Exploring the impact of sexed semen on the structure of the dairy industry.

Widespread commercial application of sexed semen is expected within the next decade because of continued improvements in fertility of sexed semen and sorting capacity. The objective of this study was to explore the potential impact of widespread application of sexed semen on the structure of the dairy industry in the United States. Historically, female offspring from all heifers and cows were needed to produce enough dairy replacement heifers to replace culled cows. The use of sexed semen allows for a decoupling of breeding decisions necessary to obtain an adequate supply of dairy replacement heifers from those needed to achieve pregnancies needed to start new lactations. Application of sexed semen allows dairy producers to select among their herds' potential dams and produce dairy replacement heifers from only the genetically superior animals. The rate of genetic progress is expected to increase, but not more than 15% of the rate of gain accomplished through sire selection achieved through conventional (nonsexed) artificial insemination breeding. The supply of dairy replacement heifers is expected to grow to meet and temporarily exceed current demand, resulting in reduced prices for dairy replacement heifers. Consequently, herd turnover rates are expected to increase slightly, and herd expansions may accelerate. The rate of consolidation of dairy farms is expected to increase. Widespread application of sexed semen may temporarily increase the supply of milk, which would result in lower milk prices. The cost of milk production will be reduced as well. Many breeding options exist for the genetically poorer cows in the herd. The optimal breeding mix depends on the value of the various kinds of calves that could be produced. More crossbred calves for beef production may be produced; however, a market for these crossbred calves is not well established. Increased specialization is expected with more dairy producers deciding not to raise their own heifers but to purchase replacements. Other dairy farms might specialize in producing genetically superior dairy replacement heifers for sale. Depending on the value of calves not raised for replacements, artificial insemination organizations might market beef conventional semen or beef male sexed semen to dairy farms. The use of sexed semen should lower the cost of progeny-testing programs and embryo transfer and enhance the value of genetic markers. Eventually, the economic benefits from the use of sexed semen will be passed on to consumers.