Focus

AssistanceFARM

Economic Impact of Beef Cattle Best Management Practices

in South Texas:

Embryo Transfer in Pure Breed Cattle Operations

E-30203/12

FARM Assistance Focus 2009-9

Department of Agricultural EconomicsTexas AgriLife Extension Service

The Texas A&M University System

farmassistance.tamu.edu

Mac YoungExtension Program

Specialist–Risk Management

Joe PaschalProfessor and

Extension Livestock Specialist

Steven KloseAssociate Professor

and Extension Economist

Cody RingerExtension Assistant

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Pure breed cattle operators in South Texas who adopt an embryo transfer program may increase profitability by over 5 percent, according to a study by the Texas AgriLife Extension Service.

The study used the Financial and Risk Management (FARM) Assistance strategic planning model to evaluate the financial effects of embryo transfer. It analyzed a simulated 800-acre pure-breed ranch with 95 cows (a stocking rate of one animal unit to 8 acres) and four bulls (one bull to 25 cows).

The analysis found that, compared to pure breed ranches that do not use embryo transfer, South Texas ranchers may increase:

■ Calf weaning weights by an average of 50 pounds

■ Calf value by 10 percent

■ Profitability by 5.6 percent

■ Net cash farm income by $80 per cow per year

■ Ending cash reserves by 4.8 percent over 10 years

Embryo transfer is used to improve the genetic pool in purebred cattle. Calves born from embryo transfer are full siblings with the same sire and dam, unlike calves from artificial insemination breeding, which are half-siblings with the same sire but different dams. Full siblings improve genetic uniformity and performance faster than do half-siblings.

Although the actual results may vary by producer, management practice, and cattle market, this study shows the possible bottom-line impacts for a reasonable set of assumptions. For more information on the FARM Assistance model, see http://farmassistance.tamu.edu/.

Embryo transfer procedure In an embryo transfer program, genetically outstanding cows are given a series of hormone injections rather than the usual one or two. The injections increase the number of eggs produced by both ovaries. The “donor” cows provide fertilized

eggs that are given to surrogate cows, known as the “recipients.” The recipient cows grow the transferred embryos to term and calve in 9½ months.

As in artificial insemination, two to three straws of semen are deposited 48 to 72 hours after ovulation to maximize the number of pregnancies. About 7 days after insemination, the fertilized eggs are collected by “flushing” them from each donor cow’s reproductive tract. The eggs are then graded for development stage and implanted in the recipient cows that are now in heat.

In this study, 15 donor cows would be needed to produce enough embryos for the 80 recipient cows. The process requires a veterinarian or technician to make four visits to:

1. Synchronize the donor cows’ estrus through drug injection

2. Breed the donor cows by artificial insemination

3. Bring the 80 recipient cows into estrus synchronization, costing $15 per cow

4. Flush the donor cows’ embryos; on average, 6.3 embryos are produced per flush

The recipient cows are then implanted with the embryos. The cost of embryo transfer is about $125 per cow.

Assumptions The general assumptions and characteristics are given in Table 1. The study used typical rates for the region for production inputs, yields, costs, and estimates for overhead charges. Hunting income was $7 per acre in 2009. The ranch was estimated to have only intermediate-term debt.

The cattle prices used were from the Live Oak Live-stock Commission Company auction report in Three Rivers, TX, for May 4, 2009. The prices for heifer and bull calves, cows, and bulls were adjusted to reflect the expected weighted average prices for pure breeds.

In an embryo transfer program, genetically outstanding cows are given a series of hormone injections rather than the usual one or two

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The embryo transfer process enabled the open cows to be covered by only two bulls, which reduced the number of bulls needed in the operation from four to two. A typical pure breed ranch tests bulls for breeding soundness. For the four bulls in the study, the tests cost an average of $73.25 per bull, or $293.00 a year; for two bulls, it cost $85.75 per bull, or $171.50 per year.

Pregnancy tests were administered to the cows, costing an average of $6.50 per cow, or $520 per year. These rates included per-head charges and ranch visit expenses for the veterinarian. The tests found a 95 percent calving rate.

Normal part-time labor costs for the ranch were set at about $1,000 per year. Because the embryo transfer process requires that cattle be run through the shoot four separate times, an extra $450 for day labor was added. Four people are needed for the entire embryo transfer process—the veterinarian or technician, the operator, and two extra day laborers at $75 a day per hand.

A 50 percent initial conception rate is expected from embryo transfer, and these cows were bred within a 1-week window. All cows are bred within 1 week to 60 days.

The embryo transfer process is expected offer these benefits:

■ Increased calving weights because of improved genetic quality

■ Larger weaned calves because of the shortened calving season

■ Improved genetics because the only semen used is from top-quality bulls

■ The birth of 50 percent to 60 percent of the calves within the first week of the calving season.

The cows that do not take to embryo transfer are bred by the clean-up bulls and normally have calves born within a 60-day period.

A 50 percent initial conception rate is expected from embryo transfer, and these cows were bred within a 1-week window

Table 1: 2009 assumptions for a 95-cow South Texas representative pure bred ranch

Parameter Noembryo transfer

With embryo transfer

Operator Off-Farm Income $24,000/yr

Spouse Off-Farm Income $35,000/yr

Family Living Expense $30,000/yr

Ownership Tenure 100%

Ranch Size 800 ac

Royalty Income Not Included

Hunting Income $7/ac

Herbicide Costs/Acre $1.50

Part-Time Labor $1,000 $1,450

Number of Bulls (95 cows) 4 2

ET Donors N/A 15 cows

Cow Herd Replacement Bred cows

Veterinary, Medicine, and Supplies

$25/cow

Salt/Mineral Blocks/Year $20/cow

Hay Fed/Cow/Year 1.5 tons

Protein Cubes Fed/Cow/Year 150 lb

Cow Culling Rate/Year 7.5%

Calving Rate 95%

Bull Calf Prices (wt. avg.) $2,145/hd $2,360/hd

Heifer Prices (wt. avg.) $2,175/hd $2,393/hd

Cull Cow Prices $0.50/lb

Cull Bull Prices $0.62/lb

Bred Cow Prices $2,000/head

Replacement Bull Prices $3,700/head

Donor Cows N/A $5,000/hd

Hay Prices $135/ton

Range Cubes Prices $0.18/lb

Creep Feed Pricing $0.16/lb

Pregnancy Testing $6.50/cow

BSE Testing $73.25/bull $85.75/bull

Synchronization Shot N/A $15/cow

Veterinarian/Technician Fee and Embryo

N/A $125/cow

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The genetic influence and the shortened calving season increased calf weaning weights by an average of 50 pounds. Improved genetics and consistency are expected to increase calf value by 10 percent (Table 1). To help promote growth, the calves in this study were allowed to free-choice creep feed.

The base year for the 10-year analysis of the model ranch was 2009; the projections were carried through 2018. Commodity and livestock price trends followed the projections provided by the Food and Agricultural Policy Research Institute, with costs adjusted for inflation.

These representative measures were used to assess the financial implications of embryo transfer:

■ Profitability, or the extent that a farm or ranch generates income from its resources

■ Net cash farm income

■ Liquidity, the ability of a farm or ranch to meet its short-term financial obligations without disrupting normal operations

■ Ending cash balance, which is a measure of liquidity

Each measure provides information on the projected variability in a ranch’s financial position and performance. When taken as a whole, the analysis provides insight into the risk and return

expectations of the ranch with and without embryo transfer.

Results The analysis found that an annual embryo transfer program can improve the profitability and financial performance of a pure-breed cow-calf operation (Table 2, Fig. 1):

■ Without embryo transfer, net cash farm income averaged $141,250 per year for the operation, or about $1,490 per cow per year (95 cows).

■ With embryo transfer, the net cash farm income averaged $149,140 or about $1,570 per cow per year (15 donor cows and 80 recipients). This $7,890 was a 5.6 percent increase in projected profitability.

Net cash farm income increased $80 per cow per year, primarily because of improved genetics. If the donor cows were left open, average net cash farm income would decline about $26,260 or $266 per cow per year compared to not using embryo transfer.

One measurement of liquidity is ending cash reserves. Over the 10-year projection, ending cash reserves would grow by $55,610, or 4.8 percent, in the embryo transfer scenario (Table 2). Off-farm income would contribute to the cash flow of the operation in both scenarios.

When taken as a whole, the analysis provides insight into the risk and return expectations of the ranch with and without embryo transfer

Table 2: Projected financial indicators (2009–2018)

10-Year Averages Per Year Cumulative10-Yr CashFlow/Cow

($1,000)

Scenario Total CashReceipts($1,000)

Total CashCosts

($1,000)

Net Cash Farm Income

($1,000)

Net Cash FarmIncome/Cow

($1,000)

No Embryo Transfer 216.42 75.17 141.25 1.49 12.11

Embryo Transfer 234.90 85.75 149.14 1.57 12.70

Embryo Transfer (Open Donors)* 199.76 83.78 115.99 1.22 10.52

*Assumes 15 donor cows left open

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The study showed that embryo transfer in pure breed cattle operations can improve herd performance and profitability

Figure 1. Projected Variability in Net Cash Farm Income

No Embryo Tranfer

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

5% 25% Mean 75% 95%

Embryo Transfer

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

5% 25% Mean 75% 95%

$1000$1000

Implications The study showed that embryo transfer in pure breed cattle operations can improve herd performance and profitability. Actual results may

vary by producer and operation; however, you can improve your ranch’s bottom line by testing for breeding soundness and pregnancy, culling open cows and infertile bulls, and adopting an embryo transfer program.

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Acknowledgment Charles Looney provided input

and advice for this project.