Across American Prairie, It's Yippeeyiyo for Tokyo
Oklahoma rancher aims for Japan's market; the steaks are high
Winter is coming to the red-clay hills of central Oklahoma. You can see it on the stubby trees, whose leaves are turning crimson now, and smell it in the night wind, which hints of woodsmoke. Everybody's breaking out their heavy coats these days, even the cattle.
For ranchers, though, it's an ominous time. Ted Davis, a rail-thin man with a shock of white hair who runs 500 head of cattle here, has been watching small ranches around him vanish for years, as domestic beef consumption dips and large corporate ranches move in. The recent year of drought and skyrocketing feed prices have only compounded this crisis.
But unlike most of his neighbors, Mr. Davis is blazing a trail he hopes will bring prosperity to his ranch and to the American cattle industry in general: a trail to Asia.
As Pacific Rim nations develop, demand for beef there is booming. With sparse land and spotty infrastructure, many of these nations are turning to foreign suppliers. US beef exports to Japan amounted to $1.7 billion last year. Japanese beefeaters consume more than three-quarters of all US beef exports to Asia and more than half of US beef exports worldwide.
Although the main beneficiaries so far are large corporate ranches and packing plants, Mr. Davis has carved out a slice of this emerging market for himself. He is one of a small group of American ranchers who raise Wagyu cattle.
Wagyu is a Japanese breed known for its stubby horns, jet-black coat, and succulent meat. It's the cow of choice in Asia, where customers tend to have higher standards for tenderness and flavor and less concern for fat and cholesterol. Davis sells 100 percent of his product to wholesalers abroad.
"The average domestic cut is kinda stiff - you have to saw it to get through," Davis says, sitting on a metal workshop stool at his 1,800-acre ranch here. "Wagyu meat is real juicy. It's beef the way John Wayne would've liked it."
Yet for all its foresight, Davis's transition to Wagyu is fraught with risk. Buying the first batch of bulls required a huge initial investment and it's taken him eight years of careful breeding to begin producing Japanese-quality meat. Since Wagyus are so new here, he has been forced to pay for his own marketing and distribution. Although some gourmet restaurants and markets have expressed interest in his beef, he adds, he can't produce enough to satisfy them. There are only so many head of cattle that his ranch can sustain.
Meanwhile, he says, the beef industry has taken a beating at the hands of poultry producers who have stressed the dietary benefits of their meat. And the US Department of Agriculture has so far refused to update its system of grading to reflect the higher quality of beef he's producing.
Unless the American cattle industry starts encouraging more Wagyu production, he says, Asian countries will continue to buy land here, set up their own high-quality beef operations, and effectively freeze American producers out of a lucrative market.
"It's a changing world," Davis says. "I don't want to see the beef business go the way of the auto industry. We're about to let somebody beat us at our own game once again."
Indeed, the export market holds huge potential for American ranchers. New trade agreements should reduce barriers throughout the world, and Japan, which accounts for more than half of all American beef exports, has no more room for new pastureland. According to the US Meat Export Federation, the US should remain a net exporter of beef through the turn of the century.
But Jerry Reeves, a professor of animal sciences at Washington State University, warns that American producers face the risk of losing much of the high-end Wagyu market to Australian ranchers, who have been spending enormous sums importing Wagyu genetics and setting up consortiums to establish connections with buyers in emerging Asian markets.
Without this level of cooperation, he argues, American producers will not succeed. "There's an opportunity here, but it's a difficult one," Professor Reeves says. "It costs more money to raise a cow to Japanese standards, so you must have a Japanese partner or a customer you trust." The only way for American Wagyu ranchers to guarantee success, he says, is if they can develop a domestic market.
Yet not all experts believe that raising higher-quality beef is the key to bolstering the American cattle industry. Brad Morgan, an animal sciences professor at Oklahoma State University, notes that the cattle business is cyclical, and today's bust conditions will soon rebound as more producers go out of business.
Besides, he says, American packing plants are already "creaming the coolers," or selecting the highest quality cuts of beef and earmarking them for Asian markets. Moreover, he says, more younger Japanese are beginning to eschew traditional cuts like Wagyu because they are more expensive than American products, and because Japanese, too, are beginning to watch their diets.
Although he agrees that American ranchers should focus on producing higher-quality beef, Professor Morgan is not concerned that other nations will steal emerging markets. Asian countries lack the land and infrastructure to meet their own rising demand, he says, and most Australian beef is grass-fed, rather than grain-fed, which tends to lower its quality. In addition, he notes, American companies are beginning to produce pre-packaged specialty beef products targeted for Asian retail markets.
Yet Davis maintains that the only way for American producers to thrive is to raise their operating culture to Japanese standards. It's a philosophy he's willing to go broke defending. "I can't believe that you can fail if you focus on quality," he says, glancing across one of his pastures in the day's waning orange light. "I just refuse to believe that."