Joyce said Australia "does not condone the mistreatment of animals" but added that the violence shown in the PETA video should have been reported immediately.
"An emotional response without full investigation, including why it has taken so long for PETA to release the footage, does not result in better husbandry practices," Joyce said in a statement late Friday.
"It just reinforces the belief that PETA is an extremist group that wants to end livestock production and to irreparably damage the economy and the reputation of Australian farmers."
Australia is the world's leading wool producer and exporter, with annual exports valued at more than Aus$3 billion ($2.8 billion).
The video released on Thursday showed shearers beating and throwing the animals, stamping on their necks and stitching wounds apparently without anaesthetic.
Joyce's criticism comes amid a push in Australia for the adoption of "ag gag" laws, already in practice in the US.
Such laws would make it illegal for activists to film in secret on a farm and then broadcast the images without alerting authorities.
PETA said its decision to collect the footage over several months came from previous experience that a "strong case for authorities" was needed or "officials will be left with their hands tied".
The video clips were reportedly filmed at 19 contractor-run sheep shearing sheds in Australia between October 2013 and February 2014.
"In this instance, PETA US had to show how repetitive and routine the abuse of sheep was, and that it happened as a matter of course in one shearing shed after another," PETA Australia's campaigns director Jason Baker said in a statement to AFP Saturday.
Baker said it "seems disingenuous" Joyce was questioning PETA's methods rather than asking why the shearers were allowed to hurt the sheep.
The group has said it would not reveal where the footage was taken to protect its investigators.
The RSPCA charity is investigating the footage for potential breaches of Australian animal welfare legislation.
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