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♦ The Value of Sexed Semen for the Dairy Industry
♦ The Value of Sexed Semen for the Dairy Industry

The Value of Sexed Semen for the Dairy Industry

Victor E. Cabrera, Assistant Professor and Extension Dairy Specialist, University of Wisconsin-Madison

Sexed semen is proven to increase the number of heifer calves and consequently lower incidence of dystocia. Sexed semen can be used with any dairy cattle in open reproductive status, but because of its higher cost and reduced Conception Rate (CR), it is primarily recommended for heifers which have naturally higher CR than adult cows.

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Under the circumstances shown in Table 1, dairy producers may have a hard time deciding to use (or continue using) sexed semen and for how many services. All the main factors displayed are inter-related, which make the question of using sexed semen complex. For instance, the difference in CR will determine the number of pregnant and open heifers after each service, the number of heifer calves, and the potential heifer culls due to reproductive failure. All these factors impact the economics of the decision to use sexed semen.

Figure 1 depicts the percentage of heifers becoming pregnant after successive services. Notice with conventional semen the number of pregnancies will be higher than with sexed semen; however, the number of heifer calves will be substantially higher from sexed semen. Interestingly, both reproductive programs have a very similar economic outcome. The conventional semen program will have lower culling because of reproductive failure and lower costs of operation. The sexed semen program will have higher returns because of the higher value of heifer calves.

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Calculate the Value of Using Sexed Semen
The value of using sexed semen can be defined as the sum of the additional revenues and reduced costs minus the additional costs as well as revenues foregone.

Value = + additional revenues + reduced costs - additional costs - revenues foregone

Sexed semen brings additional value to the herd because of differential value of additional heifer calves and associated cost reduction of dystocia cases that are more prevalent with male calves. Additional costs include a premium price for sexed semen and expenses due to more services per conception.

Reproductive programs that include a series of services must include the aggregation of the above factors for each of the reproductive services and because these services occur at different points in time, a correct analysis has to be performed using a discount rate that will bring all balances to present values.

Variables Involved in the Calculation
Variables in the evaluation of sexed semen can be classified as reproductive or economic. Reproductive factors are biological parameters related to reproductive efficiency including CR and the expected calf sex ratio. Economic variables include the value of the sexed semen dose, value of heifer and bull calves, expected costs for a dystocia case, cost of a day open, salvage value of a non-pregnant heifer, value of a heifer replacement and the market interest rate.

The following sexed semen evaluations use documented and current values. These should be used with caution and only as a reference to perform individual evaluations. Reproductive and economic variables should be farm specific. Each farm manager needs to reflect on costs and revenues expected for a farm's particular conditions.

Reproductive Variables
According to extensive analysis of Holstein heifer reproductive records in the U.S., it is safe to assume the CR for first service of a 14-month-old virgin heifer would be 56 percent from conventional semen and 44.8 percent from sexed semen (20 percent reduction). It is also documented that the CR decreases about 2.5 percentage points with each additional service. The expected percentage of heifer calves from conventional semen is about 46.7 percent and about 89 percent when using sexed semen (Table 2).

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Economic Variables

Baseline costs and revenues for each of the economic variables listed previously are shown in Table 3 below.

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Reproductive Programs
Virgin heifers are enrolled in a reproductive program at about 14 months of age (first service). They will have up to five opportunities (services) to become pregnant. Normally, more than 95 percent will become pregnant after the fifth service. If not pregnant after the fifth service, they are culled for reproductive failure. Five sexed semen treatments can be evaluated. Each has a different number of services to sexed semen. The control uses conventional semen for all services (Table 4).

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The Value of Sexed Semen
In this example, heifers could bring up to $28.23 per heifer of extra net revenue when sexed semen is used in the first and second service (Treatment 2 = optimal treatment). This reproductive program would have 65.91 percent of heifer calves per heifer. Nonetheless, the use of sexed semen in Treatments 1, 3 and 4 still have a higher net revenue than using conventional semen (Table 5). However, using sexed semen for five services (Treatment 5) will not have a higher net revenue than conventional semen even though this program will bring as much as 82.02 percent of heifer calves per heifer (compared with only 45.40 percent heifer calves per heifer when using only conventional semen).

It is evident a substantially higher proportion of heifer calves are obtained using sexed semen, but the economic value of reproductive programs for heifers using sexed semen depends on a farm- and market-specific reproductive and economic variables.

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An important variable is CR. An expected increase in CR from 56 to 70 percent in first service will increase the additional net revenue of sexed semen to $49.55 when used in two services (optimal reproductive program). Conversely, the decrease of CR to 40 percent in first service will decrease the optimal additional net revenue of sexed semen to $5.05 when used only in one service (that will become the optimal reproductive program). When the CR is assumed to be 40 percent, all other treatments (Treatments 2-5) have negative net returns. This indicates under low CR conventional semen would have higher net revenue than sexed semen when used in more than one service.

Another important variable is semen cost. As sexed semen is more widely adopted, the cost of sexed semen may decrease. As depicted in Table 6, the optimal reproductive program changes depending on the price of sexed semen. In general, as the premium for sexed semen decreases, more services to sexed semen become the optimal alternative with the highest net revenue.

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Another important variable is the value of the heifer calf. This may not only depend on market value. Often times, dairy farmers like to grow their herds from within or improve genetic quality faster through their own heifers. In those situations the value of the heifer calf would probably be higher than market value. The net return of sexed semen responds positively to the value of the heifer calf - the higher the calf value, the higher the net return of sexed semen. Also, a higher number of services with sexed semen would be recommended as the value of the heifer calf increases (Table 7). If the value of the heifer calf becomes too low (e.g., $100), the net return of using sexed semen could become lower than that of conventional semen.

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A Decision Support Tool

The University of Wisconsin-Madison Dairy Management Team has created a free user-friendly, web-based tool to evaluate the adoption of sexed semen reproductive programs with heifers. This calculator should be used for farm-specific conditions to replicate analyses presented here. The Tool called "Economic valued of sexed-semen programs for dairy heifers" (Figure 2) is available at the UW-Dairy Management website www.DairyMGT.info under the Tools section. Along with the tool are detailed instructions, supporting documents and a video demonstrating its use. Support is also available upon request.

Figure 2. Screenshot of decision support tool to evaluate sexed semen reproductive programs for heifers. Available at www.DairyMGT.info : Tools.


August 2010


 
 
 
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