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Commodities

High-end Japanese wagyu hits record price

Beef consumers shift toward cheaper options as supply shrinks

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  © Reuters

TOKYO -- The wholesale price of premium wagyu beef has climbed to an all-time high amid a steady decline in supply and growing foreign demand.

The average price of top-grade A5 wagyu steer carcass in the Tokyo Central Wholesale Meat Market, a national benchmark, rose 1% on the year to a record 2,948 yen ($26.50 currently) per kilogram at the end of March and has hovered around that level since. This represents a 50% increase over the past five years.

The number of cattle processed in Japan has fallen annually since fiscal 2013, with the total dropping 10% in five years, data from independent administrative agency Agriculture & Livestock Industries shows. Producers continue to leave the business as Japan's population ages. Demand is outstripping supply, a development reflected in elevated auction prices.

An increase in exports also contributes to the price surge, said Koichiro Uemura, managing director at wholesaler Meat-Companion. Beef exports from Japan have grown by double digits annually for the past several years to approach 2,000 tons, equivalent to nearly 10% of domestic beef shipments.

Higher prices are weighing on supermarket sales of highly marbled A5 wagyu beef, with consumers favoring lower, less expensive grades. As a result, the price of grade A3 steer carcass has ballooned 70% in five years to around 2,300 yen to 2,400 yen per kilogram. Stores often stock cheaper cuts of beef such as round and shoulder rather than choicer cuts such as tenderloin.

Some supermarkets produce their own beef, such as Daiei, which operates a ranch in Kagoshima Prefecture. The Aeon subsidiary says the ranch lets it offer high-quality beef at prices relatively insulated from the market's vagaries.

Despite rising prices, beef producers generally are having trouble turning a profit amid soaring calf prices. The national average price for wagyu calves has soared 10% on the year to around 840,000 yen a head, near an all-time high. Breeding and fattening of adult cattle often are being handled by separate companies.

(Nikkei)

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