Words and images by Annie Studholme
Having teamed up with Southern Stations Wagyu, Michael Schat has moved away from the dairy industry to pursue new opportunities as part-owner and operator of the company’s first Canterbury-based state-of-the-art wagyu composting finishing barn at Aylesbury.
Last month marked a massive milestone for Southern Stations Wagyu (SSW) as the first prime, grain-fed wagyus left the company’s Aylesbury finishing barn after spending a minimum of 100 days indoors, their sought-after meat bound for lucrative markets around the globe. It’s the culmination of many years of work and millions of dollars invested across the whole supply chain, from the dairy farmers who use SSW wagyu genetics across their non-replacement cows to the calf rearers, graziers, and now finishing.
“It was very nerve-racking till that point,” says Michael Schat. “Getting some of the animals doing over 3kg/lw/day was a real relief as it’s a very long time from calf to processing, and a lot of money has been spent on the animal to that point. The grading was where we expected it to be, and weights were heavier than expected.” It was particularly significant for him, as many were animals he had raised as calves. “It was quite rewarding to see them go full circle.”
Having grown up on a dairy farm, Michael fell into the dairy industry. “I left school and went dairying because it put a roof over my head and provided a stable income, but I never really enjoyed it.”
Craving different experiences, Michael took time out, spending three years on and off working on sheep and cropping farms in Western Australia. At 19, his eyes were opened when he had the opportunity to work on a feedlot for a family regarded as one of the leaders in the grain-feeding game near Rockhampton, Queensland, an area essentially considered Australia’s answer to Texas. “They taught me a lot about feed-lotting,” says Michael. “I was fortunate to be taught from the ground up, and it was a lifetime’s worth of knowledge. Being brought up on a dairy farm, I knew how the animals worked. It was like giving them dessert every day. They like it, and they’re happy. You’re not asking them to do anything. I found it quite rewarding.”
On returning to New Zealand in 2008, Michael managed and share-milked his father’s dairy farm at Te Pirita for 10 years. After selling the farm in 2017, Michael stayed on as a contract milker. While there, he had his first dealings with SSW, rearing just 180 calves.
An Australasian subsidiary of farm finance company, StockCo, SSW was set up in 2017 to bring together the best farms and farming practices in New Zealand to produce some of the world’s finest Wagyu beef while at the same time transforming what would have been a waste product into a high quality beef product.
Worldwide, there are four recognised breeds of Wagyu. All Wagyu cattle derive from cross-breeding in the early 20th century of native Japanese cattle with imported stock, mainly from Europe. Red Wagyu (made up of Japanese black and brown) are the predominant breed, strongly influenced by Swiss Simmental and Korean Hanwoo breeds.
Though not genetically related to Black Wagyu, they’ve been bred for the same marbling criteria in Japan. Red Wagyu’s fat was described as more like olive oil, while Black Wagyu’s fat had a buttery nature. Both are high in good oleic acid and low in cholesterol.
SSW provided genetic solutions to offer profitable dairy beef contracts to NZ dairy producers and farmers from its already established Australian-based wagyu bulls to artificially inseminate suitable dairy or beef cows or heifers, producing offspring that would go as premium-grade wagyu beef. The DNA-verified weaned calves were then sold through SSW to approved finishers participating in the programme before being repurchased at a premium price. SSW closely monitored every part of the process to ensure that best practices were followed.
Michael started small. Initially doing them on the farm before he and his wife, Leigh, purchased an 8ha lifestyle block nearby, building a custom-designed 340-head eco-tunnel house calf rearing shed, complete with an ingenious feeding system that allows him to rear large numbers almost single-handedly.
Back then, Michael was paid $700/110kg calf for autumn and $630 for spring-born calves. The dairy farmers supplying the calves, which were at least four days old, were paid around $300 and $200, respectively. Knowing these calves were sold at a fixed price, gave them the confidence to buy the meal and milk powder.
Ready for a change, Michael and Leigh took the plunge and gave up contract milking to focus entirely on rearing SSW wagyu-cross calves. He soon stopped doing the bull beef, Belgian Blues and Friesian calves. Though the margins were similar, Michael says there was no ability to cashflow them. With the SSW, he could use their finance company to pay the $180/calf to the dairy farmers at pick up for a small finance fee when sold, effectively eliminating that considerable outlay of capital. Milk powder costs alone were upwards of $300,000, but with deferred payment it allowed him to do it effectively without the burden of any upfront costs.
Further investment followed. He built a second shed which allowed them to have 1,000 head undercover at any one time and ploughed money into machinery, including a fertiliser hopper converted into a grain silo and dispenser, a JCB loader spreader for straw bales, a gas califont for heating the milk, and a large-scale milk mixing unit.
“We pretty quickly realised we could make more out of the calves. Now, the race was on to grow capacity. Because we had forward contracts with SSW, the banks were happy for us to do that. In three years, we’d gone from rearing 180 calves to 2,000. Suddenly, I was rearing almost a quarter of all of SSW’s calves in the country.”
Michael collected SSW wagyu-cross calves from dairy farmers across Canterbury. Once home, they were put in pens of 50, remaining in that mob until they were sent off to graziers at an average of 110kg. Most spent at least four weeks in the shed before being run out in small, sheltered paddocks. They were weaned at about seven weeks or 70kg but continued to have access to hay, balage and meal.
Though wagyu calves received a bad rap for being hard to work, Michael says not all wagyu’s were created equal, just as not all dairy cows are the same. SSW wagyu were a completely different genetic package. “SSW’s scrutiny of DNA proven calves allows the tracing of their weight gains and traits which gives them a real advantage over the other breeds. I find the SSW wagyus, bigger framed animals. I’d compare them more to Friesian bulls. They’re decent-sized animals that grow fast.”
He says the key was getting a high starch diet balanced with protein and fibre into young calves to help lay down the fat that is the essence of wagyu beef. “We try to get starch into them young and as much as they can eat. It’s reasonably expensive at the moment, but we can see those returns late when those animals grow out that they have laid that fat down from a young age. That unlocks their ability to really marble. They put on excellent weight gains by having them ad-lib at high grain concentrations.”
Michael’s success and diverse skillset did not go unnoticed. In 2022, SSW approached him about partnering with them to set up a finishing barn. While the calf rearing had the potential to be lucrative, it was hard physical work, and he was ready to pass the torch over to someone else. SSW’s offer presented tremendous opportunities. He was up for a new challenge and drawing on his previous experience, Michael knew he could do it. It was something that he’d thought about often since his time in Queensland.
“It wasn’t easy to make it happen. I’m glad I did it with SSW and not by myself like I had originally planned. I’m 38, I’m not 28 anymore. I have put in the hard yards and worked my guts out. I have a young family (sons Charlie, 10, and Liam, 8), and I’m trying to do a bit less now. Not having to get up in the early hours of the morning is a real life-changer. While it’s not for everyone, I enjoy that the animals are always happy and out of the weather. I’m also finding it a more attractive career for staff.”
Michael only raised 1,650 calves this season; his priorities were getting the farm and finishing-barn fully operational. Ultimately, he and the family would move to the Aylesbury farm to focus on the grazing and finishing operation.
Getting the whole operation off the ground hadn’t been without its challenges though. SSW and Michael jointly purchased the 206ha sheep and cropping farm last May. After a few hold-ups, building finally started on the 106m x 99m self-composting, eco-tunnel barn in September, with construction finished just before Christmas.
“It’s been very stressful. We didn’t have anyone to copy, so we had to do a lot of research, come up with our ideas and bring it all together. There was no plan to build to. We’ve been up against it a little bit, but I think once people see what we’ve created here people will be happy,” says Michael.
Environment Canterbury had very robust criteria that must be met. SSW had worked closely with ECan to ensure the barn meets all environmental standards. “The system is driven by very high environmental standards and outcomes, and we’ve spent a lot of money on environmental mitigations. That should give people confidence in what we are doing.”
The barn had been designed with temperature-controlled venting, a centre feeding lane and external feeding lanes to ensure the cattle are content in all conditions. The sides were open to the elements to create airflow. Though they were consented to 8m2 per animal (1,250 total), they were currently only running at 10m2 per animal (1,060 total).
“There is loads of room in there to move about if they want it, so they seem to love it. I believe the animals do much better in the more natural conditions. We use the sun to the best of our ability. They are warmer on a cold day, but not too
The barn was designed with a low environmental footprint, explains Michael. The hard floor prevented possible nitrate leaching, while it was 100 per cent self-composting. A 5,000m3 layer of wood chips would be transformed into compost through animals’ nitrogen-rich urine and dung. There would be no leaching as the high temperatures in the compost would burn off any liquid. Weekly rotary hoeing ensured the surface was mineralised and clean, improved aeration, reduced temperature, and limited odour, with new wood chips added as required. Ultimately, the compost material would be spread over the farm in place of synthetic fertilisers.
Everything was carefully monitored, says Michael. “Winter will be the real test when it’s not as sunny. We will need to balance rotary hoeing to control temperature. There are a lot of fickle things that have to be scrutinised.”
Animals arrive at the barn at 20–24 months of age, at 550kg (approx.) live weight, and leave at 750kg live weight (720kg empty) on average four months later (a minimum of 100 days), depending on each animal. Animals were only weighed in and weighed out at the start and the finish otherwise they were left alone. They aimed to produce a 400kg carcass with a marble score of at least six or above. As well as getting the animals fat, the high starch diet helped replace the yellow fat (taint from pasture) with the bright-white fat favoured by the Wagyu and grain-fed market. Animals were then toll-processed by a premium export processing facility for Australian-based Endeavour Meats, which marketed it worldwide.
Michael says getting the feeding right was crucial to the operation’s overall success. Everything was done with military precision to minimise wastage and improve overall efficiencies. Their diet consisted of a mixture of crushed barley, maize silage, molasses and other specialised nutrients and minerals. Using scales on the mixing wagon, everything was weighed down to the last kilo. Loading, mixing, and feeding could be done in under half an hour with the animals fed once a day.
“We are constantly watching and seeing what they are eating and are making fine-tuned adjustments. Each mob gets its specific brew depending on its intake and the ingredients in their rotation. We try to keep things consistent, feeding at the same time each day. Maize silage is a vital part of the system. It makes up two-thirds of the diet at initially, dropping to 20 per cent by the end. There are five different rations in total. We try to do it perfectly to minimise any wastage.”
While buying in barley, they had grown 45ha of maize this season, using water from wells and CPW. Growing their own maize allowed them to grow precisely what was required. It was cheaper that way and gave them more control over the product’s quality, cut cartage costs, and helped avoid market fluctuations. In the future, they would also be able to use the compost from the compositing barn to cut down on fertiliser costs, explains Michael.
As was to be expected, they’ve struck a few early teething problems, but overall, he says it was going better than ever anticipated at this point. He was excited about what the future holds. At this stage, they aimed to finish 3,000 SSW cross cattle annually, but in a world that’s crying out for rich, marbled meat that sits at the premium end of the market, Michael saw enormous opportunities for growth. It also could potentially solve some of the country’s bobby calf issues, remove issues surrounding winter grazing and reduce N numbers considerably. He believed New Zealand was well-placed to take advantage.
“It’s really exciting, but it’s about getting everything right. Everyone along the whole supply chain needs to be doing a good job for it to work. Any poor-performing farmer equals lost potential. If possible, we will likely build another one (feed barn). Feed lotting is only in its infancy in New Zealand. Overseas, feed lotting is huge; New Zealand is just a drop in the ocean. The sky is the limit to a certain point, providing we can tick all the boxes.”
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