BUSINESS CASE  - "GENETIC IMPROVEMENT"

  
 

The following example shows the financial profit for a livestock farmer of using pedigreed and proven semen.

Farmer Imran currently has a herd of 10 cows of non descriptive breed. The average daily milk yields of his animals, show a large variety and differs from 14L to 6L per animal. The daily average of the total herd is 10L / animal.

Farmer Imran wants to become a professional dairy farmer. He has calculated that he needs at least 15L per animal to make a good profit. Currently he is making a loss. He therefore figures it is no good to buy more animals if the yield per animal is not sufficient. His current herd:

His strategy is to first breed for a herd of the same size (10 animals) with a higher yield (average of 20L / day) to see if he can make a profit. Afterwards he will consider expanding his herd.

He has made a plan for 3 years. After 3 years most of his current herd will either have died or be replaced. So his future herd is to be bred in 3 years. He estimates that by having 24 calves, he will end up with 12 heifers (50%) of which 2 may die prematurely from disease or at birth, so he will end up with the same number of 10 animals. To breed 24 calves in 3 years, he will need 8 calves per year.

Imran selects the 8 best animals of his herd to be the mothers of these calves. The 2 cows that only give 6L on average and give him a lot extra veterinary cost, he chooses to inseminate with much cheaper local* or beef** semen. The calves of these animals will be sold for slaughter.

For the 8 best animals Imran consults the ProFarm™ Area Manager for the best semen to use. After consultation with the Area manager he has decided to use semen of Bouncer. Bouncer inherits a lot of milk (30L/day).  Besides Farmer Imran has some udder related problems in his herd and Bouncer is one of world's best udder improvers. He also likes the fact that bouncer gives rather big and beefy offspring, so he will be able to sell the bull calves for a good price as well.

Lets assume that one of the 14L yielding animals gives a bull calves and the other one a heifer calve. Let's assume the same for the animals of other yields and this to be so every year.

In breeding both parent animals inherit 50% of their genetic potential to their offspring. A cow with a yield of 10L crossed with a bull that has a breeding potential of 30L will give offspring with a milk potential of 20L. Therefore after 3 years, there will be 3 heifers that give 22L, 3 that give 21L, 3 that give 20L and 3 that give 19L. Let's assume the worst, and say that the 2 calves that die premature are those with the potential of 22L. Farmer Imran's new herd will look like this:

The new herd has an average of 20L / day per animal. His new herd will provide him with around 200L milk per day. At a price of 20Rs / L, Farmer Imran will have a daily income of 4000 Rs / day. Every year he will also earn a little extra from the sales of the bull calves.

The overall scenario looks like this:

 

THE FIGURES:

Let's take a look at the figures now.

 

REPRODUCTION SCENARIO  (Base)

In the base scenario, where farmer Imran chooses for mere reproduction and only uses cheap non proven semen, he would spend:

Cost of semen

•10 animals / year x 2.3 straws per conception x 3 years = 70 Straws                          70 X 200 Rs =   14.000 Rs
 
BREEDING SCENARIO

In the breeding scenario, where farmer Imran chooses for genetic improvement by using high quality (higher conception rate) and proven semen for 80% of, he would spend:

Cost of semen
•8 animals / year x 1.5 straws per conception x 3 years = 36 Straws of Bouncer                36 X 700 Rs = 25.200 Rs
•2 animals / year x 2.3 straws per conception x 3 years = 14 Straws of beef / local          14 x 200 Rs =   2.800 Rs

                                                                                                                                 Total cost       28.000 Rs

 
RETURN ON INVESTMENT
In both scenario’s the semen cost are recovered after 7 days of lactation. In the base scenario the herd still generates a daily income of 2.000 Rs. The cost of semen is 14.000 Rs. (14k / 2k = 7 days).

In the breeding scenario the herd will generate a daily income of 4.000 Rs. The cost of semen is 28.000 Rs. (28K / 4k = 7 days)

However after a full lactation the base scenario brings (305 days of lactation x 2000 Rs/day) – 14.000 Rs cost of semen = 6 lac)

The breeding scenario brings (305 days of lactation x 4000 Rs/day) – 28.000 Rs cost of semen = 12 lac)

 
 

CONCLUSIONS:

Farmer Imran has made the right choice by using proven semen. He also cleverly realized a genetic improvement by selecting high quality proven semen and making a selection on the female side as well (using only the best 8 animals in his herd to breed with).

As a result he now has animals with an average of 20L / day, no animals below the 15L minimum, and a more homogeneous (19-22L), healthier and stronger herd.

He has managed to realize his strategy and become a profitable dairy farmer. He now looks with great confidence towards the future and is even thinking about increasing his dairy business even further.

 

  
  NOTES:

  • Obviously there are other cost to diary farming than semen cost alone, but these cost will be similar for both scenario’s.

  • The other advantages of genetic improvement such as reduced management cost and higher prices for the bull calves are not yet taken into account.

  • * local semen, is the opposite of imported semen. Locally produced semen is not proven or pedigreed and is of lesser quality (# of sperms cells, motility and morphology of sperm cells)

  • ** Beef semen = semen of bulls that give offspring that are particularly suitable for fattening and slaughter.

  • No rights can be claimed from this example what so ever.

  • This is a fictional example, and Farmer Imran is a fictional character.

  


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