Factors affecting economics of using sexed semen in dairy cattle

The use of sexed semen in the dairy industry has grown rapidly. However, high costs and low fertility have limited the use of this potentially valuable tool. This study used simulation to evaluate 160,000 combinations of key variables in 3 spheres of influence related to profit feasibility: (1) market (e.g., milk and calf prices), (2) dairy farm management (e.g., conception rates), and (3) technology (e.g., accuracy of sexing). These influential variables were used to determine the most favorable circumstances in which managers or technicians can effect change. Three distinct scenarios were created to model 3 initiatives that a producer might take with sexed semen: (1) using sexed semen on heifers, (2) using sexed semen on heifers and a fraction of the genetically superior cows, and (3) using sexed semen on heifers and a fraction of the genetically superior cows, and breeding all other cows with beef semen. Due to the large number of management, market, and technology combinations, a response surface and interpretive graphs were created to map the scope of influence for the key variables. Technology variables such as the added cost of sexed semen had relatively little effect on profitability, defined as net present value gain per cow, whereas management variables such as conception rate had a significant effect. Milk price had relatively little effect within each scenario, but was important across scenarios. Profitability was very sensitive to the price of dairy heifer calves, relative to beef and dairy bull calves. Scenarios 1 and 2 added about $50 to $75 per cow in net present value, which ranged from $0 to $200 and from $100 to $300, respectively. Scenario 3 usually was not profitable, primarily because fewer excess dairy replacement heifers were available for sale. Dairy heifer price proved to be the most influential variable, regardless of scenario.