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Exports of red meat "co-products" are offering increasingly important market diversity, contributing a $1 billion boost to the agricultural sector last year.
Expansion of sales from edible but unusual parts of the carcass has increased the utilisation and returns from meat processing, a recent Rabobank report said.
Co-products, including offal, casings, pelts and rendered products, tallows and meat meal, were created once red meat cuts had been processed from the carcass.
Pressures on supply in the sheep meat sector in particular, with decreasing stock availability, had been driving processors to extract greater value from the whole carcass, Rabobank animal proteins analyst Rebecca Redmond said.
There was increasing demand and global growth for edible offal, particularly in Asia and developing countries where offal was a staple and used in cultural dishes that were not typical in the Western world.
"These markets consume well-recognised products such as heart, liver and kidney to those parts that are less likely to be consumed in New Zealand, such as testes, tendons or tongue."
The report highlighted how New Zealand's disease-free status and adherence to a high level of food safety lent support to the expansion of edible offal markets.
"The contribution co-products made to cattle in 2010 was $244 per head, indicating the attractive returns for New Zealand producers in this market.
"Without the revenues generated by co-products, the industry would look very different.
Co-products help boost farm-gate prices and add to the overall profitability of the industry," Ms Redmond said.
Processors had increased their focus on the products and either moved to align themselves with specialist marketers in products such as casings or refocused on gaining profitability from materials such as pelts, by selling in a semi-processed state.
"The ideal would be dedicated market development and investment for the co-product sector," she said.
In the Alliance Group's update to shareholders and suppliers last month, chief executive Grant Cuff said there had been significant increase in the range of co-product items being sought in Asia.
Products such as tripe pieces, omasum and honeycomb were in demand.