Monday, February 26, 2024

Farmers count knock-on costs of faulty semen

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LIC should front up more than just a refund of the AI outlay, farmers say.
LIC chief executive David Chin says efficiency in meeting environmental challenges has never been as important as it is now for the dairy industry.
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New Zealand dairy farmers are counting the cost of using faulty semen over mating after LIC discovered a biological breakdown in the semen of thousands of its straws used in October.

The bad semen was initially found in 13 batches sent out to farms on October 17,18 and 19. This amounted to 20,000 straws and affected 921 herds across NZ.

A second faulty batch was discovered on November 22; it had been sent to farms on October 23, 24 and 25.

On both occasions, the semen was discovered to have degraded on the third day of quality control testing. 

How many herds this has impacted has yet to be determined. LIC has undertaken to refund the price of the straws and the cost of artificial insemination services – but farmers say this may not be enough.

One of those affected was Federated Farmers dairy chair Richard McIntyre. 

Communication with affected farmers over the past few weeks suggests that the long-term impact this will have on their farming businesses far exceeds the costs of refunding the semen and AI services, he said.

“It spreads out the calving pattern. You have less days in milk, potentially more empties [cows], fewer replacements next year and because these cows calve later, there’s more chance of them calving later again because there’s less time for them to recover from calving before they start mating. There’s flow-on effects from it.”

Depending on how the calculation is done, that loss equates to big money, he said.

In a hypothetical example, if 30 cows from a herd of 449 were impacted by the semen and lost 21 days of milking in the 2024-2025 season, and if those cows averaged 1.75kg MS a day going by the current mid-point payout from Fonterra, that would equate to a loss of around $266 per cow in lost milk.

McIntyre applauded LIC’s quality control and prompt communication, but he questioned the adequacy of the compensation offered.

Another impacted farmer, who asked not to be named, had his first round of mating on October 17 and 19 affected by the semen. It impacted around 24 cows of his 330-cow herd.

Those cows had a 100% return rate.

He said the decision not to commit yet to compensation for the financial impact it will have next season angers him.

Given that both he and LIC collect his mating and production data, it would not be hard to determine fair compensation for possible lost days in milk for next season.

“When you put it into an $8/kg MS payout, it’s quite a sum of money,” he said.

It also had a knock-on effect on the affected cows for the next two seasons because they were now calving later.

“LIC has no debt, has made millions of dollars of profit and is not willing to help out. What hurts the most is I’ve used LIC for 30 years, I Sire Proved for 15 of those years – I helped prove bulls for LIC and there’s no goodwill in return.”

That hurts more than the compensation, he said.

“They have stuffed up, so they should front up.”

Compounding it all is that it has occurred in a year when the payout has fallen and costs are still high, he said.

“We’re staring down the barrel of a pretty average income. It’s like kicking a man while he’s down.”

Asked about the possibility of compensation, LIC chief executive David Chin said LIC is still considering its options.

“Our focus is on making sure first and foremost that we can understand what happened and mitigate the on-farm impact from happening again and then I think we can look at how does the response play out.”

It has reimbursed the cost of the semen and AI used on October 17, 18 and 19. A decision on whether that reimbursement will cover the semen used on October 23, 24 and 25 had yet to be made at the time of going to press.

“We need to identify what is causing this and how we mitigate and prevent it from happening again – that’s our initial focus,” Chin said.

“We have done fresh semen for decades and over the past 20 years the process has happened pretty flawlessly and this has really caught us by surprise.”

LIC has shifted semen quality control testing to 4am to allow enough time to inform AI technicians out on farms not to use that product, he said.

He said the message he is getting from farmers he has spoken to is to make sure it does not happen again.

“Of all of the things that can go wrong on a farm, inseminating cows is one of the things that generally goes pretty good and they want to return to that state of affairs. We want to return to that state of affairs and that’s the thing I want to hold myself and my team accountable for.”

In Focus: Farmers need better response to semen failure

Federated Farmers wants LIC to do more for farmers affected by a dodgy batch of semen. Dairy chair Richard McIntyre is one of those farmers and he tells Bryan that while LIC is being proactive in addressing the issue, farmers need more from the co-op.

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