# To BSE or not to BSE: a capital budgeting analysis of the use of the bull breeding soundness evaluation (BSE) to improve reproductive efficiency and profitability in cow-calf herds

## TL;DR

This paper uses financial modeling to explain why some cow-calf producers choose not to use bull breeding soundness evaluations, finding that profitability depends on factors like breeding season length and cow-to-bull ratios.

## Contribution

The study introduces a financial capital budgeting model with Monte Carlo simulations to evaluate the profitability of using BSE in cattle herds.

## Key findings

- Using BSE increases profitability when breeding seasons are shorter and cow:bull ratios are higher.
- The financial benefit of BSE is driven by higher calf weights and lower replacement costs for non-pregnant cows.
- Despite higher BSE costs, profitability is more likely under certain management conditions.

## Abstract

The breeding soundness evaluation (BSE) as defined by the Society for Theriogenology is intended to identify subfertile bulls. Removing subfertile bulls and replacing them with fertile bulls is expected to produce financial benefits in the form of more pregnant cows within a designated breeding season and subsequently higher weaning rates. However, past survey results of cow-calf producers indicate low adoption rates of the BSE. To better understand the rationale of these decisions by producers, a financial evaluation by means of a capital budgeting model was developed to calculate the net present value (NPV) of two different herd management strategies; one that performs BSE to one that does not. Because there are various sources of uncertainty in cattle production, a Monte Carlo simulation analysis was employed to estimate the differences between the expected NPV of these two strategies. Simulations were conducted across a range of plausible fertility differences from using BSE and revenues were generated from the resulting calf outputs and herd replacements. Additionally, the length of the breeding season and the cow:bull ratio were varied to capture a typical range of heterogeneous production systems. For each scenario considered, the results indicated that the likelihood of improving profitability by performing BSE increases as breeding season length decreases and cow:bull ratios increase, despite the relative increase in associated costs from hiring veterinarians to perform BSE. These results are largely driven by the increase in total weight of calves weaned and a decrease in costs associated with the replacement of non-pregnant cows. Overall, these findings provide a plausible financial explanation for why cow-calf producers with different management strategies are more/less willing to perform BSE.

Despite its long history and widespread promotion by animal health professionals, only a minority of cow-calf producers use breeding soundness evaluations to screen their herds for subfertile bulls. This study puts forth financial reasoning for this observation, specifically identifying the influence of breeding season length and cow to bull ratio on the profitability of performing breeding soundness evaluations.

Fig. 2. The cumulative probability curves for the likelihood that a strategy that uses breeding soundness evaluations (BSE) to remove subfertile bulls from the herd will have a higher net present value (NPV) than a strategy that does not.Each curve represents a different breeding season length in units of estrus cycles and assumes that both strategies use a cow:bull ratio of 25:1. The vertical lines represent differences in fertility of 5% & 7%, which is approximately the range of expected differences in incidence rate of conception per cycle between herds that use BSE and those that don’t based on published literature.(Wiltbank and Parish, 1986 DOI: 10.1016/0093-691X(86)90093-2) The horizontal line represents the point at which it is equally likely that using the BSE will have a higher NPV than not using the BSE.

Fig. 2. The cumulative probability curves for the likelihood that a strategy that uses breeding soundness evaluations (BSE) to remove subfertile bulls from the herd will have a higher net present value (NPV) than a strategy that does not.

Each curve represents a different breeding season length in units of estrus cycles and assumes that both strategies use a cow:bull ratio of 25:1. The vertical lines represent differences in fertility of 5% & 7%, which is approximately the range of expected differences in incidence rate of conception per cycle between herds that use BSE and those that don’t based on published literature.(Wiltbank and Parish, 1986 DOI: 10.1016/0093-691X(86)90093-2) The horizontal line represents the point at which it is equally likely that using the BSE will have a higher NPV than not using the BSE.