Saturday, April 29, 2017

The latest big idea from the technology breeding sector

From the Dairy Route Letter Nov 2014

The latest big idea from the technology breeding sector

Sexing Technologies of Nagadoches TX controls the patent for producing sexed semen.

They purchased Trans World Genetics (stud 151, Wisconsin) five years ago, in order to access export AI markets for sexed semen, and purchased Taurus Service (stud 76, Pennsylvania) this summer, the result of a desire to raise the profile of their Genomic acquisitions by having both USA and international sales.
Thus the new “Taurus ST” logo and semen product offering combines three separate programs into one.

Sexing Technologies announced a new “Sexed Ultra” product at World Dairy Expo.
Over the past five years, once acquiring TWG gave them access to markets to test semen straws in real world conditions, the goal of ST has been to improve the conception rates on sexed semen.    They have shortened the time it takes to separate the sperm cells by 75%, made some energy modifications to the semen extenders used, increased the sperm concentration per straw by a million.     The resulting “Ultra” product in a 12,000 cow trial in Germany this summer produced conception rates for the “Sexed Ultra” product equal to the conception rates of conventional European AI semen (at the same sperm count).

The new sales manager for Sexing Technologies (which offers semen—both “sexed” and conventional, high Genomic embryos, and live cattle for export) described their new view of a progressive dairy herd breeding program as follows:
Genomic test all your cows, to help determine who are your “best” breeding cows currently.
Breed the “top half” of those cows to female “Sexed Ultra” dairy semen for your future replacements.
Breed the “bottom half” of cows to male “Sexed Ultra” beef semen for premium market steer calves.  

ST is not the only company to advocate this—a large scale Limousin cattle company in Nebraska has been promoting breeding Limousin bulls to the bottom half of Jersey herds, contracting to buy all the beef breed calves for their feedlot system.    Jersey dairymen in western states who are a distance from population centers (getting next to nothing for deacon bull calves) have found this attractive as the beef prices have escalated and crossbred beef calves have earned market premiums.     They just switched to female sexed semen to insure enough dairy replacements from “better” cows.

Does this pencil out the way it is promoted?

Most of you are probably already enjoying higher cull cow and deacon calf salvage value which is a result of the run-up in corn prices for 2010, 2011 and 2012 combined with a couple tougher winters resulting in a big reduction in the beef cow-calf herd numbers.     Dairy cull beef and dairy steer calves have been required to take up the slack in the market beef supply, which in the last year finally caught on to the shortage of supply in the feedlots.    For a couple years now, the value of an open dairy heifer “by the pound” equaled or exceeded their value for future dairy replacements.   The western USA facing losing battles over access to water sent most of its heifers to Midwest feedlots.

Thus in fact, many of you are already using strategies that are keeping lower profit cows moving out of dairy herds into the beef supply chain.    For the first time in decades, you can buy a good replacement for the sale value of two culls.    On the calf side, relatively low prices for corn have encouraged feedlot operators (who ran below capacity for two years of unprofitable corn costs) to fill their yards again, and are again buying animals at younger ages to insure supply for the entire corn (price) season.

Thus, the prognosis is—as long as corn feels “cheap” to feedlot operators, they will be buying cattle.

Compare the costs of using conventional vs sexed semen

(1)   For [average size] herds not using sexed semen the numbers could look like this:

100 milking cows, 25% cull rate, 45% heifer calves expected from all AI matings.
Total semen budget for the year might add up to  $3937.50:
75 cows rebred each year, x 2.5 services per cow average, @ $15 per straw average = $2812.50.
50 heifers bred each year, x 1.5 services per heifer, @ $15 semen cost = $1125.00
Average stillbirth rates are 8% on cows, 13% on heifers, according to DHIA data across the USA.
You harvest 31 heifers from 75 milking cows, you harvest another 19 heifers from heifers.
You would likely have  (37 + 23)  60  live deacon bull calves to sell each year.

A 25% annual culling rate implies an average four lactation life for each milking cow.    While USA average is only three lactations per cow, I like to suggest that dairymen who follow our program will see this change (mating by aAa + screening bulls for maternal longevity + selection on PL) and the effect is a lowering of cow replacement costs by 33% alongside a noticeable improvement in fertility.

Overhead per cow to produce milk = $2400 average cow market price of a first lactation replacement
(two lactations = $1200 per year)  (three lactations = $ 800 per year)  (four lactations = $500 per year)

Cashflow from milk:   add up your most recent year’s milk checks.    Maybe $350,000 ($3500/ cow)
 Subtract feed costs of 55% ($1925/ cow) and you have a gross income before operating costs that is $1575 per cow.     Two lactations nets $375: Three lactations nets $775:  Four lactations nets $1425.
This is the real reason why longevity in cows can produce more profit gains than increased milk.
Cashflow from cull beef:   currently we see prices to which most of us are unaccustomed:
25 cows @ $1250 = $ 31,250 from cull cows:  60 bull calves @ $200 = $ 12,000 from deacons. 
Cashflow from surplus cows (50 heifers raised, 25 needed):  25 replacements @ $2400 =  $60,000.

(2)  Conventional semen is one half to one quarter the cost of the same bull in “sexed” form.  Thus in herds using sexed semen, its use has been limited to heifers (43% of herd matings, 30% of AI services).
At this level of usage, a 100 cow herd (with “normal” 33% cull rate) might be spending $5400:
67 cows rebred x 3.0 services @ $12 per straw = $2400.  +  50 heifers x 2.0 services @ $30 = $3000.
These matings we would expect to produce  68  live heifers:       
67 cows @ 45% females @ 8% stillbirths = 28.    50 heifers @ 90% females @ 10% stillbirths = 40.
Thus there would likely be (33 live from cows) + (4 live from heifers)  37  salable deacon calves. 

Note the use of sexed semen on heifers within two years could increase the supply of heifers from 50% of the milking herd numbers to 68% (68 to breed compared to 50) as it also decreases the numbers of deacon bull calves to sell.    At that point, with more heifers to breed, you not only buy more semen, you buy a higher percentage of sexed semen:  $6480:
67 cows rebred x 3.0 services @ $12 per straw = $2400. +  68 heifers x 2.0 services @ $30 = $4080.

Breeding “the bottom half” to beef bulls and selling the calves obviously solves a problem that added heifer numbers will quickly create.     Of course, a Genomic test costs an added $50 per cow if you buy the idea that the technology is always right.    Add (33 new cows x $50 G test =  $1650 to the annual costs of breeding.    Sexed beef costs the same as sexed dairy.     BUT all you need is four lactation “longevity”to generate an added $60,000 to cash flow without any sexed semen.    So think about it

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