Dairy farmers look for options as Wagyu demand draws to a halt

As international and domestic markets grind to a halt and restaurants close amid COVID-19, demand for high-end beef has all but dried up, leaving a producers like Alistair Harris searching for solutions.

The Larpent dairy farmer has supplied Beefcorp with Wagyu-cross calves for more than 20 years and is expecting about 150 heifers to calve within the month.

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Mr Harris uses Wagyu genetics over his Holstein heifers and on-sells the calves after seven days to be hand reared, later finished in a feedlot.

"We can't do much about it because the calves are in the heifers but we fully understand the situation," Mr Harris, a third-generation farmer, said.

"Last year we sold about 140 week-old calves to them and this year it would have been between 100-140 again."

Beefcorp has supplied its Wagyu genetics to dairy farmers for 25 years, who sell the week-old calves for a supplementary income.

It means these farmers will have to find alternative markets for the Wagyu calves

Mr Harris said he planned to retain his steer portion and sell the heifers as bobby calves.

"It's not a huge percentage of our business, it would be on the lower end. It's just a good outlet for our calves and we know they have a good future ahead of them," Mr Harris said.

"Dollars-wise they're usually $200 a calf but our main objective was with the Wagyus to get heifers in-calf and use the genetics due to the ease of calving.

"You sell them on the bobby calf market for $50 or $100 but going forward we could be dealing with higher feed costs. Wheat has just jumped up again and fodder if we go through another tough year."

Mr Harris, who milks about 700 cows, said Beefcorp had been transparent and supportive through the process but feared future implications if the export and domestic markets continued at a similar trend.

"The beef market is good now but it might not be as good in two years' time and we won't get the weight on them like feedlotters do and they don't have the market Angus or Hereford do either," Mr Harris said.

"But Wagyu are looked down upon a bit in the yards alongside other beef cattle and that's simply because they don't have the weight in them and slow weight gain for the days and feed you have to put into them."

Coragulac dairy farmer Luke McCarthy has used Wagyu bulls over his low-production fertile Holstein/Fleckvieh cows for four years.

Annually, he sells about 150 calves direct to Beefcorp and within a month will have 100 calves online.

"We will lose about $20,000 but then we can still sell the calves and depending on what we can sell the calves for, that will limit our loss and we expect we'd be able to get $100 for them," Mr McCarthy said.

"So we might loose $10,000 or $12,000 to our business which in the scheme of things isn't that much.

"It's not ideal but we were waiting for something to affect us eventually - it was only a matter of time."

Mr McCarthy said while farmers would deal strategically with the shortfall in Wagyu demand, it could have dire consequences in the long-term.

"If Beefcorp can't keep running their business in years to come then it will definitely be a loss to dairy farmers like us not having that option," he said.

"There's about 100 calves that we're going to have to find homes for but fortunately I've found a buyer who was chasing bull calves so he's agreed to take the bulls and heifers but after that I'm not sure."

For producers like Larpent dairy farmer Lachie Sutherland, who contract breeds Wagyu calves for Beefcorp, said it was business as usual for the time being.

He grows the calves out to 180 kilograms before the calves are backgrounded before entering a feedlot.

"We've been told it's business as usual with the bobby calves and that we can deliver to who we normally sell the bobby calves to, there will be no restrictions and obviously observing all the regulations," Mr Sutherland said.

"We've had discussions about the future but no clear decision has been made."

Mr Sutherland said he "had faith" in the product due to its quality, despite its slow growth weight.

"If they have to go into the normal trade, they have to go into the normal trade," he said.

"If we are left with surplus stock because our normal purchaser can't buy it, then we would probably on-rear them them and sell them at a store markets or as fats."