- [Narrator] This is a premium Wagyu steak from Japan,

and costs around $100 at supermarkets in the US.

And this is also Wagyu, but it costs $40.

(upbeat music)

That's because it comes from here,

the vast country of Australia,

where ranchers are racing ahead to win the global market

for Wagyu by experimenting with different methods

to raise the cattle.

- We're running about 2000 Wagyu cattle,

the Wagyus have been the linchpin

for our growth as a business.

- [Narrator] All this doesn't sit well

with Japanese farmers.

(speaks in foreign language)

Japan and Australia are the biggest Wagyu producers

in the world.

And they're vying for the largest export market

that is in US.

By 2023, the global Wagyu industry will generate sales

of around $9.5 billion,

according to the marker research from Technavio.

So Australian and Japanese farmers

are in an intense competition

with one country betting on tradition.

(speaks in foreign language)

While the other is betting on new technology

to increase productivity.

- We are mapping the entire genome,

I'll know whether to breed on from it,

or it's gonna end up on a dinner plate.

So this is really powerful technology

and we're using it to full effect.

- [Narrator] Wagyu is a breed of cattle native to Japan,

and literally translates into Japanese beef.

What makes it so special is the high concentration of fat

that's inside the muscles.

The industry calls it marbling.

And that's what farmer Kazuki Morimoto does best.

(speaks in foreign language)

He says the trick to his success

has been following strict traditions.

(speaks in foreign language)

Wagyu farms are usually small, but Morimoto's 300 cows

have brought in $1.4 million annually in the past few years.

A small herd allows them to pay very close attention

to the feed, which accounts for almost 70% of his costs.

(speaks in foreign language)

Morimoto usually fattens cows for a minimum

of two-and-a-half years,

compared to the average one-and-a-half years it takes

for other types of cattle like Angus.

He says his Wagyu is meant to be consumed

in small quantities, similar to other high-end delicacies

like caviar and Foie gras.

(speaks in foreign language)

(birds chirping)

Many Australian ranchers see the Japanese way

of raising Wagyu as out-of-date.

- As the Japanese, they're feeding the animals

basically from birth.

They just feed feed feed.

And we're not doing that.

- [Narrator] Steve Binnie is part

of a new generation of Wagyu ranchers,

who want to produce beef in what he says is the modern way.

He had his first Wagyu steak five years ago.

- Some people say, "Where were you when,

"you know September 11 happened?

"Where were you when Kennedy got shot?"

And so I look at this moment in my life

was when I had that first Wagyu, and it was so incredible.

- [Narrator] The next day, Binnie pivoted

his nearly 100-year-old family business

from Hereford cattle to Wagyu.

- So this is an eight to nine strip line.

Beautiful, this is what we'll be having for lunch.

The Australian product does cost less

because we're more efficient.

We're doing it on large-scale with low cost of production.

- [Narrator] Australian ranchers have perfected a technology

that Japanese farmers like Morimoto

won't ever consider using.

Agricultural genomics, it's the analysis and selection

of the best DNA in Wagyu cattle.

Then he has been artificially inseminating his cows

since he started raising Wagyu.

For this cow, he's carefully selected sperm

so that the resulting calf

will thrive in the hot Australian climate,

need less water and food compared to a cow in Japan,

but still grow up to become Wagyu that's rich in fat.

- It's a very data-driven process.

All of the carcasses that are coming through the abattoir,

they are evaluated for a matter of marbling,

weight, age, days on feed, all of this data

is going into this monstrous database

and all of these carcasses are being linked back

to the genetics.

- [Narrator] Using this, Australian ranchers

also create cross-breeds with other cows like Angus,

these steaks usually have less marbling

because they're genetically 50% Wagyu.

So about half the price of full-blood Wagyu steaks.

(steak sizzling)

Many of these cross-bred Wagyu steaks,

end up on plates in the US,

where local Wagyu production makes up a tiny portion

of the larger cattle industry.

By 2021, Binnie expects to increase the sales to the US

by up to 50%.

- So good.

- [Narrator] Wagyu embryos first arrived in Australia

in the early 1990s.

But the combination of genomics

and Australia's ability to scale cheaper Wagyu production

has led to a boom in demand,

helping the Australian industry grow

by 20% every year since 2015.

Last year, the country sold 40,000 tons

of Wagyu beef abroad,

making it the largest exporter of the steaks

on the planet by volume,

well ahead of Japan's export of just 4300 times.

(speaks in foreign language) (sound indicator beeping)

Farmers like Morimoto have been feeling

the market gets sucked away from them

by Australian ranchers.

So the Japanese government has stepped in

to protect and promote its Wagyu industry.

(speaks in foreign language) (sound indicator beeping)

Auction houses like this one are the only places

where Japanese farmers can sell their Wagyu beef.

For years, these places were not allowed to sell to the US,

a coveted market for Wagyu farmers.

The last year Japan signed a key trade deal with the US

to export unlimited Wagyu,

a key part of the Japanese government's grand strategy

to double beef exports.

(upbeat music)

The government also recently passed a bill

that criminalizes the export of Wagyu's semen and embryos.

(cameras clicking)

But experts say these reforms don't really get up the heart

of the issue with Japan's industry.

- It's a core deal, what Wagyu original beef

is a very excellent but price is too expensive.

- [Narrator] Takafumi Gotoh is an agronomist

who studies the Wagyu beef industry.

He says that in order for Japanese farmers to catch up,

they need to start copying

what Australian ranchers are doing;

produce Wagyu beef that's less rich in fat

and therefore cheaper.

- Australian farmers consider as a business.

But the Japanese farmers, the most important thing

is to produce a good marbling beef.

Japanese farmer should do a business,

consider the cost of performance, how much feed?

How much profit?

- [Narrator] But that won't be something Japanese ranchers

will accept easily.

(speaks in foreign language)

- This is an A4 Miyazaki ribeye from Japan.

And here we have a beautiful Australian ribeye.