"We spend our entire lives as farmers trying to breed a better cow. If we know we'll get a heifer calf, we can spend a lot more on that semen."
That's because a young female that will eventually produce milk for four to six years is far more valuable to a dairy than a steer that gets shipped to a beef-processing plant, said Albert De Vries, a professor of animal sciences at the University of Florida in Gainesville. At an auction November 28 in Springfield, Missouri, baby heifers sold for as much as US$350 each, while bulls sold for as little as US$50, according to the Springfield Livestock Marketing Center.
Dairy farmers use artificial insemination to impregnate heifers shortly after their first year, and nine months later, a calf is born. After that, the cow produces milk for 10 months. Typically, she will give birth two to four times during her time on the dairy, before output drops and she is sold for slaughter.
On average, US cows produced a record 1,910 pounds of milk a month in the past year, up about 14 per cent from a decade ago, US Department of Agriculture data show.
That's allowed farmers to expand output while shrinking their herds.
Still, sex-determined semen for breeding remains relatively new and accounts for only 3 per cent of a global market, so there's plenty of room for growth, as long as farmers can be convinced the extra investment will pay off.
"When you look at the dairy industry, this is a fundamental problem that hasn't yet been widely resolved," said Brent Ogilvie, managing director at Auckland-based Engender, which primarily serves the New Zealand dairy industry, the world's largest milk exporter. "Sex is the most-important genetic trait. Farming is all about genetics, and most farmers don't have control over the sex of their herd."
In the US, the market is dominated by Inguran. Its Sexing Technologies unit provides the sorted semen which is marketed through the STgenetics unit. Inguran has patents on improvements to a technology first developed by a USDA researcher more than two decades ago. Using the cell-sorting science of flow cytometry, the company says it can deliver heifer calves in about 90 percent of pregnancies, which is a big increase on the 50-50 chances of conventional semen.
In flow cytometry, sperm cells move single file past a laser beam at about 50 miles an hour, with special detection machines making about 180,000 measurements per second, said George Seidel, a professor at Colorado State University who worked to apply the technology to dairy farms in the 1990s.
Inguran uses a fluorescent dye to cells that reacts differently on female X chromosomes than male Y chromosomes. The amount of fluorescence is measured and then an electrical charge is applied, which deflects the cells into different containers. The sorted semen is then sold in vials known as straws.
The technique has some obstacles. More mature cows don't always get pregnant, so farmers tend to use it only on virgin heifers, which conceive more easily, said Matt Gould, Philadelphia-based analyst for the Dairy & Food Market Analyst newsletter.
Fertility rates matter because a cow only has one opportunity to get pregnant each month, and the animals will produce less milk if too many months go by. Farmers are so concerned about getting cows pregnant at the right time that some have started attaching pedometers to them, according to Gould. When cows are fertile, they wander around looking for a mate, and the number of steps they take increases.
Inguran's conception rates are now comparable to those of conventional semen vials, according to Jim Hiney, the company's marketing manager.
Engender, which hopes to start selling sex-sorted semen in the U.S. within two years, says its product has a higher pregnancy rate because their sorting process is gentler. It uses photons, or pulses of light, to physically nudge sperm cells into specific channels. The company also says its product will be cheaper and easier to supply.
Of the 175 million semen straws sold globally each year, only about 5 million are sex-selected, and 2 million of those are in the US, according to Ogilvie at Engender.
While Engender targets Inguran customers, some US companies are eyeing its technology. Genus's ABS Global of Wisconsin, a stud company that wants to enter the sex-sorting business, persuaded the U.S. Patent and Trademark Office to rule two patents invalid. An appeals court is reviewing that decision. Inguran filed suit in June accusing ABS of infringing patents and stealing trade secrets.
The same court is considering whether to revive antitrust claims brought by another firm, Trans Ova Genetics, which says many of Inguran's patents are simply combining known ideas. Trans Ova accused Inguran of burying the US Patent and Trademark Office in paperwork so examiners wouldn't spot information that showed the applications didn't cover new inventions. Inguran said it developed ways to preserve the cells, improve the sorting process and produce sexed embryos.
"There will be millions of dollars in intellectual-property battles, no matter the merits of who or whatever," because some of the patents are written so broadly, Colorado State's Seidel said.
