As part of the Australian Agricultural Co’s 200th anniversary this year, Beef Central has published a series of articles on the world’s largest cattle producer’s beef genetics history. Earlier, we chronicled AA Co’s progression through its Shorthorn, Santa Gertrudis and Composite eras. Today’s fourth and final instalment looks at the Wagyu era.

Click here to read the previous item in the series on the Santa era; click here to read about the company’s genetic roots 200 years ago in Shorthorns; and click here to read about the company’s Composite cattle era.

WHILE one of the defining the features of the Australian Agricultural Co’s recent history is the way the company has vigorously embraced Wagyu cattle, it hasn’t always been that way.

As our four-part history of AA Co’s genetic evolution has shown, the world’s biggest beef producer has continued to evolve over its 200 year history, as times, tastes and markets have changed.

Click on image to enlarge, click twice to expand further

Today, Friday 1 November, marks the exact 200-year anniversary since AA Co was created in London by Royal Decree – a fitting book-end to this series. The image published here (click on image to enlarge) is the Royal Proclamation struck on 1 November 1824, officially launching the company in Australia.

It was the public listing of AA Co on the Australian Stock Exchange on 10 August 2001 that arguably provided the catalyst for the most recent change in genetic direction.

The company’s then high-profile chief executive, the dashing Peter Holmes a Court, cultivated a vision to elevate the company’s beef production out of the ‘commodity’ field in which it had played for decades, into something more ‘special’, with a differentiated, provenance-driven brand attached. All that was lacking was a clear direction, and the tools to achieve it.

The company had already established its 1824 brand program based on its composite cattle, but in reality that program was little different from dozens of other 100-120 day grainfed beef programs across the country.

Serendipity

In what may have been a case of serendipity, AA Co was at the time looking to expand its Queensland lotfeeding footprint beyond the company’s existing Goonoo yard at Meteor Downs in Central Queensland.

It started discussions with prominent Darling Downs lotfeeder, Dugald Cameron, one of the grainfed industry’s true pioneers, who had founded his Aronui feedlot near Bell way back in 1964. Dugald was looking towards retirement.

One of the real innovators in the beef industry, Dugald had pioneered a number of novel new directions in the production and marketing of grainfed beef cattle. One of those was the creation of Pacific Pride, a supply chain network involving a collection of dedicated feeder cattle suppliers whose job it was to breed feeders year-round to a tight spec; the lotfeeding resources at Aronui; and Teys Brothers export plant at Beenleigh. The midfed product was to be marketed under its own dedicated brand name and identity into high-paying export and domestic markets. Cattle suppliers received premiums on carcase performance as well as extensive feedlot and chiller data – unheard of, at the time.

Also aligned with his adventurous approach, Dugald was one of the first to feed Wagyu-influenced cattle in Australia.

Peter Cabassi had started his own fledging Wagyu beef business called Kobe Cuisine in 1996, and joined forces with Dugald & businessman Harold Seeley in 1999, to continue feeding small numbers of Wagyu F1s – both black and red – that Peter was marketing into Japan and to targeted Woolworths stores in Sydney.

Some of the first grain-finished Wagyu ever produced in Queensland, and possibly Australia, came out of Aronui. Dugald’s feedlot manager Greg Gibbons was to play a major role in the project.

Greg remembers an Aronui feedtruck driver being surprised by the appearance of speary-horned new arrivals in a pen as he drove down the lanes, asking over the two-way radio why the yard was now feeding ‘Spanish fighting bulls.’

They turned out to be four-year old bullocks, bred from US purebred Wagyu genetics, that had been lotfed in WA before transfer to Aronui, where they were fed-on for another 100 days and processed at Teys, Beenleigh – the first batch of crossbred Wagyu fed by the Kobe Cuisine business.

Mood for change

Former AA Co managing director Don Mackay, who spent nine years with the company between 1999 and 2008, was at the helm before and during the company’s entry into the Wagyu industry.

Don sees the company’s purchase of Dugald Cameron’s feedlot in 2002 as ‘ground-zero’ in what was to come.

As well as the feedlot itself, the business transaction also included the small, but growing Kobe Cuisine Wagyu beef business, along with some genetics.

It is wrongly assumed by some that AA Co’s primary target was the Aronui feedlot itself, and that the Wagyu program and cattle were something of an ‘unwanted by-product.’

Greg Gibbons, who later spent 16 years running the Wagyu program and feedlots for AA Co, says the reality was somewhat different.

“The truth is that AA Co was extremely interested in the Wagyu business, and in fact indicated it would not go ahead with the feedlot purchase without it,” Greg said.

Ultimately the deal was done, and both businesses moved under AA Co ownership in 2002.

Don Mackay said the Wagyu program at that stage was little more than an a ‘modest experiment’, buying a few Wagyu feeder cattle, feeding them at Aronui, processing them at John Dee abattoir near Warwick, and marketing the product under the Master Kobe brand. None of the early cattle were bred by AA Co itself.

“It wasn’t large numbers, by any means – around 30 head per month,” he said. “Wagyu feeder cattle were still very limited in number at the time, and the majority of the cattle in Aronui were still export 100-day types and a large Woolworths program.”

Don said AA Co’s new Wagyu program, by then under the management of Peter Cabassi, quickly grew into a ‘real business’, but at the time was based solely on feeder cattle bought from other breeders, rather than being bred by the company itself.

Dugald Cameron’s former Kobe Cuisine Wagyu business partner Peter Cabassi joined AA Co after the Aronui purchase, along with Greg Gibbons, and together the pair provided a level of knowledge and expertise that was unsurpassed in the Wagyu industry at that time.

Some of the earliest Kobe Cuisine Wagyu product destined for Japan

While the Kobe Cuisine program through Aronui was profitable and steadily grew, any serious attempt to move into its own Wagyu program was met with some derision and opposition within the company ranks.

“After all, we’d all spent a lifetime trying to breed cattle that did not look like Wagyu,” Don Mackay said.

“There was some pushback at the board and staff level, but as we all know, the real value of the Wagyu is in the forequarter meat and the loins, not in the rumps. And on top of that their draught heritage meant they were the most hardy animals I have ever had anything to do with, and their high level of fertility has added value in other ways. Their calf-getting ability surprised everybody.”

Don thinks that while it was fortuitous that the Aronui feedlot + Kobe Cuisine Wagyu business deal came along when it did, it would have been inevitable that AA Co would have eventually found its way into the Wagyu industry, regardless.

“The board at the time was looking for where to go, and how to dramatically change the value of the production of the animals the company produced,” he said.

“Around the board table, we reflected on the incremental transformations that had taken place earlier with the arrival of bos indicus genetics in northern Australia, and asked: Is there another one of those out there?”

“We clearly spent a lot of money and wanted to go further down the Wagyu path, but to be fair, nobody at the time foresaw the degree to which the Wagyu industry would grow – not only within AA Co, but more broadly across the industry.”

The company spent time, money and effort on due diligence with a series of reports and forecasts prepared before making the commitment to breed Wagyu cattle at a commercial scale.

AA Co was already making ‘really good money’ from buying other breeders’ F1 calves and feeding them into the Kobe Cuisine brand program. But it quickly became evident that even better margins could be had by breeding the cattle themselves.

One of the AA Co directors in that era in particular – Englishman Charles Bright, representing shareholder Elders – was arguably the biggest supporter of the Wagyu initiative around the board table, pushing it enthusiastically behind the scenes.

Westholme acquisition

The company’s next major step into Wagyu genetics was its purchase in 2006 of Chris Walker’s elite, high-marbling Westholme Fullblood Wagyu herd, regarded at the time as amongst the best Wagyu genetics in the world, outside of Japan. The herd purchase price of $10 million was an unbelievable amount of money at the time to be paid for any beef herd of its size.

The names Westholme, along with Wylarah – the property near Surat which later became AA Co’s bull breeding depot – later became the foundations for AA Co’s Wagyu brand identities, used to this day.

“The Westholme herd purchase gave the company the opportunity to ‘get serious’ about building a large-scale Wagyu program,” Don Mackay said.

“There was no point in buying five or ten Wagyu bulls here and there, when the company was running more than half a million cattle. It needed a major genetic injection like Westholme to shift the needle.”

Prior to that point, AA Co’s Wagyu feeder cattle were being contract bred by others, using semen supplied by AA Co. Some of those calves were out of dairy herds on the NSW/Victorian border, following the lead of Wagyu x dairy breeding practised in Japan.

The company also purchased large quantities of Wagyu semen out of the US, and started breeding Fullblood bulls in considerable numbers at Wylarah using AI, embryo transfer and natural mating.

Some of the first matings of the Westholme-bred bulls with AA Co-owned breeders happened a year or two after the Westholme herd purchase – firstly over Angus x Santa cows at Carrum Downs near Julia Creek, followed by Angus x Santas and straight Santa cows on Headingly, near Dajarra, and a little later, Charolais x Santa cows bred on Avon Downs on the Barkly.

Wagyu bull, Santa cross cows and early F1 calf, Avon Downs late 2007

The company started to accelerate the use of Wagyu bulls in northern areas, to ‘see how they would go.’ Wagyu at the time were still a completely unknown quantity under northern Australian grazing conditions.

“We, along with everybody else, assumed that because they were black-hided originating from a temperate climate, they must perform like Angus under tough conditions,” Don Mackay said.

Asked whether it was ever foreseen that the Wagyu footprint in the AA Co pastoral operations would be as significant as it is to day, Don said “it was discussed, but was always met with some scepticism.”

“There was certainly some experience in running Wagyu further north, through Peter Hughes, Wally and Ralph Rea, Percy Hornery and others, but most of that was in Central Queensland.

“So there was some experience in running Wagyu in the dry tropics, but many felt it would still be a bold move to take large numbers of Wagyu bulls onto the Barkly,” he said.

Once the cattle had truly proven themselves (hardiness wise) on the Barkly and elsewhere, it opened up the floodgates for breeding Wagyu influenced cattle at scale in the north.

Given the time taken to breed up bull numbers, it wasn’t until around 2009 or 2010 that the first ‘really significant’ numbers of Wagyu-influenced F1 calves started to arrive in AA Co’s northern breeding paddocks.

Wagyu backgrounders Meteor Downs 2011

Former AA Co Wagyu program manager Greg Gibbons, now working in a similar role with Hancock Agriculture, said the marbling performance difference at Aronui was ‘like night and day’ when the first of the Westholme-influenced calves started to arrive at the yard.

Asked whether there was any push-back from station managers about the Wagyu project, Greg said head office “copped a lot of heat about these black Jerseys,” but it did not last long. “Exactly the same happened a decade earlier with the arrival of the AA Co composites, and even earlier, the arrival of the Santas,” he said.

“Personal biases came into it. The Wagyu bulls were sometimes put into the hardest breeder paddocks, for example, to try to prove a point.”

“But none of us working in the industry at that early time could have contemplated how far Wagyu would go in Australia, or within the large herds like AA Co,” he said. “It very quickly shifted from being a niche product into mainstream.”

Feeding strategies

While also managing day to day operations at Aronui feedlot, Greg said the arrival of Wagyu feeders in numbers meant lotfeeders (both within AA Co at Aronui and Goonoo and elsewhere) had to learn how to effectively feed Wagyu cattle for marbling performance.

“Legendary Japanese lotfeeder and genetics producer Shogo Takeda, was responsible for much of Australia’s early knowledge on feeding Wagyu,” he said.

“The industry pretty quickly learned that different approaches to ration were necessary. The first shipment of beef to Japan through Kobe Cuisine in the late 1990s presented well (visually), but they didn’t like the flavour. The importing company sent out a representative to Australia, and he helped us adjust our ration to Japanese style feeding,” Greg said.

“The basics of that ration are still in use across the Wagyu feeding industry today – they have not changed much in 25 years.”

AA Co Wagyu in 2024

Fast forward to 2024, and the AA Co’s beef production based on its herd currently comprising around 455,000 head bears little resemblance to that which existed prior to the arrival of the first Wagyu genetics in 2006-07.

Over the following 17 years, the company quickly established as the world’s first and largest vertically integrated Wagyu beef producer – breeding, backgrounding, feeding, processing and exporting under the company’s own banner.

Along with Hancock Agriculture and possibly Hughes Grazing, AA Co today operates one of the three largest Wagyu beef herds in the world.

The Wagyu herd injection required some changes to the company’s original supply chain, with acquisitions of further backgrounding country (as well as long-term leases on holdings like Sundown Pastoral Co in northern NSW, since concluded) being necessary to supply feeder cattle at scale.

Today, about 50 percent of AA Co’s total stock inventory has some Wagyu component – ranging from F1 to purebreds.

On top of that, 100 percent of the company’s branded beef output is Wagyu-based – under either the Westholme, Wylarah or Darling Downs brand programs.

As a measure of progress, this year’s annual report says that Wagyu branded beef sales last financial year reached a new record high of 13,600 tonnes, up 24 percent on the year before.

While it has gained little prominence at this stage, AA Co during the year added its first grassfed Wagyu product to its branded beef range, following a successful trial.

“This product caters to emerging consumer trends, particularly in the US, where some customers are seeking a tender, marbled Wagyu product with a stronger beef flavour profile,” the company said.

Breeding the horns off

David Harris

Present day AA Co managing director David Harris said the proportion of purebred and higher content Wagyu cattle under the company’s control was growing – largely due to the objective of ‘breeding the horns off.’

“It’s no secret that we now have purebred Wagyu herds now stationed on Dalgonally, north of Julia Creek, and Avon Downs on the eastern part of the Barkly Tableland, and numbers of purebreds continue to grow,” Mr Harris said.

“We, along with other local graziers, are testing purebreds in those environments, and the number of purebreds being produced in the north has expanded over time, as our confidence in their performance has grown.

“That’s on top of the F1 breeding that has been happening in the area over composite cows for 15 years or more. It’s part of a process – originally we were testing purebred and Fullblood Wagyu bulls in the north, and once their performance and adaptability was proven, we’ve now moved on to running more purebred females.

The conversation around the industry had always been around exactly how much Wagyu percentage the north handle, Mr Harris said.

“Different producers have had different risk appetites on that subject. In AA Co’s case, we started off pretty conservatively, but as time has passed, the Wagyu cattle continue to exceed our expectations. But within that there’s a management angle and an infrastructure angle – it’s not just about the cattle themselves.”

Poll breeding

The most recent major extension within AA Co’s Wagyu breeding history is unquestionably its extension into Poll Wagyu selection and breeding.

The selection program started five or six years ago, and last year for the first time, Poll purebred Wagyu bulls were sent into the company’s northern commercial breeding herds for the first time.

“The number of Poll cattle in the seedstock nucleus breeding herd has now built to reasonable scale, and will start to filter out more each year into the company’s composite F1 breeding herds as well as purebred Wagyu herds in the north,” Mr Harris said.

“We’re getting closer to the time when large lines of young Wagyu bulls going out to our commercial breeding herds will produce poll calves only.”

In terms of meat quality performance, Mr Harris said through genetic selection, there was always opportunity to make further improvement, and AA Co had committed considerable technical resources to that objective – both in Wagyu and composite breeding programs.

“Based on sheer numbers, simply taking out the tail makes a big impact on the overall result,” he said.

“But given that the majority of branded Wagyu beef we sell is from F1 calves, it means that around 50pc of the meat quality and feedlot performance is contributed from the Mitchell composite females – so we have to work on it, from both sides.”

• Click here to access previous items on AA Co’s Shorthorn origins, click here to read about its Santa Gertrudis and Brahman era,  and click here to read about the composite programs