RED hot premiums for crossbred cattle with Wagyu content is fuelling big interest from many corners of the beef breeding business as feedlotters and branded beef exporters scramble to secure supply to fill lucrative overseas orders.
Wagyus over Angus females has led the way, Shorthorn crosses have also been very successful, in the dairy sector Holstein Wagyu calves are developing a big following and now northern Brahman breeders are well in on the act.
Market analysts Mecardo say F1 Wagyu prices have spent most of the past three years trading 75 to 95 per cent higher than the Eastern Young Cattle Indicator.
Analyst and livestock trading manager Matt Dalgleish said Wagyu’s position as a premium product and the fact it was highly sought after overseas, particularly in the Japanese market, went a long way to explaining that spread.
In recent times, the search for premium or niche markets within Australia’s beef industry had possibly amplified that effect, he said.
The Australian Wagyu Association, which held its annual conference in Albury last week, has some hefty predictions for production growth in the next few years.
By 2020, the forecast is for 821,000 Wagyu joinings, which will be 5.7per cent of the female beef herd.
How much extra supply would have to come through the pipeline in order to put downward pressure on premiums is very much an unknown at the moment.
Given consumer research is indicating growth in demand for high end beef, Australia’s top beef marketers say it’s unlikely there will be any saturation in the near future.
For those contemplating joining the revolution, the big issues revolve around what is the best approach, should it be F1s, F2s or more and how Australia’s beef supply chain will cope.
A panel of Wagyu industry leaders fielded those questions in what was one of the highlights of the Albury conference.
Patrick Warmoll, managing director of NSW operation Jack’s Creek, at Breeza, which has won the World’s Best Steak two years in a row with a Wagyu cross, said F1s dominated the overseas demand.
“After the global crisis, the main group left in Japan has structured their marketing around an F1 Angus Wagyu cross,” he explained.
“They have found the performance, compared to an F2 or F3, more commercially viable - they are getting adequate marbling and high weight carcases.”
NSW Wagyu seedstock producer Peter Krause, Sunnyside Wagyu at Inverell, said a lot of feedlot space in Australia traditionally taken by Angus was now going to Wagyu F1s.
“It astounds me what feedlots have been able to do in the past three or four years with Wagyu,” he said.
“In the early days, no one knew what they were doing and a marble score of five was considered so special it warranted a call from the feedlot manager.
“But today the expectation is a marble score of five and above and they are doing it consistently.
“Due to the traits in Angus and Shorthorn, the propensity is there to grab hold of the Wagyu marbling gene and make something special.”
Northern commercial producer Peter Hughes, Hughes Pastoral in Queensland and the Northern Territory, said the thing about the first cross was it’s important to breed cattle that have been in an area for a generation.
“It doesn’t matter if you have Brahman or another breed, if you start with cattle that have already been successful, you can put Wagyu bulls in and the big lift in the first crop is your females,” he said.
“With the steers you produce, there is no need to feed them because of the hybrid vigour - you will get as much out of them as what you are breeding now.
“But when you take those first cross females and cross Wagyu back again, you’re really starting to cook with gas.”
What is lost in hybrid vigour as the crossbreeding continues is picked up in consistent marbling, he said.
“With the first cross, you’ll get anything from a nine to a 0 but your average will be pretty ordinary. As you go further up the ladder and the marbling is more consistent - a lot more fives and sixes.”
Mr Hughes said if you give Wagyu cattle an inch “they will give you back five inches.”
“Whatever you do for them that is good they will give it back many times over,” he said.
Marbling is key
MARBLING should be top of the priority list, Wagyu branded beef exporters have told breeders.
Andrew Moore, marketing manager at Rangers Valley, Glen Innes, one of the world’s most respected premium marbled beef producers, said marbling was key for his company.
Rangers Valley feeds both Wagyu Holstein crosses and Wagyu Angus.
“Our customers, be they chefs or retailers, are telling us marbling is what sells the product,” he said.
“Our aim is to work out how we go forward to get more marbling.”
Asked if there would be enough feedlot space to cope with the expansion of Wagyu F1s, Mr Moore said the market would adjust.
“If it is profitable for everyone in the supply chain people will take less profitable cattle out of the feedlot system,” he said.
The six to nine marble score was the most desired worldwide, particularly now Wagyu was more than just a niche breed, Mr Warmoll said.
“To most people, what Wagyu means is a marbling breed,” he said.
“If you don’t have a contract and want to produce for multiple markets, I’d stick with an Angus base in the south and if you’re in the north go with a bit higher Wagyu content because that is going to bring the marbling and enable you to sell to more.”
The markets that have been growing rapidly, such as China, would continue to do so, he said.
“Because we sell a chilled product into China, there is less opportunity for them to build you up and tear you down like they can do with frozen product that can be stockpiled, so we have that advantage,” Mr Warmoll said.
“There is also big potential in America, where there is talk about the opportunity for a 90-day chilled Wagyu product.
“They are not going to take full sets but if we can get a topside or silverside or a chuck or brisket for burgers, all that bodes really well for Wagyu.”
Asked if there was an opportunity for grassfed Wagyu, Mr Warmoll said: “There might be a niche feeding market in Sydney for it but I don’t there will be a sustainable market we can all produce for.”