For years breeders have been saying how they would do things differently than the big A.I. companies. In March of 2013 they are going to get their chance. While many top breeders are already licking their lips at the opportunity, there are some key factors I don’t think they have considered that may not change things as much as they think. The following is a closer look at these issues.
When Calbrett-I H H Champion hit for GenerVations, the biggest challenge was not marketing but rather distribution. Here is a company who had been a distributor for many international A.I. companies that now had to turn the table and sell back to these companies. Fortunately, for GenerVations they were able to do so and leverage the network they had already developed in order to get Champion semen out to the world. However, what is the typical breeder going to do? Sure, you may be able to move some semen through the internet or advertising your bulls in the major publications, but that will not pay the bills. A global distribution network that can move your semen is a must. Only one person can have the #1 bull, for all others you had better have a cost effective distribution network, or your dreams of becoming the next great Albert Cormier or Doug Blair will fizzle before they even start.
Frequent Genomic Releases
With new genomic bulls coming out monthly, you could be on the top of the list one month and not even in the top 10 the next. This provides for a very short run for peak sales and means you will not always be able to sell your genomic young sire semen for $50+ a dose. More likely, you are looking at a $20-30 average price, and that is assuming you are still in the top 50. Fall out of the top 50 genomic sires in the world and you can kiss sales good-bye.
Cost of Production
Breeders wishing to prove their own sires will have to use one of the approved semen collection facilities. Certainly, many of these facilities will offer competitive rates, but they need to operate at a profit too. While working with the largest A.I. company in the world, we knew that the cost per semen collected averaged between $4 and $5. To get your semen dose collected you are typically looking at $7 – $10 a dose. Big deal you say, a couple of dollars less. Well actually it is. When large semen orders come in, they operate on blend price for the order. Depending on the situation they are from $10 – $12 a dose. That $3-$5 a dose difference could mean the difference between profit and loss. Don’t think you need those large bulk orders? Think again, you will find they are your lifeblood for cash flow.
Aggressive Lease Options from Current A.I. Companies
We have already started to see it. Gone are the fixed sales price of $5,000 -$10,000 or the capped leases at $100,000. The major A.I. companies have already started to get very aggressive on the lease options they offer. Smaller A.I. companies have already been forced to get extremely aggressive in order to procure top genomic young sires. It’s also for these reasons that we are starting to see more bulls being sold in top sales, as it provides the ability to set the bar higher for many breeders. It’s also for these reasons that you have noticed many players starting to buy top females, as the cost to buy them is actually cheaper than the cost to contract their sons.
The Bullvine Bottom Line
While the ability to test their own sires will certainly affect the lease agreements, they get from the A.I. companies it will not be the total game changer that everyone is expecting it to be. What it will do is make the current A.I. become even more competitive and have to trim their own fat. Breeders sampling and selling their own bulls and not selling their bulls to A.I. seems a promising opportunity. However, the thought that it is going to totally change the way bulls are sampled and sold is farfetched. From the cost of production to distribution there are many factors that eager breeders have not yet given enough consideration.