Selection of Young and Proven Holstein Artificial Insemination Sires to Maximize Profits from Milk

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Abstract
Net present values of genetic investments in young and proven artificial insemination Holstein sires were calculated to determine profit-maximizing proportions of these genetic resources. The sensitivity of profit from young sires was evaluated by varying semen cost from 0 to $5 per unit and comparing average net present values of young and proven sires. Data for proven sires were retail semen prices and predicted differences (1974 base) for yields of milk and fat of 449 bulls available for purchase after the July 1983 USDA sire summary. Data for young sires concurrently used in fall 1983 were predicted differences of sires and maternal grandsires of 260 bulls for random sampling and 32 bulls-in-waiting from four artificial insemination organizations. Net present values of milk income were calculated using a real interest rate of 3% with alternative conception rates to first service (30 and 50%) and number of generations (one and infinite) of descendants in the planning horizon. Relative rankings of young and proven bulls were same for each conception rate and planning horizon; thus, only net present values for 50% conception rate and one generation planning horizon are reported. Average profitability of young sires for sampling was equal to average profit from proven bulls when young sire semen cost $5/unit and was $36 (.7 standard deviation) more profitable than average proven sires when young sire semen cost was nil. Mean net present value of young sires for sampling ranked at 42nd percentile of proven sires when semen cost $5/unit or 69th percentile of proven sires when semen cost was nil. Therefore, profit-maximizing dairy producers have no economic incentive to mate cows to random young sires when free to select and obtain semen from at least the top 30% of proven bulls at current prices. For semen cost of $5/unit, there was incentive to replace with young sires up to 40% of the least profitable proven bulls. Decreasses(increases) in cost of semen of young sires relative to the less profitable proven bulls would increase (decrease) the proportion of proven sires that should be replaced by random young sires.