American Wagyu Beef Price at Auction

So Ya' Want to Raise Wagyu...

I decided to add this section of the web site because I get a lot of questions from producers, or potential producers about how to get started with Wagyu. As much as I enjoy talking about the Wagyu breed with others, it does get repetitive after a while, so I thought I would try to capture some of my philosophy and opinions in an easy to reference place.

As with everything on the Internet, you should take all this information with a grain of salt. It represents my opinions and experiences, which are certainly biased, and may also be outdated, or not relevant in your area of the world.

I'll be working on this section for awhile, so if it looks incomplete, that is the reason!

If I get this section right, you can either read it straight through, or you can step through a series of questions that I typically pose to potential new producers. The first one being …

Why do you think you want to raise Wagyu cattle?

In my opinion, there are several acceptable answers to this question, including:

I want to grow a little high-end beef for family, friends, and acquaintances.
I want to build a "finished beef" business and participate in the local farm to fork movement.
I have a strategy to extract a premium price for top quality beef calves.
I want to be a Wagyu seedstock provider.

There are also some unacceptable answers to this question, like:

My neighbor is raising them, or I read an article about them, and it seems cool.
Everybody knows Wagyu cattle are awesome and I'll make more money for them when I sell them at my local stockyard.

I'll address this one without further ado ... in my experience, a Wagyu calf will be discounted by your local calf buyer at auction. They are light weight, thin boned, no-rump, black calves with horns - and they don't look anything like the Grade #1 calves that those buyers are willing to pay a premium for.

Your (hopefully acceptable) answer to "Why Wagyu" leads to a discussion of business models. If you find a happy fit with a business model, we should talk about your existing herd.

How would you describe your cattle herd today? And what do you expect to gain by introducing Wagyu?

Some typical answers:

Theoretical. (as in, I own no cows) But, if I am going to own a cow, it should be the best!
I have a registered SuchAnSuch-breed herd and want to diversify (or replace).
I have a commercial herd that i want to upgrade (or replace).

Evaluating your existing program and settling on goals leads to a discussion on getting started. Keeping your business model in mind, you have to consider:

What kind of Wagyu calves do you want to produce?

Just one word here before we look at some choices. Whatever you decide to produce, be proud of that and don't try to pass it off as something else. If you are raising F1s, don't hide that fact and label them "Wagyu" as if they were Fullblood - trust in the quality of your product and be specific in its description.

Fullblood
Purebred
Percentage
a little bit of everything

No matter what type of calves you want to produce, you will have to consider how to sire them. Head here for some Sire Thoughts

Wagyu Business Models

Custom Beef

This is the most familiar business model to me because it is the one that got me into Wagyu in the first place. If you are going to raise a Wagyu calf from birth to slaughter, and then give or sell those sides of beef to someone other than yourself, you are raising Custom Beef.

Since you are not selling the finished product (i.e. steaks, hamburger, roasts) directly, this is a pretty straightforward business model to transact. You agree a price with your buyer, and then drop off the live animal at their preferred butcher shop. You get paid at delivery and your customer works directly with the butcher shop on how they want their beef processed, packaged, and made available for pick up. This is really easy if the customer buys the whole animal (both sides) and still pretty easy if two different people take one side each (because butcher shops cut them in half to hang and age them anyway). With two people involved, you just need them to agree on the butcher shop. It starts to get harder if you sell quarters, and lots harder if you sell eights, since now you need to get people to agree on all the little processing decisions (thickness of steaks, cuts, etc.) AND how to work together to split it up at delivery.

Custom Beef (at least in Alabama) can be processed at any butcher shop. It doesn't need a USDA or State inspection stamped label on each cut of beef produced. This is because the butcher shop is "custom processing" the beef for the direct consumer - not you, and specifically, not for resale. (In Alabama, all of the steaks, burgers, and such will specifically be labeled "Not For Resale" on the packages.)

As soon as you decide that some other than the end consumer (meaning you, or a distributor) is going to pick up the beef and sell it later (like at a farmer's market, or to a supermarket, or a restaurant), you have entered the realm of …

Commercial Beef

Now I don't know if it is officially called Commercial Beef, but the USDA and State Ag folks I've talk to about this use the phrase "entering into commerce", so I'll borrow it.

For a beef product to be sold wholesale or retail, it must carry a State Inspection Stamp (as long as it doesn't cross a state line) or a USDA Inspection Stamp. All that means is that the animal must be butchered and processed at a facility that can affix the stamp on the label. From the beef producer's perspective, this doesn't require any more work, and so long as one is relatively near your farm, doesn't usually cost any more for processing. The trick (at least in Alabama) is finding one, since most shops don't bother because the stay as busy as they want without the hassle of the daily inspection presence.

Once your beef has the right stamps; you must then worry about transport. It is your responsibility to make sure that you are following any USDA or state health department guidelines, and can properly document that the product has been consistently kept at the right temperature. This responsibility starts from the moment you pick it up and stays with you until it is sold it to someone else. How you document your procedures, what is even required in your area, etc. - this is something you need to check into and get comfortable with before you go this route.

In our operation, we have done the research on what we need to do to make this work. I can tell you that it is a lot more complicated than Custom Beef, but is manageable.

Marketing Premium Calves

If you do not have the facilities, desire, or time to take care of a calf from birth to slaughter, then you need to pick an exit point while the calf is still alive and can be moved around.

The easiest thing to do would be to sell your calves to a company that specializes in finishing out Wagyu beef and knows what they are getting. The American Wagyu Association keeps a list of such companies. I have never gone this route, but have heard from people that have that you can expect a decent premium over the current price being paid for #1 grade calves at your local auction. This route is nice because you get paid as the calves leave your farm and what happens to them after that is someone else's worry. The difficulty in this approach will be in gathering up enough similar calves to be worth the trouble of shipping.

Another route that might be worth considering is Retained Ownership. In this arrangement, you keep ownership of the animal until it is slaughtered. You basically put an agreement in place with a feedyard that does the work of feeding and finishing until they are ready for slaughter. (Many feedlots out there cater to this scheme which can be applied to any breed of cattle.) At slaughter, you are paid based on the grade and weight of the carcass. With Wagyu, you expect that the carcass will bring top dollar, but then again, if you don't like the price they come up with, it's kind of hard to argue at that point. In this scheme, you also keep a portion of the risk (via ownership) for a longer period and cash flow can be an issue since you pay feed and yardage costs from the time your cattle arrive until they are processed. Gathering up enough calves to make shipping worthwhile could also be an issue. We sent our first load of Wagyu influence calves to A to Z Feeders in Atlantic, Iowa in 2022 and can report that this has been a viable business model that we plan to continue to use heavily. It helps to have a high quailty operation and trusted partner such as A to Z to work with.

Wagyu Seedstock

With all the interest in Wagyu cattle, someone out there should be willing to provide the seedstock for new producers. This involves raising herd bulls, heifers for breeding stock, collecting and selling semen for AI, and producing embryos for transferring. We have not really explored this business, though we do offer cattle that fit these criteria for sale from time to time. I've also sold embryos, and we are now offering semen on our top-quality herd bull. I have certainly purchased from seedstock providers and I can tell you that to be successful, you need to pay a lot of attention to keeping high quality records and having a lot of data to help set your genetics apart. I suspect that this can be a difficult market to establish because it takes a while to get known and build a good reputation.

Seedstock is often sold through auction (watch the American Wagyu Association web site and e-mails for notice) or through private treaty. There is also a Wagyu Exchange website that sees a lot of activity.

Getting Started with Wagyu

From Zero to Sixty in ...

If you do not currently own cattle and are considering getting into Wagyu, I would strongly advise you to pause for a minute, take a deep relaxing breath, and think it all the way through.

Fullblood Wagyu cattle offer great performance when it comes to the production of the end product, (tasty beef!) but that does not make them more invincible, or somehow easier to work with or own than any other cow you see standing in a pasture near you. Any cow, including the amazing Wagyu, can and will still:

die from snake bites, pneumonia, lightening striking the tree they are sheltering under, low self-esteem, and every other thing, when you least expect it.
miscarry, have a stillborn calf, or refuse to be a mother to a perfectly healthy one.
refuse to cycle and breed, go sterile, flush zero embryos, wander into your neighbor's pasture and get bred by his longhorn bull.
turn out to be an idiot and chase you around the catchpen or run through your fences.
prolapse in the middle of the night (fun one - look it up!), break a leg, get hoof rot, develop mastitis, or otherwise "not quite die" but become a lot less valuable.

It isn't that Wagyu are any more prone to these things. Unexpected setbacks are common to every breed of cow. The problem is with your level of experience and expectations going in. In 1998, we owned no cows; in 1999 we owned lots of them. You can bet that we learned a lot in those first years and many things didn't go as smoothly as it looked on paper when we were planning at the kitchen table. It is painful to lose a cow no matter what your investment, but if it is a $10,000 Wagyu dam, it hurts considerably more than if it is a $1,000 commercial Angus one. The same goes with making product decisions such as when to retain and bred a cow faced with an obvious handicap, verse when to cut your losses and cull her for a significant financial loss. As a new cattleperson, you have a lot to learn - be sure you are comfortable with the level of investment if things go wrong.

When you've come to grips with this, it is time to consider how best to build the herd that you need to execute your chosen business model. You are going to need cows, and maybe a bull, of some kind to get started. They can be commercial cattle, percentage Wagyu, or Fullblood Wagyu. What you choose as your base of operations should be heavily influenced by your business model and production goals.

From other Registered breeds ...

As a current cattle owner, you know a lot of the pitfalls that are out there - Wagyu are like any other in that regard. Maintaining a registered Wagyu herd should be pretty similar to the paperwork involved for any other breed.

The governing body for Wagyu, at least in the US of A is the American Wagyu Association. They organize events, process registration paperwork, and generally try to keep things organized. There are a lot fewer producers and a lot fewer animals than other breeds, so I suspect that our association is a little less 'organized' than some, but we seem to genuinely be trying to improve.

I'm looking forward to a day when we get a good baseline of Expected Progeny Differences (EPD) going. Most other breeds have this already in place, but it is a true problem in the Wagyu breed, and one I'm eager to see corrected.

From a commercial basis ...

As a current cattle owner, you know what it takes to own cattle. If you are adding Wagyu to the mix, you need to prepare for doing the paperwork to maintain their registration. While this isn't technically required, you immediately surrender commercial value for animals that don't have proper credentials established, so it is worth doing. You will need to start paying attention to birth dates, breeding dates for bulls and back-ups, and establish a tagging scheme to make sure you know the lineage of your weaned calves.

Join the American Wagyu Association, and read through all of the information they publish on how to make the most of your membership.

Production Goals

Producing Fullblood calves

Fullblood Wagyu can trace their lineage back to original Japanese cattle with no single parent of any other breed in their family tree. The only way to produce a Fullblood Wagyu is to create a mating of two Fullblood Wagyu parents - you cannot "breed up" to a Fullblood. (I do wonder what happens when you get to a 99.95% Purebred Wagyu since the certificates only go out to one decimal place. I guess time will tell - but I'm betting that they will add another decimal point to the certificate!)

The easiest (and potentially most expensive) way to enter Fullblood production is to buy a Fullblood cow, but it isn't the only way. I did eventually buy Fullblood cows and heifers, but I actually started by buying embryos and transferring them into commercial cows to produce Fullblood calves.

At the time of this writing, a quality Fullblood cow would cost in the neighborhood of $5,000 - $9,000 depending on her age, pedigree, performance characteristics, and breeding status. Note: you can spend a lot more than this, and there are opportunities to spend a lot less, but make sure you know exactly why you are doing either.

Also at the time of this writing, you can buy 'well mated' embryos in the neighborhood of $500/each. Always make sure you are buying Grade 1 embryos. No one should ever be selling Grade 2 embryos, but sometimes they do. Also, in my experience, embryos produced by conventional means work better than those that come from IVF. If you get a 50% success rate on embryo transfer, be satisfied - some get higher some get lower. Working the math, for the same $9,000 you would spend on a single bred Wagyu Fullblood to produce 1 calf, you could transfer 18 embryos into your commercial cattle and expect to get 9 calves. Of course, that Fullblood cow could give you 9 calves over her lifetime as well, so it is just a matter of timing.

If you do acquire (or raise) a Fullblood cow, you can also consider producing your own embryos and transferring them to commercial recips. This has the potential greatly multiplying the cows reproductive output if it works. Transferring never-frozen embryos is generally more successful than frozen ones. That said, flushing embryos is a fickle process - sometimes it works great and you get 10+ viable embryos; sometimes you get nothing - of course the technician gets paid regardless.

The cow is only half the equation, of course. See the section below on Siring Wagyu Offspring for thoughts about the other half.

Producing Purebred calves

Purebred Wagyu have a lineage that only includes one non-Wagyu parent in its set of sixteen great-grandparents, i.e. 15/16ths, or 93.75% Wagyu blood. Given that the only important criteria is the percentage of Wagyu in the bloodline, you can mathematically get a Purebred Wagyu in an infinte number of ways. Two popular ones would be by breeding two Purebred parents, or by breeding a 7/8ths (87.5%) Percentage cow to a Fullblood bull.

I am adding this section for completeness, but I wonder if anyone goes into the business of Wagyu to specifically produce Purebred calves - or do they just end up there eventually as part of a Percentage program. At the Purebred stage, for all practical purposes, there isn't going to be any difference in the end product, but why go to the trouble when you could have just bred Fullblood in the first place. The only reason I can think of is that it has been my observation that the Purebred designation will always be discounted in price/value in a given market when compared to a Fullblood of the same quality of pedigree. If you don't care about ever having the Fullblood designation, but want to produce a product that is essentially the same in all but the name, it is generally cheaper to start with Purebred stock.

Producing Percentage calves

Percentage Wagyu have a lineage that includes at least one Fullblood parent but that doesn't reach the criteria of Purebred (15/16ths). The typical Percentage calf is the product of a commercial cow and a Fullblood bull that results in a 50% Wagyu bloodline, also known as an F1 cross. Breeding an F1 Wagyu heifer to a Fullblood bull will give you an F2 calf, i.e. 75%. Repeating this process again by breeding the F2 offspring to another Fullblood bull gets you to an F3 calf, i.e. 87.5%. One more time will produce a Purebred calf.

Surely the vast majority of Percentage offspring come from the selection of a Wagyu bull to use in breeding a non-Wagyu herd of cows. (Give the rarity and value of Wagyu breeding stock, no one would turn out a non-Wagyu bull into a herd of Wagyu cows.) If you are planning to go this route, the coming section on Siring Wagyu Offspring is for you.

Producing a little bit of everything

So this is what we do. It is a result of our business model, our appetite for risk, and experience in serving the market.

As mentioned elsewhere on this website, we have two distinct, synchronize breeding windows during the year with planned conception dates on the 15th day of February and August. These dates were selected based on our climate and its impact on dam fertility and calving survival.

For each of the target dates, we put together a comprehensive plan of action that starts with identifying the dams that will be part of the group. Given the diversity of our herd, it will include commercial non-Wagyu cows, Percentage Wagyu cows, Purebred/Fullblood cows, and retained heifers. We always try to include at least one Fullblood cow that we expect to be able to flush with good results so that we have a supply of fresh, never-frozen embryos to transfer.

Commercial non-Wagyu cows will always be used for embryo recips. It used to be that we AI bred our favorite combinations with a track record for high quality F1 calves, but now that we have the means to produce our own supply of embryos, we maximize that potential. Percentage Wagyu cows with excellent genetic potential are matched up with an AI bull that provides continued genetic improvement and diversity while lesser ones will go the embryo route. Purebred/Fullblood cows that will either be AI bred to leading bulls or flushed depending on their prior embryo production records. Cows that are flushed for this breeding group stay in a flush program and add to our stock of frozen embryos for a couple more months until they are AI bred with the subsequent breeding group (to give them a rest from flushing).

After a week or two for the AI or ET breeding to "settle in" we turn in our Fullblood Wagyu bulls for cleanup. Calving dates give us a good indication of the sire, but we do parentage testing on every calf regardless so that our records are correct.

The result of this pattern is a pretty tight breeding window that starts with the highest value (due to careful planning) AI and Embryo calves. Anything that follows outside of that window is from our backup Fullblood herd bulls. While it is hard to be precise in these matings, we do work to make sure the inbreeding coefficients remain in the single digits.

Siring Wagyu Offspring

Sire Thoughts

No matter what type of calf you are trying to produce, it will be important to think about the bulls you are going to utilize. Because your choice of a sire impacts a whole breeding cycle of calves, with regard to genetics, it is really the most important decision you will make in a given season.

You will need to either acquire some Wagyu semen for Artificial Insemination (AI) or embryo production, or buy a Wagyu bull for breeding. A good bull will cost between $4,000 and $12,000 (though once again, you can spend a lot more or less…). Good semen can be purchased in the $25 - $75/straw range. It is pretty easy to do the math and calculate your projected costs based on the size of your herd. There are pros and cons to each method. Some that I can think of are below.

AI Pros:

upgrading genetic performance - buying semen from superior bulls is much more affordable than buying the whole bull. You can also match each cow with a bull that is exactly right for her.
genetic diversity - it is easy to change up your bull and keep inbreeding coefficients down over time.
Low cost of ownership - you don't have to feed or care for a frozen straw of semen.

AI Cons:

Logistics - cows have to be bred when in heat, and it takes a technician to do it right. There are strategies to synchronize a whole herd, but these all take effort and money.
Facilities - AI work has to be done in a quality setup that allows you to catch, sort, and work the cattle safely.
Success rates - 70% is a good rate of conception with AI, and anything that misses has to be re-worked.

Bull Pros:

Ease of use - turn out the bull and let nature take its course. Conception rates are high, and re-breeding is automatic.
Long-term cost savings - if all goes well, a bull will breed your cows for 3 or more seasons and if the herd is big enough, your 'per calf' cost should be lower.

Bull Cons:

Genetic Lock-in - no flexibility in matching up your cows, can't breed his daughters, can be expensive to acquire the "best" genetics.
Risk of Loss - bulls die, go sterile, and get lame. These occurrences will be costly to your bottom line.
Cost of ownership - even if all the cows are bred, your bull expects to be fed and taken care of.

The one "in between" option that you might be able to make work is to lease (or borrow) a Fullblood bull for your breeding period. That can help address the "Cons" of bull ownership. Finding a high quality bull could be a problem, and there are some logistical issues with getting the timing you need, moving a bull in and out of your pasture, and insuring against loss.