Hawke's Bay agri-businesses Brownrigg Agriculture and Firstlight Foods are turning a wasted resource into export gold.
Hybrid dairy bobby calves are usually sent straight to the works but thanks to Brownrigg's success in breeding top wagyu, a cross between the animals is producing a premium product.
David Brownrigg said at first they were simply looking for more cattle to complement their sheep operation.
"Trade and Enterprise helped us find a Japanese customer and so we started investing in wagyu cattle genetics," he said.
They imported embryos and air-freighted wagyu calves to their Japanese customer who helped improve their Te Aute Valley herd's genetics. They now produce top-flight bulls.
Use is also made of pharmaceutical company Pfizer's genetic profiling service.
"We sit at the top internationally for that marbling characteristic."
With Dr Paul Muir of Onfarm Research, trials were run on feeding regimes.
Mr Brownrigg said research so far indicated first cross of Angus or dairy cows maintain the wagyu characteristic, particularly with the first generation of a Freisan/Jersey cross, known as a Kiwi Cow. He said crossing wagyu with dairy breeds was a common practice in the Japanese home market.
"The find is exciting because those calves are not utilised - they are largely bobbied."
Having a great product and selling it does not always go hand in hand, so he contacted Gerard Hickey, the managing director of premium meat marketer Firstlight Foods, who is enjoying export success with venison.
"We are the value-chain managers - we run farmer producer groups and market the product," Mr Hickey said.
"The product belongs to the farmer all the way through. Brownrigg is the important stuff in the middle - the genetics and the research behind it.
"The reason for the producer groups is the industry is all about technology transfer - aligning farmers with a market. Our belief is you have to get groups of about 30 farmers together and get them focussed on that particular supermarket chain or city of the world.
"If you have hundreds of farmers you don't get the same attachment. We had some farmers in Los Angeles last week doing demos in store - cooking their product in the Bristol Farms chain of stores."
Dairy farmers will supply Kiwi Cows and Brownrigg will exclusively provide semen or a bull.
"Dairy farmers can either take that resulting calf and finish it themselves or most likely we would link you with Producer Group backgrounders and finishers."
He said the calf would most likely be sold at each stage.
"We have found the farmers, by having skin in the game, are going to do a better job." The return to farmers they are targeting is $6 per kg - last year they achieved $5.
On Monday the Ministry for Primary Industries announced $11 million funding to perfect the company's programme before it is scaled up.
"We know the marbling genetics can produce themselves in pasture but we now need to do more work to get the very best combined marbling and growth rates off pasture," Mr Brownrigg said.
"We will be doing progeny testing and working on various feeding regimes for the best growth rates with marbling.
Firstlight will be busy positioning the product in premium markets.
"The fact that it is a supply chain means there is lots of work to be done to perfect each link."
There have been New Zealand wagyu-cross schemes in the past but they ended in disappointment for all.
"There were a lot of opportunistic people just selling semen and not having things lined up."
But with dairy calves plentiful, Brownrigg's supreme genes and the recent funding, success looks assured.
"We believe we are the only people in the world that can produce a marbled beef off grass the same as top US grade, called USDA Prime," Mr Hickey said. "Only 2 or 3 per cent of the entire United States' beef production is this prime grade and it is all off feed lots. We have shown we can do it off grass using a wagyu across a Kiwi or an Angus."
Mr Hickey said Firstlight was a good fit with Brownrigg, who coincidentally have its offices in the same Hastings street.
"We are a premium red meat marketer. We need to be selling products that others don't have with a premium at the top end - there is nothing better than wagyu."
Mr Brownrigg agrees.
"The combination of marbling and grass is a very good combination - particularly appealing to discerning consumers."