Dairy cows looking at camera stefbennett/Thinkstock

Battle brewing over sexed-semen technologies

One company, Ingrain LLC, dominates sexed-semen business in U.S.

by Lydia Mulvany and Susan Decker

Sex is big business in dairy farming, which is why a battle is brewing in the U.S. over new technologies designed to make sure only milk-producing cows are born.

Most of America’s 9.4 million dairy cows were bred using artificial insemination from bulls with specific genetic traits, but there’s still a coin-flip randomness about the sex of the offspring. So, more farmers are paying a premium for semen that contains only the X chromosomes for females. It’s a small but growing business dominated by one company, Inguran LLC in Navasota, Texas.

Over the years, dairies improved breeding to boost milk output using fewer cows. Sex-specific semen is a recent innovation, and it’s so promising that New Zealand’s Engender Technologies plans to sell its own version of the product in the U.S. Companies also are fighting in court over patents for the technique. Farmers welcome more competition because sex-sorted semen vials can cost $30 for a typical dose, about double those that can’t guarantee a female calf. 

“We have no choice but to pay,” said Russ Warmka, owner of a dairy farm in Fox Lake, Wisconsin, that milks 500 cows a day and uses sex-sorting semen on his heifers. “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 Nov. 28 in Springfield, Missouri, baby heifers sold for as much as $350 each, while bulls sold for as little as $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.

More Milk

On average, U.S. cows produced a record 1,910 pounds of milk a month in the past year, up about 14% from a decade ago, U.S. 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% 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 U.S., 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.

Laser Beam

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 U.S., according to Ogilvie at Engender.

Legal Battles

While Engender targets Inguran customers, some U.S. companies are eyeing its technology. Genus Plc’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 LC, which says many of Inguran’s patents are simply combining known ideas. Trans Ova accused Inguran of burying the U.S. 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.

To contact the reporters on this story: Lydia Mulvany in Chicago at [email protected]; Susan Decker in Washington at [email protected]

To contact the editors responsible for this story: Simon Casey at [email protected]

Steve Stroth

© 2018 Bloomberg L.P

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