Economic Evaluation of Alternative Breeding Programs for Commercial Artificial Insemination Firms

Abstract

A method was developed for economic evaluation of alternative breeding programs for an AI firm operating in a large dairy cattle population with a competitive semen market. The model allowed for the evaluation of changes in both present value of returns from sale of semen and risk on returns. The model was applied to improvements in conventional progeny testing schemes. Sensitivity of the results to several economic parameters was investigated. Adoption of an improved breeding plan led to large increases in present value of returns and its variance. Reducing the number of bull sires used increased present values of returns by up to 20%. Additional use of embryo transfer on bull dams increased returns by over 40%. Results were not highly dependent on discount rate and semen price level. For small to moderate improvements, form of the functional relationship between semen price and estimated breeding values of bulls and simultaneous adoption of the improved plan by competing firms had small effects on increases in present values of returns. Reducing size of the market decreased economic values of adoption of an improved breeding plan significantly. © 1990, American Dairy Science Association. All rights reserved.