Making the Grade ~ Published by Wagyu World

The USDA beef grades have been the same for many years. Some people feel that it’s time for changes and updating, to reflect the changes that have been occurring in the beef industry in the past decade. The best carcasses in terms of quality and marbling are not being identified as such, since they are above and beyond Prime.

Mike Kerby produces Wagyu cattle on his Buck Mountain Ranch in the Missouri Ozarks and has worked hard promoting the Wagyu breed through his Passion for Prime Event. This year’s event will be held in June at Missouri State University and will be a consignment auction and workshop on the Wagyu breed.

Kerby points out that our labeling/branding of beef today in the U.S. does not adequately identify marbling. “We don’t have a marbling system, and we don’t have a labeling system. There has been a lot of talk about a new grading system overall, and at least a grading system that can identify Wagyu beef,” he says.

Kerby has been talking to many of the major Wagyu producers in this country. “It will be hard to come up with a system that labels the percentage such as half Wagyu, half Angus, as opposed to a Fullblood. A lot of the meat being produced is F1 so people don’t want to do that,” he points out.

“Regarding our current meat grading system, it would probably take an act of Congress to change it.”

He has talked to numerous ranchers recently to get some input on these two topics (the beef grades, and the need for branding/labeling Wagyu products) and is hoping to get additional feedback. “Perhaps eventually some of these thoughts could be presented to the American Wagyu Association board and help push something toward branding or labeling,” he says.

Labels and advertising can influence public perception and create a positive perception for Wagyu beef. “When I was a kid and went to the butcher shop with my parents, the photos behind the meat counter were Hereford cattle. Then over the years those photos became black cattle. The Angus breeders simply out-marketed everyone with all their advertising. You go to McDonalds today and get an Angus burger. You go to a restaurant or a grocery store and buy Certified Angus,” says Kerby.

“We are at the point now in the Wagyu breed that we have become the best beef producers in America. We are not the biggest, but as far as quality of the meat, day in and day out, Wagyu is it. We are still small enough but getting large enough that we now have to come up with a brand,” he explains.

“It should not be American Kobe or American Style Kobe or Kobe Beef. We

have to promote our own product and not take the name of another product, or we are not being truthful in our labeling.” An article on the Australian Wagyu Association website mentions that the Australian Competition and Consumer Commission (ACCC) recently held an investigation on the labeling of Wagyu beef produced in Australia.

The ACCC considered this matter in relation to their sections that deal with (1) misleading or deceptive conduct, (2) false or misleading representation that goods are of a particular standard, quality, value, grade, etc. and (3) conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics or suitability for their purposes or quantity of goods. After looking into this matter, the ACCC decided not to pursue it any further at this time. The Australian Wagyu Association assisted with the investigation and welcomed this announcement. The AWA president Peter Gilmour said, “We continue to support truth in labeling principles fundamental to Australian consumer law.”

The Australian government dropped the investigation in late December 2015, but Kerby says American Wagyu producers should take note. “How would you like to be a rancher just trying to make a living and then have someone from the USDA show up and tell you that you’ve violated truth in labeling. One of the things the USDA does is enforce truth in labeling and advertising. If it’s Prime, it had better be Prime,” he says.

“Not only are we facing the chances of litigation in the future, on the extreme side, but we are not helping ourselves for the future. People are starting to learn about Wagyu beef and what it is. I travel all over the world and see it on menus in many of the nicer hotels, and we’re starting to see it in more and more restaurants. Regarding labeling, we should not be hiding behind another product or saying it’s like Kobe beef. It’s Wagyu beef. Many producers are saying we should just call it American Wagyu, or even just Wagyu,” Kerby says.

“Maybe we could incorporate the American Wagyu Association logo, which everyone is trying to use, with the branding of this beef. Is it enforceable for the Association to say: ‘Don’t make us come out there and change your advertising?” No. You or I or a board member have no power to regulate and enforce anything we come up with regarding labeling. But we can highly encourage it, and get everybody’s advertising dollar, whether it’s a person who is selling 10 head of cattle per year or 300 head per year,” he says.

“When producers put their advertising in the local restaurants or high end beef shops, we should have a set logo that everyone will stand behind and that the public will recognize. If we are ever going to become a major player in the industry, we need to have this. If you look at the grade Prime in the U.S., it’s up 2 to 4% from what it was, and this is due to the contribution of Wagyu bulls being used on commercial cattle,” says Kerby.

“There is no reason for us to be saying that we are trying to be like the Japanese people, because we are not. We produce great beef here, but I don’t know of anyone in this country who has produced $400 per pound beef, like I’ve seen come out of Kobe, Japan. Yet we have carcasses that could be rated as 4 or 5 grades above Prime. This is where a carcass camera can be useful,” he says.

“There are very few carcass cameras in the U.S. however. Even if we don’t have a carcass camera, we can come up with an IMF (intramuscular fat, or marbling) score, though it won’t appear on our USDA grade. I personally think it would be a good idea to come up with a logo and labeling that we can all get behind, and push it as much as possible—and discourage the use of the word Kobe. Let’s be proud of what we have. We have the top-of-the-line here and shouldn’t be trying to mimic anybody,” he says.

Wagyu has the quality, and will always compete—on any market in the beef industry. “We can call it American Wagyu or just Wagyu and let the public decide, and hopefully our board will get behind this and do it. I’ve talked to a lot of restaurants in the U.S. and they are all serving Australian Wagyu beef. One of the speakers at my Passion for Prime event 2 years ago said that only 20% of the Wagyu beef eaten in the U.S. is produced in the U.S. Everything else is imported. What a massive market climb we could have, if we could just expand to take over our own market. I don’t want purveyors of nice restaurants and butcher shops to think they have to go to Australia or Japan to get good Wagyu. We need to have a logo and get behind it,” he says.

He uses state inspectors to ship meat out of the state. “But I didn’t know until recently that there are state graders who will come out and grade our meat. I had one come to my place and he’d never graded a Wagyu before. He wasn’t sure how to grade it because he had no experience with this kind of meat. I had photos of the Japanese marbling scale, and he looked at that, and then guessed that my meat was 4 grades above Prime,” says Kerby.

“We need to come up with a grading system. A well-known producer in Australia has his own labeling—C1, C2, C3, C4 and C5. He tells his customers that C5 is his prime, and tells them what they’ll pay for it. C1 is good, but not as good as C2, C3 or C4. We can’t tell USDA that we’re going to redo the whole grading system. I’m not saying it can’t happen, but it would take a lot of push from our Association and a lot of marketing, at the national level. That would be a huge uphill battle,” he says.

“One alternative would be for us, in the Wagyu industry, to have 5 grades, and they could be mixed with the USDA grades. Any carcass that was Prime or above could be a W5 (Wagyu 5), for instance, or whatever we decided to call it—to create some kind of labeling system,” he says.

People who have experience in grading could help guide this and give ideas on how to set it up. “We could come up with a laddered or grading system that everyone could use, that goes along with the USDA scale. I also think that with the proper information to producers, we could probably get some good feedback that we might be able to compile and maybe make a recommendation to the board,” he says.

This is something the Wagyu industry has needed for a long time. “It’s been talked about a lot, yet nothing has happened; nobody does anything about it. This year we have 6 auctions scheduled for the Wagyu breed, and that’s the most we’ve ever had. The growth is here. I feel that if we don’t get hold of it now, and get in front of it, it will be harder to catch up later.” The breeders need to get on board and move forward in a unified way.

“We need a logo, and we need our name. Our logo should be professionally done, and available to all producers through the AWA or the Texas association. We all need to get behind creating a logo and a common marketing tool,” says Kerby.

With input from producers who have done this all their lives, it might be possible to come up with a grading system that could be used within the industry so everyone is on the same playing field. “The worst thing we can do is finally get national recognition because the USDA is investigating claims of misleading advertising!” This is not how Wagyu breeders want to be remembered!

All the breeders he has talked with on these two topics (consistent, accurate labeling, and a grading system) have said we need to have this, and that it should have been done a long time ago. “We don’t want to force anybody into anything, but we need to come up with recommendations that might make it a lot easier to implement. We are reaching out to the ranchers and asking for their opinions and ideas on how to do this and improve our system,” he says.

“My goal is to talk to people smarter than me and put together an idea and present it to the board. Hopefully we can have something implemented. This isn’t something I’m wanting to do just for my farm. I want to do this for my industry that I have invested my life and my dollars into, for the next generation. If we start building a brand that we can stand behind and grow behind, this will be better for our future,” says Kerby.

The present grading system started with ideas at an earlier time. People have to start somewhere and create something that works and stands the test of time. “Our current grading system for beef is antiquated and probably needs to be updated. As a good place to start, why can’t we lobby—from our association—and say that the present grading system just doesn’t go high enough for this breed of cattle. We need a new system because often these cattle will go far above Prime. That would be great marketing, to reach the people who have never heard of Wagyu. We have advantages that we talk about inside the industry, but those advantages have to be screamed from the hilltop so the consumer can hear it. If that happens, we all win.”

The meat-eating public needs to realize there is beef available that goes beyond what consumers have traditionally considered top-of-the-line. “I was at a grocery store recently and saw a display of certified USDA Choice Angus beef! They are promoting Choice! That’s like saying ‘we have the best average beef on the market’ but it’s advertising, and people don’t understand the grades enough to know what to buy. We’ll never have a Prime cut or a Wagyu 5 cut and have everybody understand it, but we could get behind the breed, the labeling, the marketing, so we are unified, and everybody’s advertising dollar is pushing the same agenda and make a difference.”

Kerby feels strongly that we need to do it soon, because the bigger the Wagyu industry becomes, the harder it will be to turn this big ship around. Even if the average consumer doesn’t understand a grading system, the people who are buying meat for high end catering, restaurants, etc. will understand it.

“If we have a uniform logo, it could be on the menus at the restaurants. This could help educate the consumer, advertising this breed of cattle. It could be used ultimately for retail purposes,” says Kerby.

Angus breeders started their marketing a few years back and it has paid off for them today. “We are not going to be the everyday beef, like Angus. That’s not going to happen. But we are the premium beef and we need to be marketing as the premium beef and the healthiest beef,” he says. It’s an educational process.

“The one thing I know about marketing is that you have to tell people something multiple times because at first they are not going to remember it. If they see or hear it enough, it starts to sink in, and maybe feel that it’s something they want to remember. If we are all using the same labeling for this beef, every time there’s advertising in a magazine or a restaurant or a butcher shop, it’s repetitive and something people will come to recognize. We need to have a brand, and the ultimate goal of any association is not to promote itself but to promote the cattle.” Without the cattle, you won’t have an association.

“It’s time to take that step. If a group of people agree upon it and the associations get behind it and help create the final plan, we can move forward. We are still in our growing, infancy stage with this breed, but we are no longer taking baby steps. We need to become organized in our advertising. Right now, there are many different logos and everyone keeps changing them. We need to get a logo and focus our marketing and stand behind it.” The element of recognition is lost if things keep changing.

“With 10 different ranchers advertising their beef 8 different ways, it’s confusing. I really think the grading part will be the hardest. At our Passion for Prime auction in June I am going to try to get a meat grader from the state of Missouri to come and speak. This could give us some insight, realizing that we do have cattle that quite often will go Prime or above, and an opportunity to ask the questions about what it would take to get a new grading system. Even if that’s not possible, maybe we as an industry can come up with something that will work—regardless of whether we are producing F1s or fullbloods or purebreds, to be graded on this scale,” says Kerby. This is something everyone could stand behind, recognizing the exceptional carcasses—whatever they are.

“If we can come up with something simple that everybody was using, we may not have to reinvent the whole wheel. We’d have something that everybody could relate to, and the meat buyers and chefs could relate to, over time, and we don’t want it to get a black eye from a consumer protection agency or the USDA. If we are not truthful in our labeling, at some point it will come back to bite us.”

He feels that the Wagyu associations should eventually come up with guidelines for the industry, and a logo that could be downloaded off the website to use on menus, websites and advertising. “We just need to all get behind it, for the future of our breed. I think we will have a long run and a great future. I want this to be a family legacy for our children. The better we can make this breed, the better it will be for our children and grandchildren and beyond.”