Sexed semen economics

Sexed semen has become widely available and is commercially used to produce more (and better) heifer calves. Because of higher cost and risk for reduced conception, sexed semen is primarily recommended for virgin heifers. Sexed semen usage varies widely among dairy producers; some farms do not use it while others use it on both heifers and cows (Anonymous, 2008). With heifers (and cows), sexed semen is usually used for first and perhaps second breedings, but typically not for later breedings. Economic benefits of sexed semen differ by farm.

Technology

Semen sorting is based on flow cytometrical cell sorting for DNA content of sperm (Weigel, 2004; Seidel, 2007). The method works by staining sperm with a DNA-binding fluorescent dye. (For more details see "Sexed Semen Economics" by David Thorbahn). The method is fairly accurate (~90%, Garner and Seidel, 2003; DeJarnette et al., 2008) but results in a lower concentration of sperm per straw (approximately 2 million) than non-sexed semen (approximately 20 million) because the sorting process is relatively slow. Because of lower doses of sperm per straw, and possibly a negative effect of the sorting process, fertility of sexed sperm is typically lower compared with conventional sperm (Garner and Seidel, 2003; DeJarnette et al., 2008). Semen cell sorting technology is continuously being improved and improvements in sorting capacity, fertility and reduction of semen cost are expected (Seidel, 2007).

Random chance and sexed semen results

Random chance affects the results of breeding cows with sexed semen in at least two ways. First, when the true probability of conception (conception risk) is say 50%, either more or less than half the animals may become pregnant. This is the same as flipping a coin 10 times and getting more or fewer than 5 heads.

The binomial distribution is the statistical law that calculates the chances of binary results (pregnant/not pregnant) when the outcomes (pregnancies) are independent and each trial (insemination) has the same probability of success. For example, if every animal has a probability of conception of 50%, the chances that you will get 5 animals pregnant out of 10 bred animals is only 25%. There is a 42% chance you get 4 or 6 animals pregnant, a 24% chance you get 3 or 7 animals pregnant, etc. There is even a 2% chance you get 0 or 10 animals pregnant.

If 100 animals are bred with a 50% probability of conception for each animal, the chance that exactly 50 animals become pregnant is only 8%. However, the chance that between 45 and 55 animals become pregnant is 73%. If conception rate (probability) drops to 40%, the chances of getting between 45 and 55 animals pregnant decreases to 18% and the chance of getting 40 - 50 animals pregnant is 52%. This concept is not intuitive to most people.

In practice, we generally estimate probability of conception as number animals pregnant divided by the number bred. When breeding only a few animals, there is great uncertainty about the probability of conception if more animals were bred. So, don’t jump to conclusions if only a few animals have been bred and conception rate is lower than expected.

Similar probability statistics apply when judging whether sexed semen produced the expected 90% heifer calves. If you had 10 calves born from sexed semen, there is only a 39% chance that 9 of them are heifers and 1 is a bull calf. There is a 35% chance all 10 calves are heifer calves and a 19% chance of producing only 8 heifer calves. There is even a 16% chance of producing 4 or less heifers and 6 or more bulls! Probabilities tell us there is a 94% chance of getting between 85 and 95 heifer calves out of 100 calves born. Sexed semen technology gives on average close to 90% female calves (DeJarnette et al., 2008). But don’t be surprised if you see more or fewer than 90% heifer calves, especially if a limited number of animals are bred.

Economic considerations

Calf prices

The value of sexed semen comes primarily from increased production of heifer calves. If all calves are sold, the value is easy to calculate. When heifer calves are not sold, the value of the calf is the difference between the cost to raise a heifer calf to freshening, and the purchase price for a similar freshening heifer. Say you can purchase a heifer for $2000 but raise your own heifer calf for $1600 then the value of the heifer calf is $400. This assumes there is no difference in the quality of the freshening heifer (genetics, biosecurity, age at first calving, value of the calf in the freshening heifer, etc.) AND ignores the time value of money, as shown below. Estimates for heifer calf prices vary widely, but recent US averages range from $400 to $540 (DairyProfitWeekly, 2008). Bred heifers (7 to 9 months pregnant) ranged from $1600 to $2275.

The time value of money should be considered if heifers are raised. For example, if the market value of a newborn heifer calf is $450, the purchase price of a 23-month old heifer is $2300 (and raised one month until calving) and the cost of raising a heifer until 24 months of age is $80.43 per month ($1930 total, or $2.64 per day), then both strategies result in a total cost of $1930, not considering the time value of money. However, if we consider 8% annual interest discounted monthly, then the present value of the newborn heifer calf that you keep to be raised decreases to $264. The advantage for the purchase option results from delayed cash outflow until 23 months from the birth of the calf while there is a cash inflow today from the sale of the heifer calf. The present value of the $2300 for the purchased heifer 23 months from today is only $1974. At 8% interest, the present value of the raising strategy is a cost of $1778 and the present value of the purchasing strategy is $1593; a clear economic advantage to purchasing. Not considered in these calculations is the risk that a heifer to be raised is culled for failure to conceive or health problems; the value of a heifer calf will decrease even more.

Semen prices

Sexed semen is more expensive than conventional semen. Average premiums are reportedly $30 over conventional semen (Fetrow et al. 2007; Anonymous, 2008), although it varies with sire.

Sexed semen fertility in heifers

When the decrease in fertility with sexed semen is discussed, pay attention to the difference between a percent and a percentage point. These are easily confused.

An example may clarify the difference. For example, a 25% decrease in fertility from a conventional conception rate of 55% results in a 41.3% conception rate (55% - (0.25 x 55%)). A decrease of 25 percentage points from 55% is simply 30% (55% - 25%). This is quite a difference! Writers are sometimes sloppy when reporting changes in fertility. Recent reports suggests that, on average, fertility of sexed semen is about 75% (70 to 80%) of the fertility of conventional semen in virgin heifers (a decrease of 20 to 30%) (DeJarnette et al., 2007).

Successful use of sexed sperm requires excellent management of cattle, careful handling of sperm and use of a skilled inseminator (Seidel, 2007). Reproductive efficiency plays an important role in the expected conception rate with sexed semen, with larger differences when reproductive management is poor. When reproductive management is excellent, heifer conception rates are only slightly lower than normal when using low doses of sexed semen (Seidel, 2007). Seidel (2003) earlier reported that with excellent management of cattle, fertility with low doses of sexed sperm were 70 to 80% of normal doses of conventional sperm. Some studies reported 90% fertility. With marginal management, fertility of sexed semen could decrease to 50 to 60% of conventional sperm.

It is very difficult to get unbiased field comparisons of sexed sperm with conventional sperm due to likely bias in semen use (Garner and Seidel, 2008; DeJarnette et al., 2008). Without well-controlled studies, dairy producers are more likely to cherry-pick the most fertile animals as candidates for sexed semen. Recent communications with dairy producers revealed that they typically observe a 10% to 15% percentage point drop in conception rate (say from 55% to 45%, a reduction of 18%, or from 55% to 40%, a reduction of 28%). Current field results suggest an expectation of ~ 45% first service conception rate for virgin heifers with well managed heifer reproduction programs.

Sexed semen fertility in cows

Based on the reduced fertility of sexed semen in heifers, sexed semen is not recommended in for use in cows (Linderoth, 2008). Little data on conception rate with sexed semen in cows exist.

In a Finish study with 306 AI bred lactating dairy, 157 were inseminated with 2 × 106 frozen/thawed sexed sperm and 149 with 15 × 106 frozen/thawed unsexed (conventional) sperm. Average conception rate was 21% for the sexed-sperm and 46% for the conventional sperm, a drop of 54% or 25 percentage points (Andersson et al., 2006). This decrease was significantly different, suggesting such a decrease is likely in practice.

A small, recent study in the US, inseminated 172 cycling, lactating Holstein cows with units of either 10 x 106 conventional sperm or 2 x 106 sexed sperm (Crichton et al., 2006). Conception rate at first insemination was 55.6% for the conventional sperm and 40.4% for the sexed sperm. However, the low number of cows meant the difference was not statistically different. The authors concluded that “successful use of sexed sperm in dairy cows, which approached a voluntary waiting period of 80 days in milk, was achieved with cows that were selected for reproductive status prior to insemination.” But they did not report economics results.

A larger study with 2197 Holstein cows used either 20 x 106 sperm/dose of conventional semen or 2 x 106 sperm/dose of sexed semen (Schenk et al., 2007). First or second service conception rates were about 25% for sexed sperm and 37.7% for conventional semen, a significant difference of about 12 percentage points. Conception rates for sexed sperm after 84 to 94 days in milk were 7.9 percentage points greater than before 84 DIM. Conception rate was depressed by 6 percentage points in 3rd and 4th lactation cows compared to 2nd lactation cows. A statistical sire effect of up to 6.7 percentage points difference in conception rate was found. The authors concluded that sexed semen reduces conception rates by about 12 percentage units; the best conception rates are attained when sexed semen is limited to 1st or 2nd lactation cows after a voluntary waiting period of more than 100 days.

A field study (DeJarnette et al. (2008) evaluated conception rate with sexed semen in cows. Conception rates were not statistically different among dosages, sires, and parity; however, the data set may have been too small to find such differences. Among the 13 herds that inseminated ≥ 50 lactating cows with sexed semen, conception rates averaged 30 ± 2.4% (range 15 to 41%). For 26 herds that used ≥ 50 doses of conventional semen in lactating cows, conception rates were similar, averaging 30 ± 1.0% (range 21 to 39%).

Conception rates with sexed semen in lactating dairy cows can be similar to that of conventional semen if cows have completely normal reproductive characteristics using ultrasound examination, good records, etc. (Seidel, 2007). Such a prescreening of cows is usually impractical.

Effect of service number on heifer conception rates

A large USDA survey following 537,938 AI services found an average conception rate for Holstein heifers of 56.3% with 88% of the herds experiencing conception rates between 40 and 70% (Kuhn et al., 2006). Conception rate decreased from 53% for first service to 33% for seventh service. Such decreases have been documented by others (Chebel et al., 2006; Michael, 2008).The 6 major US AI organizations reported relatively small differences in heifer conception rates at 2.8%, with ranges between 50.3 and 53.1% (Kuhn et al., 2006).

The effect of service number on the conception rate with sexed semen is unclear. A 25% reduction in conception rate would mean that the absolute difference (in terms of percentage points) gets smaller with every service number. A difference of 10 percentage points would mean that the relative difference increases by service number.

Age of first calving

Reduced conception rates with sexed semen result in longer breeding periods and greater age at first calving. Thus, using sexed semen generally increases heifer rearing costs and delays entry into the lactating herd. Another consideration is the effect of age at first calving on lactational performance. Heifers that calve too young may produce less milk and have reduced fertility in the first lactation while older heifers can experience more dystocia (Ettema and Santos, 2004). However, these effects depend greatly on growth rates, so greater age at first calving may not necessarily reduce profitability of lactating cows.

Genetic progress

Without sexed semen, little selection is possible on the cow side because all heifer calves to be raised as replacements. Sexed semen has been estimated to increase rate of genetic progress by 15% (Van Vleck, 1981); however, a later study suggested use of sexed semen in elite cows and sires would have a minor impact on rate of genetic progress (Baker et al., 1990).

Most dairy producers do not or cannot rank heifers for genetic merit and use sexed semen on all or random groups of heifers. Generation interval decreases if heifers produce the majority of the next generation of animals. The value of increased genetic gain from the female side can often be ignored in practice.

Dystocia

Female calves result in lower risk of dystocia and dystocia related costs. Reduced dystocia related losses with use of sexed semen in heifers averaged $5.38 per calving (Fetrow et al., 2007). In cows, reduced dystocia with sexed semen was estimated at $1.48. Heifers giving birth to bull calves had an increased dystocia risk of 10 percentage points. At $147 per case, a bull calf increases potential dystocia related costs by $14.70 (Fetrow et al., 2007). Therefore, reduction in dystocia should not drive the decision to use sexed semen.

Calculations for heifers

Commercial use of sexed semen is primarily limited to heifers, due to cost and fertility concerns (Garner and Seidel, 2008). A spreadsheet was developed to evaluate the value of sexed semen under various assumptions. This spreadsheet is similar to Fetrow et al. (2007), except the value of female genetic progress, which can often be ignored, is excluded.

Key assumptions, based as much as possible on the literature, are listed in Table 3. Heifers that are not pregnant after the maximum number of breedings are culled and sold for beef. Beef value was estimated from growth and body weight data of Ettema and Santos (2004) with a maximum of 1400 lbs. Culled heifers are replaced by purchased heifers so the number of heifers bred equals the number of heifers calving.

Table 1. Key default assumptions for heifer calculations

Age at first breeding: 400 days
21-day service rate: 65%
Conventional semen conception rate: 60% first service, a reduction of 5.75 percentage points per later service
Sexed semen conception rate: 75% of conventional semen rate
Cost to raise heifers: $2 per day
Maximum number of breedings: 8
Number of sexed semen breedings: first 0 to 8 breedings, remainder with conventional semen
Annual discount rate: 8%
Market value culled open heifers: $980 or less
Market value calving heifer (without value of her calf): $1800
Semen cost: $40 sexed, $10 conventional
Value heifer calf: $450
Value bull calf: $50
Death loss per calving: 10%
Heifer calves from sexed semen: 90%
 Heifer calves from conventional semen: 48%
 Extra dystocia cost: $14.70 per bull calf

Genetic progress not considered

Given the default assumptions, profit per heifer presented for breeding was determined for 0 to 6 services with sexed semen. Additional services were with conventional semen. Sexed semen increased profit by, at most, $10.35 after 2 sexed semen services. The first 4 services with sexed semen were profitable. Profit was the sum of cull revenue, calf value, value of the heifer to the dairy and costs for raising, breeding, and dystocia. With more services by sexed semen, age of first calving increased, as did cost to raise a heifer. With too many sexed semen services, average raising cost per heifer decreased because of higher cull rates for open heifers.

The value of sexed semen breedings was relatively small at $10.35 per heifer. The value of sexed semen depends greatly on heifer prices, and to a lesser extent on sexed semen price and relative decrease in conception rate. When heifer calves are worth $300, few scenarios make sexed semen a profitable choice. When heifer calves are worth $500, almost all scenarios make sexed semen a profitable choice. When sexed semen is profitable in the first service, it typically remains profitable in later services as well, even though conception rate decreases.

Using a similar spreadsheet and slightly different inputs, sexed semen in heifers was only profitable with very small differentials in the price of sexed semen (< $25), small impacts on conception rate (< 10%), and no consideration for genetic progress Fetrow et al. (2007).

Olynk and Wolf (2007) studied break-even heifer calf prices and insemination costs for sexed semen strategies in dairy heifers compared to using only conventional semen. When conception rate for first service conventional semen was 58% and decreasing after first service, the profit per heifer enrolled was $208. When conception rates for sexed semen were 75% of those of conventional semen and the first service was with sexed semen, the additional profit was $5. Second and later services with sexed semen were not profitable. Under these conditions, breakeven heifer calf values were nearly $500. Break-even sexed semen insemination costs were close to $50. Their calculations were quite similar to the ones presented here and by Fetrow et al. (2006) but default assumptions differed.

An earlier analysis suggested that sexed semen could become economically and environmentally beneficial in most cases with near normal fertility of sexed semen and a $10 per dose premium for sexed semen (Seidel, 2003). If sexed semen had 90% of fertility of conventional semen and heifer calves were worth $380, break-even premiums for sexed semen to be $44 (conception rate of 60% with conventional semen) and $26 (40% conventional semen conception rate). To achieve wide adoption by dairy producers, these premiums may need to be considerably less than break-even.

Calculations for cows

Sexed semen is usually not recommended in cows because of low conception rates. Intuitively, the cost of sexed semen and additional days open (because of reduced fertility) are greater than the value of the calf. A simple analysis confirms this conclusion for reasonable inputs (Table 6). Conception rate, expected sex and value of the calf, and the percentage of abortions and dead calves determine the expected calf revenue per breeding. Nonpregnant cow costs were calculated as the percentage that failed to get pregnant times the value of a new pregnancy based on conventional semen. New pregnancy value is the sum of the effects of greater days open, increased culling etc. because a cow failed to get pregnant. Early in lactation, values for a new pregnancy are typically lower for first lactation cows than for later lactation cows. It turns out that the value of a new pregnancy is not a major factor in the value of sexed semen in cows. The value of genetic improvement is again ignored in these analyses.

Table 2. Simple analysis of the value of sexed semen in dairy cows.

Assumptions

  Conventional semen Sexed semen
 Conception rate 35% 25%
 Semen cost $10 $40
% Heifer calves @ $450 per calf 49% 90%
% Bull calves @ $50 per calf 51% 10%
% Abortions and dead calves 10% 10%
Value of new pregnancy $200 $200

Results

Expected calf value per pregnancy $218 $369
Cows not pregnant after service  65% 75%
Calf revenue $76 $92
Semen cost $10 $40
Non-pregnant cow cost $130 $150
Net return ($64) ($98)
Gain (loss) of sexed semen breeding  - ($34)

The sexed semen conception rate must be 31% to make the sexed semen breeding break-even in cost with the conventional semen breeding example in Table 6. Conception rates required for sexed semen to be cost-neutral in cows were determined for a variety of assumptions. The break-even conception rate for sexed semen is insensitive to reasonable variations in sexed semen price, heifer calf values, and the value of a new pregnancy. In the best case for sexed semen, conception rate could decrease 17% (6 percentage points) when conventional conception rate is 35%, sexed semen costs $40, heifer calf value is $500, and the value of a new pregnancy with conventional semen is $100. Therefore, conception rate decreases with sexed semen must be quite small under most circumstances to make sexed semen a profitable choice.

If the value of sexed semen was solely based on greater heifer production and genetic progress is ignored, then loss after one service with sexed semen was $21 (Fetrow et al., 2007). This is close to the loss of $34 as presented here, given some differences in assumptions. Fetrow et al.’s sensitivity analysis did not show a positive value of sexed semen without genetic progress.

Other considerations

Value of the increased genetic gain from the female side can be included in economic calculations (Fetrow et al., 2007). With heifers ranked for genetic merit, the value of genetic gain was approximately $32 per heifer entering the breeding pool if the top 30% of heifers were bred initially with sexed semen and the bottom 70% were bred with conventional semen. Without valuing genetic gain, using sexed semen in 30% of the heifers resulted in a loss of $11 per heifer entering the breeding pool. Therefore, considering genetic gain resulted in a $22 (-$11 + $32) value for sexed semen per heifer. Value of genetic gain per average heifer entering the breeding pool optimum mix was optimized at $33 when sexed semen was used in 40% of heifers. Therefore, accurately ranking heifers for genetic merit, for example with parent averages, is potentially advantageous. Fetrow et al. (2007) also reported that under reasonable assumptions the genetic gain from breeding only top cows with sexed semen still barely overcomes its cost. Therefore, they recommended not using sexed semen in cows.

The increased lifetime genetic value imparted to heifers due to selecting from 56% of the cow herd as future mothers (instead of 100% as is typical without sexed semen) was worth about $106 (B. Cassell as reported in Seidel, 2003). This is approximately $35 annually. If 4 doses of sexed semen are required to produce a heifer calf that survives and enters the herd, then the genetic premium for the herd per dose is about $9.

Other economic benefits from sexed semen have been ignored in most analyses (Fetrow et al., 2007; De Vries et al., 2008). For example, large increases in the supply of heifers are expected to reduce purchase prices, especially compared to current high prices. Greater availability of heifers, or lower purchase prices, allows dairy producers to cull more low-end cows. Home raised heifers may have advantages in biosecurity (better immunity, lower incidence of infectious diseases), but these advantages are difficult to quantify. However, many farms do not have the facilities, feed, labor, capital, or permits to raise much larger numbers of heifers which would be necessary with sexed semen. The use of sexed semen in in vitro embryo production and embryo transfer was reviewed by Weigel (2004) and is probably quite valuable.

Summary

Sexed semen conception rates average 25% lower than with conventional semen, but field trial results have varied widely. A 25% reduction is approximately 10 to 15 percentage points in heifers. When not considering genetic progress, sexed semen is generally profitable when heifer calves are worth at least $400 more than bull calves. Value of sexed semen does not vary much with service number in heifers. Therefore, if a second service with sexed semen is not considered profitable, the first service is at best marginally profitable. Sexed semen is usually not profitable in dairy cows, unless the fertility is almost equal to conventional semen. If the genetic merit of animals is known, sexed semen could be profitable on genetically superior animals. Therefore, the value of genetic information should increase when sexed semen is considered.

References

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Anonymous. 2008. They use sexed semen (57th Hoard’s dairyman round table). Hoard’s Dairyman, January 25, page 56.

Baker, R. L., P. Shannon, D. J. Garrick, H. T. Blair, and B. W. Wickham. 1990. The future impact of new opportunities in reproductive physiology and molecular biology on genetic improvement programmes. Proceedings of the New Zealand Society for Animal Production 50:197-210.

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DairyProfitWeekly. 2008. Market prices. Volume XVIV, Number 16, April 21.

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Author

Albert de Vries

Albert de Vries
5 articles

Associate Professor, Department of Animal Sciences, University of Florida

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University of Florida

University of Florida