September 11, 2011

Koch building herd of Japanese cattle

GREENWOOD COUNTY — In the quiet heart of the Flint Hills, Koch Agriculture's Matador Cattle Co. is trying to turn American beef Japanese.

GREENWOOD COUNTY — In the quiet heart of the Flint Hills, Koch Agriculture's Matador Cattle Co. is trying to turn American beef Japanese.

In one of the pastures of Spring Creek Ranch, nearly three dozen unusual reddish-brown cows and calves trot after the feed truck along with the regular herd of Angus-Hereford crossbreeds.

Akaushi cattle, source of the legendarily tender Kobe beef, has the potential to remake the domestic cattle industry, the company thinks.

For now the breed remains nearly unknown to most Americans, including to those in the industry, but Koch is busy building its herd at ranches in Kansas, Texas and Montana.

Koch has close to 40 full-blood Akaushi adult bulls and has begun an aggressive program to breed both full-blood cattle and half-blood offspring, mixing Akaushi bulls with its own high-quality herd.

One result is expected to be more Kobe beef finding its way to American dinner plates, either as $160-a-pound filets or $4-a-pound hamburger.

But a bigger impact, Koch said, will be introducing Akaushi genes to the regular cattle herd, producing superior offspring with higher percentages of top-grade beef.

And, crucially, it doesn't cost any more to raise Akaushi cattle, said James Palmer, vice president of Koch Agriculture and manager of the Spring Creek Ranch.

In other words, he said, these cattle have the ability to produce significantly more valuable beef at no extra cost.

That's pretty dramatic — and that provokes caution in an old cowboy like Palmer who is used to being able to push only small improvements year after year.

"I think there is an opportunity here, but I have to be careful," Palmer said. "I get excited, and I've been doing this long enough I thought I'd never get excited again."

Selling Akaushi

In a taste testing at the cafeteria of Koch's headquarters in Wichita a few weeks ago, the staff cooked shoulder steak, hamburgers and beef hot dogs using Akaushi or half-Akaushi beef. The results were impressive, with a rich beef taste and little aftertaste.

That's because Akaushi cattle have more marbling, which means more fat within the protein, which gives it a rich taste and tender feel.

That difference in quality means more money for producers.

A commercial cattle herd is typically 2 to 3 percent prime, the highest grade; 65 to 70 percent is choice, the next highest grade; and the rest is select, the lowest grade, Palmer said.

A full-blood Akaushi cattle herd is 80 to 98 percent prime and the rest is choice, he said. The half-blood cattle will be at least 30 percent prime with the remainder choice.

Raising the ratio could mean $30 more per hundred pounds of cattle, Palmer said.

The meat also has a healthier profile than regular beef or many other meats, said Bill Fielding, CEO of HeartBrand Beef, a Texas company that is both aggressive in marketing the breed and strict in guarding the purity of the cattle's DNA.

Akaushi beef has more oleic acid, meaning it has less saturated fat, the so-called bad fat, and more monounsaturated fat.

"With this fat structure, beef no longer has to take a backseat to chicken, it no longer has to take a backseat to buffalo," he said.

The cattle are given no hormones at any time and no antibiotics after they leave the ranch.

Premium cattle

The Akaushi bred in America are the property of HeartBrand Beef. Koch is one of the few producers that contracts with HeartBrand.

HeartBrand buys the calves from its partners, sends them to a particular feedlot and slaughter plant, and then markets them to fancy restaurants.

Fielding said HeartBrand pays its partners $100 a head above market rate for the Akaushi calves, although it expects to reap more than that from the meat. As the operation ramps up, he said, HeartBrand expects to share more of the benefit with its partners.

Fielding said the Akaushi are fiercely protected by the Japanese cattle industry and government, which worry about others diluting the breed.

A loophole in a 1994 export treaty allowed a Korean company to send a 747 to Japan to fly three bulls and eight cows out of the country. The cattle were quarantined in the U.S. until the legal issues were settled.

"There were some pretty bitter feelings about it in the beginning," Fielding said. "But now we have a great relationship with the Akaushi people (in Japan) because the geneticist who has worked on it for the last 15 years has done a super job of protecting the genetics."

HeartBrand is the successor of the original family that brought the cattle to Texas. Three years ago, HeartBrand brought in Fielding, who has served as president of Excel and Creekstone Farms, among others.

Koch hasn't yet sold any of its pure-bred Akaushi cattle for meat and won't for several years. But it did wean 300 cross-bred calves this year companywide and expects to triple that next year. Palmer hopes to have the herd at its optimum size within five years.

He foresees a herd of 300 to 500 full-blood Akaushi cows producing half-blood calves for Koch and for its customers. Ultimately, this could lead to a big improvement in the American cattle herd, with little extra cost.

"We're past the point of it being an experiment," Palmer said.

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