"Some will leave the cow pregnant as long as possible to get a bigger foetus to get more blood, to get more money," the insider said.
"And that cow has already given her life to produce milk, I just don't see how they justify it. I think it's an appalling practice."
The harvest of foetal bovine serum - the official name for calf foetus blood - is the latest in a string of animal welfare issues to hit the New Zealand farming industry, including last week's revelations about intensive winter feeding, and previous concerns about culling of bobby calves.
The serum industry has been operating in New Zealand for at least 25 years. Each calf heart produces about 300ml. Farmers are believed to receive about $50 extra per harvest. The serum is exported around the world for up to $2500 a litre.
The serum is used in pharmaceuticals and in laboratories as a medium to grow cells - including in the formation of vaccines and, ironically, lab-grown meat.
To get the blood, the uterus containing the foetus is cut from the cow's body after it is killed and hung on a hook. Regulations say the cow must be dead for at least five minutes before the foetus is removed, to ensure it has died.
The foetus is then taken to a special room, where a needle is put into its heart to extract the blood.
Until now, the industry has gone largely under the radar. The Herald on Sunday's source decided to come forward in the wake of the mycoplasma bovis outbreak, accusing farmers who said they didn't want to kill pregnant cattle of being hypocritical.
"It's self-serving saying the government is forcing them to slaughter when they've been doing it for years," they said.
Federated Farmers national president Katie Milne said culling pregnant cows was a normal part of the farming cycle, but most would go to the meat works before the second trimester, not when they were heavily pregnant.
She didn't know of any farmers deliberately impregnating cows to get extra money at slaughter, and she would disagree with that.
"But if it's an animal that is going to die anyway, surely aren't we best to utilise as much of it as we can, particularly for a valuable by-product?"
However, Marcelo Rodriguez Ferrere, a senior law lecturer in the field of animal law and welfare, said there was no necessity to impregnate cows that were going to die.
"One has to consider that we're not talking about non-sentient beings. We're talking about animals that can feel pain and distress, and also have the capacity to feel positive emotions," he said.
"That seems to be lost in the most graphic of ways here. We're treating the cow as it's seen in the law as a commodity - but just because law recognises that as being acceptable doesn't make it morally acceptable."
Sirma Karapeeva, a spokeswoman for the Meat Industry Association, said the industry had a strong commitment to the humane treatment of animals.
Collection and processing of the serum was carried out under strict regulations, including the direct supervision of vets.
She said cows were not being deliberately impregnated prior to processing in order to 'farm' foetuses.
However MPI said there was no way to know if farmers were deliberately impregnating cull cows to gain extra profit.
It said welfare regulations would be strengthened into law on October 1 to make calving within 24 hours of going to the meatworks punishable by fine or infringement.
