April 3, 2006

Australian company to expand wagyu beef business

The Australian Agricultural Company is buying a herd of Wagyu bulls hoping to expand its production of the special beef.

The company, one of Australia's largest beef producers, bought a pure-bred Wagyu bull herd from Westholme Wagyu Ltd.

Wagyu beef commands a premium in the meat market and is three to four times the price of traditional beef. In the US, a wagyu beefsteak can sell for as much as US$100 a steak. 

The herd was purchased for approximately AUS$1 million (US$700,000) and the company has an option to acquire the balance of the assets for about AUS$9 million (US$6.3 million) after calving, weaning, and breeding is completed later in 2006.

Chief financial officer Stephen Toms said the acquisition would help the company meet the demand for Wagyu beef in restaurants in Japan, Korea, and the United States. The company expects to increase its Wagyu beef output from 3,000 tonnes this year to 5,000 tonnes next year through crossbreeding its traditional-breed cattle with the pure-bred Wagyu bulls.

The company expects output to reach 9000 tonnes eventually, Toms said.

Wagyu beef makes up 80 percent of the company's branded beef products.

Wagyu beef is commonly known as Kobe beef, but Kobe is merely the prefecture in Japan where expensive meat is produced. The diet of wagyu cows are augmented with sake and beer, and regular massages are given to soften their meat and enhance the marbling of their fat.

In Japan, where Wagyu means "Japanese cow," cattle are graded on a 12-point scale much more detailed than the USDA's grading system. Well-marbled meat the USDA commonly rated prime beef only scores a 5 or 6 in this scale, but top Wagyu beef generally score a 10.