Comparison of Breeding and Marketing Systems for Red Angus Cattle Using an Integrated Computer-Based Spreadsheet

Professional Animal Scientist, Oct 2004 by Miller, K E, Whittier, J C, Peel, R K, Enns, R M, Et al

Abstract

An integrated computer-based spreadsheet was developed with data from 581 Red Angus-sired calves to compare synchronized AI and natural service breeding systems. This comparison was based on input costs, genetic merit of sires used for mating, and calf marketing system, using differences in net return. The spreadsheet integrated four elements into a decision summary: bull costs, AI costs, genetics merit, and marketing options. An economic sensitivity analysis was used to identify trends and key variables in the net return of each decision. Three prominent variables identified from economic analysis were bull purchase price, semen price, and percent genetic change. Bull purchase price was a primary factor in changes in net return; semen costs and genetic merit change explained rearrangements in ranking of net return. These two variables altered the ranking based on whether the estrous synchronization protocol used estrus detection or timed AI. The spreadsheet identified AI to be more cost effective than natural service when calves are marketed as finished cattle. Net revenue from AI calves was greater in all retained ownership scenarios; the weaned marketing scenario caused net return to vary by synchronization system for the combinations of costs and changes in genetic merit. However, there was a wide variance in identifying which breeding system provided the greatest benefit when calves were marketed as feeder cattle. Retaining ownership through finish and marketing either on the cash market or on a grid proved to be advantageous to AI in all of the estrous synchronization protocols provided. The economic advantage ranged from $142.98 to $214.16 per head compared with marketing at weaning. The spreadsheet developed provides a useful tool for evaluating the economic impacts of breeding system decisions.

(Key Words: Beef Cattle Breeding System, Artificial Insemination, Natural Service, Net Return)

Introduction

Artificial insemination has been used for many years to improve or preserve genetics of animals. Technologies have improved significantly over the past 70 yr, and AI can be used in most cattle production systems today. Artificial insemination has not been used extensively in beef cattle production systems in the U.S. Less than 10% of all beef cowherds use this technology (NAHMS, 1998), whereas 90% of the U.S. dairy herds use AI. This vast difference in adoption rates of AI can be mostly attributed to differences in management systems. Beef cow managers suggest, "AI requires too much time and labor to be implemented" as the primary reason for lack of adoption of AI in beef herds (NAHMS, 1998; Sprott, 1999; Sumpter et al., 1999). The lack of AI could be limiting net return in U.S. beef to the operations. Several decision tools that compare the costs of AI to natural service breeding systems have been developed (Loseke et al., 1990; Schafer et al., 1990; Werth et al., 1992; Tess and Kolstad, 2000a,b; Johnson, 2002); however, comparing the net return to an operation accounting for breeding costs, change in average age, change in genetic merit, and impact of various calf marketing programs into a single application for decision making has yet to be constructed.

The objective of this investigation was to determine whether a dynamic model could be developed to accurately determine economic impacts when comparing natural service to AI in beef cattle.

Materials and Methods

An integrated computer-based spreadsheet was developed using Microsoft� Excel. The spreadsheet was developed in a stepwise fashion to provide a structured and directed movement through the decision process. Input of bull costs, AI costs, genetic evaluation, and marketing options were used to compare the breeding systems. Inputs were incorporated into a decision summary that provided information comparing natural service to 12 AI breeding systems, each with a different estrous synchronization method.

Bull Costs. Inputs supplied by the user were used to develop a matrix for evaluation of cost per pregnancy in a natural service system and clean-up bull costs used in the AI cost section. Number of cows to be bred, average number of expected breeding seasons for a sire, cow-to-bull ratio, and expected final pregnancy rate were used to calculate the number of cows a sire will service over his life in the herd. Other inputs were used to compute the variable and fixed costs per bull and total number of bulls required. Purchase price of the natural service sire was multiplied by 10% to produce a risk value. Risk value is a non-cash cost that is associated with the bull in case of termination of service (failed breeding soundness exam, health concerns, etc.) prior to the expected number of breeding seasons. This value can be saved and accumulated over time to purchase an additional bull if circumstances occur. The cost per pregnancy matrix is given on a pregnancy rate from 60 to 100% in increments of 5%. Although it would not be realistic to consider 100% pregnancy rate, this range allows the user to evaluate the possible impact of a wide array of outcomes. This allows comparison of costs from a deviation from the expected final pregnancy rate.