Master Breeder Killed in Triple Homicide

Friday, March 20th, 2015

Technologies like IVF and Sexed Semen and ownership of genetic rights and females by AI companies have killed the dairy cattle breeding industry. More specifically they have taken things to such a level that the days of the average individual breeder being able to make a little money from selling genetic stock are long dead.

It was first believed that when the exclusive use of genomic information by AI units was going to be lifted (April 2014) that dairy breeders who owned top sires were going to cash in. And while it did happen, it was very short lived. As we predicted here at The Bullvine, these AI units needed to control their costs of sire acquisition and so the majority of them went out and started buying their own females. All except Semex, (Read more: Should A.I. Companies Own Females?, Why Good Business for A.I. Companies Can Mean Bad Business For Dairy Breeders )

Now there are those who believed that, if these had been the only changes, that breeders would have been able to compete, as history had many instances where breeders were able to out perform the geneticists at the AI companies.

IVF not Genomics – the Original Killer

The biggest difference this time is that dairy breeders and genetics are not playing on a level playing field. Technologies like IVF have significantly changed the game. When this whole rat race started, breeders and AI companies alike took advantage of extensive IVF work to accelerate their rate of genetic gain. But more accurately, that allowed them to cover up their mistakes. You see IVF does not make you a better breeder, but rather, gives you more chances to make mistakes. Instead of only being able to select 3 or 4 crosses on a cow a year and get about 10-18 progeny from your top animals, IVF allows companies to make selections every 2 weeks, or up to 26 crosses a year, resulting in hundreds of progeny a year. The challenge with this is that it’s a very costly expense and breeders, as a result of low royalty prices on sires and next to no genetic female sales, cannot afford to IVF their top animals as much as AI companies who stand to make significantly more from the sale of semen.

There is also the fact that many seed stock breeders could not control the cost of their recipient programs. The biggest expense in any IVF program is not the drug or flushing costs but rather the costs of the buying and raising recipients. That is what makes or breaks most flushing programs. Large herds can keep their costs down, since they have a couple thousand recipients around, whereas smaller programs have to purchase and rely on the sale of fresh heifers in order to have enough recipients available.

Who has the Rights?

One of the changes that many breeders did not think about is the fact that AI and genetics companies would own the rights to the early release semen.

In the past, this semen was not seen as a premium item. Once it became in much demand, for a short period, it was sold at a significant premium price. But the AI companies got wise to the fact that it was more advantageous to use this semen for their own programs than to sell it at any price. So as a result what you see is that all AI units now use their top sires for their own exclusive contract matings or on their females, months before other breeders can even get access to the semen. This results in a 2-6 month advantage for the AI companies.

Also, many AI companies have started forcing breeders to sign a contract that, in order to get this advantage, breeders have had to give exclusive rights for the resulting animals to the AI company. This means that in order to use the semen, you cannot even get the advantage for yourself. The company you are buying the semen from is forcing you to sell the resulting progeny to them. Some companies are even going as far as to only sell sexed semen from their sires, meaning that the breeders will only get females from these matings and will not get a chart topper sire.

A Whole New Game Changer

Recently I have watched many AI companies make some significant moves and purchase companies that are outside their core offerings. When I first saw this, I asked myself …. Why? Why would this company go out and buy a company in a whole different field than what they specialize in. While first glance tells you that they are looking to gain more revenue from each relationship they currently have, there is also something else that catches my eye. In reading some of the most recent technological advances in IVF technology, I start to find that the age of the donor at which they are successfully starting to recover oocytes is getting drastically younger. Sure it only makes sense! Since a female is born with a set number of oocytes. If you can advance the instruments and drug program, it’s not surprising that they can start this process younger and younger. The challenge becomes as this technology becomes more and more exclusive to the large genetics companies, who can either afford or own the technology, this means that all others are going to fall farther and farther behind. Think about how much quicker our rate of genetic gain is, as a result of the introduction of genomics. If a select few companies can now start flushing animals as early as 1 month of age, or about 1 year ahead of others, they will receive that much of an advantage over everyone else. This also explains why these companies have been so aggressive at buying top females so that they can have the seed stock needed to start this process. Now that they have the technology and the base animals, there is nothing stopping them from passing all others.

The Bullvine Bottom Line

Over the past few years, The Bullvine has begged and pleaded with breeders to not sell females to the AI companies as it would lead to their own downfall. Then we tried to open their eyes to the fact that technologies like IVF and Sexed Semen were going to limit their options, instead of significantly enhance their revenue streams. Now, as we are well past the time to do anything, the average seed stock breeding program is living on life support. Looking for those few chances to get a breath of air while drowning in a battle they cannot win. Instead, we are watching a triple homicide of the dairy cattle breeding industry. Shortly we will be exactly like the swine and maize industries, where only a few global companies own the top genetics.