When you first read the recent Limited Offering from GenerVations for Liquid Gold, Fuzion and Gizmo priced at $750 and $500 and $500 respectively, I am sure some breeders will think: “Are the bulls dead? Are these guys crazy? Are they expecting to get rich? Who the heck will buy that semen?”
What Makes Them So Special?
In reality, it may not be as crazy as some would think. According to David Eastman, what GenerVations is trying to do here is to give every breeder access to their top Genomic Index sires at the same time albeit at a premium price. Now you might say that premium is hefty and it is. When you consider that sires like Numero Uno, Supersire, McCutchen and Cashcoin can be purchased for under $100, the $750 price tag for Liquid Gold seems pretty steep. Are these sires that far ahead on his genetics? Let’s take a look.
|AMIGHETTI NUMERO UNO-ET
|DE-SU BKM MCCUTCHEN 1174-ET
|GENERVATIONS LIQUID GOLD
As you can see by the numbers above, these GenerVation bulls are not any higher than the current top GTPI sires. The biggest difference is that breeders who take this offer will get instant use of the semen. This is unlike some of the other sires on the list that have contract matings that will produce daughters that are 6 months older than the daughters from the first publicly available semen. If you look at the first registered daughters of each of these other sires you will see that they are all for contract matings or with preferred herds. Instead of making breeders sign an agreement for the sampling rights from the resulting progeny from the selective early released semen, GenerVations is giving each breeder the opportunity to be ahead in the marketing of the genetics they have purchased.
Big deal you say. Well actually it is a big deal. In the past, contracts were signed when heifers were 30 months of age, after they had calved, been classified and were 60 days into production. Now high indexing heifers are being flushed at 12-14 months of age. So a six month head start is a big deal!
Think about it. According to GenerVations,”Progressive breeders will have the opportunity to access the latest genetics and would likely use them immediately on a variety of mates..” In other words breeders get a unique product and can charge more for the resulting embryos, bulls and heifers. How long would it take to make up the $1,500 (2 doses of semen per flush, though often with IVF it only requires one dose) on a flush? That’s an extra $200-$300 per embryo. On the elite females that these bulls will be used on, that is easily done.
Another interesting aspect of this offering is that GenerVations is limiting the semen to North American breeders. This is more a result of health protocols and semen access than anything else. Ordinarily, by the time these sires clear all tests and protocols, breeders outside of North America would already be behind on getting the semen. So it is much better for those breeders to purchase embryos from top North American breeders from these sires.
How will this affect their bull proofs?
With the current practice of selective sampling of top genomic sires (selective early release and semen price) the issue of sampling bias will come to light long before any of these three sires get their proofs. Also, if you look at these three bulls, they are only 83 TPI points apart. Given the current range of genomic sires and where they end up with official proofs, it is hard to say which one will actually be the higher one, once they all have daughter information.
Are they doing it to get rich?
Well yes and no. Anyone who tells you they are doing it for the good of the industry is blowing smoke up your butt. What they are actually doing is trying to help the breeders of top sires like these get the market reward they deserve. In the typical scenario with most studs, this highly valuable early release semen is given away for contracts and the breeder of the sire sees none of this in their royalty contracts. Something GenerVations could easily do since they are a private company and own their own females. (Read – Should A.I. Companies Own Females)
GenerVations is taking it to the other extreme. They argue that the first released semen is the most valuable semen that the sire will ever produce and they are pricing it accordingly. Does that mean that after the 6 months the semen price will drop? Most definitely. But for those breeders who want to stay at the cutting edge of the genomics race, they can afford and pencil out paying these prices. (Read – The Genomics Advancement Race)
What this move also does for GenerVations is that once the market for bulls opens up in March 2013 GenerVations is showing breeders of top sires that they “have other options to maximize their revenues”. No longer do you have to sell your bulls to a stud where they might sell 30,000 doses at $40 a dose. The GenerVations model is 1,500 doses at $750 or $500 a dose.
The Bullvine Bottom Line
From a marketing viewpoint there are many aspects to this story that catch my interest. First that someone has the gumption to stand up and take a risk. Dave Eastman, throughout the years that I have known him, has always been thinking of ways to advance his sire selection programs as well as how to grow GenerVations. This is just another indication of David thinking outside the box and looking for new ways to improve the system. Simply crazy? Or simply smart? Breeders will decide.