Fifth Quarter Exports Boost NZ Agriculture

NEW ZEALAND - Exports of red meat ‘co-products’ – such as edible offals, casings, pelts and rendered products, tallows and meat meal – offer increasingly important market diversity for New Zealand agriculture and in 2010 contributed $1 billion to the country’s sheep and beef sectors, according to a new industry report.

20 June 2011

3 minute read

Oceania

In its recently-released industry note The Fifth Quarter, specialist food and agribusiness bank Rabobank says a focus for New Zealand’s sheep and beef sectors has been on increasing exports of edible offal in particular, using existing plant to process a wider range of edible products.

Expansion of sales from edible, but not traditional, parts of the animal carcase has increased the utilisation and returns from meat processing, the report says.

So-called ‘co-products’ are a diverse range of goods created once red meat cuts have been processed from the animal carcass. Adding value to pelts, viscera (offals), bones and fats may be done in New Zealand or raw materials can be sold into a diverse range of markets.

The report says co-products, commonly referred to as the ‘fifth quarter’, contributed an additional $1 billion to New Zealand’s meat industry revenues in 2010 – literally increasing income by one fifth.

“As a result the co- products industry has evolved over the past 20 years and is an increasingly important contributor to the industry,” she says. “Added-value rendering volumes have increased, added-value edible offal volumes have increased, while leather and casings have moved to being exported in a semi-processed state.”

Overall, the ‘fifth quarter’ maximises carcase utilisation, adding significant value per head for livestock returns, the Rabobank report says.

Edible offal sells into markets around the globe and continues to see an increasing demand and global growth, particularly in Asia and developing countries where offal is a staple and used in cultural dishes that are 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,” Ms Redmond says.

The report says the contribution made by co-products to the overall profitability of the New Zealand sheep and beef industries is not yet fully appreciated by producers due to the bundled nature of their payments.

“The contribution co-products made to cattle in 2010 was $244 per head, indicating the attractive returns for New Zealand producers in this market,” Ms Redmond says.

“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.”

“Processors have increased their focus on these products and either moved to align themselves with specialist marketers, in products such as casings, or refocused gaining profitability from materials like pelts, by selling in a semi-processed state,” Ms Redmond says.

Looking ahead, Ms Redmond says the next stage of evolution is whether processors choose to focus more on the specialty revenue source and provide sufficient resources to maximise returns. “The ideal would be dedicated market development and investment for the co-product sector,” she says.