Domestic grazing effects on primary productivity and community structure are controversial in rangeland ecology and frequently misunderstood. Although directly related with secondary production, biomass stock and biomass production at species level (biomass composition) has been relegated in field studies, especially in arid rangelands co-dominated by woody species. We estimated grazing effects on aboveground biomass in a temperate mixed grass-shrub steppe of Patagonia. We compared exclusion of sheep with two levels of continuous grazing: moderate (light) and intensive sheep grazing in an average precipitation year. Total green biomass (productivity) was twice as high in moderately grazed paddocks as in those without grazing and intensively grazed pastures, while standing dead grass biomass stock only decreased in intensive grazing. Shrub biomass was not modified by grazing management. In addition, grazing modified grass specific biomass composition, thus diminishing biomass quality in intensively grazed areas. This work provides evidence that in arid rangelands, continuous moderate grazing management could be an effective tool to increase productivity compared to grazing exclusion. Furthermore, moderate grazing would not cause major undesired changes in species composition. However, a potential risk of land use intensification exists because intensive grazing could decrease biomass production as well as promote negative composition changes.