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Frozen Semen Contract Considerations For Stallion Owners

Posted by Julie Skaife on Wed, Feb 15, 2012 @ 02:02 PM

Breeding season is upon us and hopefully the phone has been ringing off the hook with mare owners interested in breeding to your stallion. Now is a great time to review and update your frozen semen contracts. We are here to make it easier for you! We have prepared contract templates for either selling frozen semen by the dose or for a frozen semen breeding agreement, both templates are accompanied by detailed notes you can refer to for guidance when formulating your own agreements.

Click here to download your Free Contract Guide and Templates.

In this Blog article we answer commonly asked questions related to structuring your breeding agreement.

Sell by the dose or as a breeding?

The first consideration when preparing your frozen semen contracts is whether you are selling frozen semen by the dose or by the breeding. The pros and cons of both options are discussed in a previous Blog article: Frozen Semen - Sell by the Dose or as a Breeding? When selling frozen semen by the dose, the mare owner pays in advance for each dose of semen and typically there is no live foal guarantee or restrictions on the use of the frozen semen. When there is a limited inventory of frozen semen, particularly if demand is high and/or there is no opportunity to replenish stocks due to death or injury of the stallion, then selling frozen semen by the dose may be the best way to manage such limited resources. Alternatively, Select Breeders Services recommends that frozen semen be used as another means (like fresh or cooled semen) to fulfill the stallion owner’s obligation in a breeding contract. This type of breeding agreement will primarily be the focus of this blog article.

How should I structure my breeding agreement?

We suggest that breeding contracts for frozen semen are structured such that the costs associated with the production of the semen are separated from the value associated with the genetics. i.e. the breeding fee is comprised of a booking fee plus the service fee. The “booking fee” is set to cover the production costs for the frozen semen being used per mare, and the remaining balance, the service or “stud fee”, is for the genetics of the stallion, which is realized only if a pregnancy is achieved and/or a foal produced.

The breeding agreement can be written to provide for “up to N doses of frozen semen for the season” after which the mare owner has the option to purchase additional doses at a higher cost per dose if they want to continue trying to breed that mare, or you may wish to offer them the opportunity to return the following season, in which case they would repeat the booking fee. Thus by paying the booking fee again for the second season, you are being covered for the cost of additional doses of frozen semen that may be used.

To calculate the production cost of the frozen semen:

  1. Divide the total cost of freezing the semen by the number of doses produced - this gives you your cost per dose. In the production cost, you may simply consider the fee to freeze each ejaculate, or you may wish to include transport of your stallion to/from the collection center and board whilst he is resident at the facility. If the semen was frozen with export qualification, you should also include the cost of the health testing.
  2. Based on the number of doses you decide to allocate in the breeding contract to each mare per season, you can then calculate your cost per mare. This can be used as the basis for determining your booking fee. Within the booking fee you may also wish to incorporate any additional costs you may have that are associated with handling the booking or rebreed, like an office fee.

When calculating the production cost per mare you could use either the total number of doses allocated to each mare in the breeding agreement, or base it upon the average number of doses used per mare. For example, a stallion owner may allow 2 doses per cycle, with up to 8 doses total per mare for the season; if their total cost of production per dose was $70 and they included all 8 doses in their production cost per mare, then their booking fee would be $560. However, if the stallion owner knows that the average mare bred to their stallion takes 2.0 cycles to achieve a pregnancy, they can base the production cost per mare upon the average cost of doses used, in this case the booking fee would be $70 x 4 doses (2.0 cycles x 2 doses/cycle) = $280.

Should I offer a live foal guarantee?

When frozen semen is sold as a breeding there are a few options with regard to a pregnancy or live foal guarantee:

  1. Fee per breeding with no guarantees: In this scenario, the stallion owner provides several doses (3-6 is typical) of frozen semen in exchange for a breeding fee, there is no live foal guarantee. If there is no limit on the number of mares that can be inseminated, then it is really no different than selling by the dose. However, if the stallion owner agrees to only issue one breeding certificate per breeding fee paid, and requires that any unused semen be returned or destroyed, there is no incentive for the mare owner to use less than the optimum number of doses per breeding.
  2. Free return guarantee: This is similar to the scenario described above with the addition of a pregnancy guarantee (mare checked in foal at 60 days). If the mare is inseminated with the total number of doses included in the breeding agreement and fails to conceive, the mare owner is entitled to an additional allotment of semen for another try the following season. In this case the mare owner would usually repeat the booking fee to gain access to additional doses in the second breeding season.
  3. Full (live foal) guarantee: In our opinion, if you give a “live foal” guarantee with cooled semen then you should also give the same guarantee with frozen semen. When frozen semen is used as another means (like fresh or cooled semen) to fulfill the stallion owner’s obligation in a breeding contract, it represents the fairest system for both mare and stallion owner, partnering together to produce a foal. Like the above scenario, if the mare fails to conceive or produce a live foal, the mare owner is entitled to return service the following season or in some cases a partial or full refund of the service fee.

How many doses should I ship per cycle?

Most stallion owners provide 1 or 2 doses of frozen semen per cycle. The advantages and disadvantages of one or two dose insemination protocols are reviewed in another blog article - The Pros and Cons of 1 or 2 Dose Insemination Protocols. When only one dose of semen is provided per cycle the mare must be intensively managed to ensure that insemination occurs within the period of 12 hours prior to or no more than 6 hours after ovulation. At SBS we recommend shipping two doses of frozen semen per cycle, as this allows the veterinarian to use a convenient timed insemination protocol if appropriate.

Some owners have expressed concerns that if semen is sold by the breeding unused doses of frozen semen remaining after the original mare becomes pregnant may be sold to a 3rd party or used to inseminate another mare without payment of any additional stud fees. This is not a concern in breeds where a breeding certificate is required for foal registration and registration is important. We recommend that stallion owners specify the policy concerning unused frozen semen in the breeding contract and require that the inseminating veterinarian sign an insemination certificate that specifies the mare inseminated and dates that the inseminations occurred and that any unused doses were returned or destroyed as per the contract. See the Blog article - Three Ways Stallion Owners Can Prevent Unapproved Use of Frozen Semen.

How many doses should I include in a breeding agreement?

Generally a breeding agreement will provide for at least two and usually three breeding cycles. If one dose per cycle is shipped the breeding agreement would provide a minimum of 3 doses, whereas if 2 doses per cycle are shipped, the breeding agreement would provide a minimum of 5 or 6 doses (five doses would provide two doses for the first two breeding cycles and then only one dose for the third cycle). In either case it is typical to allow the mare owner to purchase additional doses, for a specified fee per dose, should the mare not conceive using the allocated semen. Although 3-6 doses are commonly provided it is not unusual to see frozen semen contracts that allow up to 10 doses of frozen semen.

The number of doses shipped per cycle and the total number of doses allocated with each breeding agreement may depend upon the availability of frozen semen or the cost of production. If there is a limited inventory of frozen semen it would be logical to provide only one dose per cycle to maximize the number of available breedings. In turn, if the production cost for each dose of semen is expensive, such that the number of doses that can be recouped under the booking fee is limited, then it may also be preferable to ship one dose per cycle, as the increased cost for more intense management of the mare may be less than the cost for additional doses of semen.

NOTE: The definition of an insemination dose should be clearly outlined in the breeding agreement, i.e. the size and number of straws that constitute a dose and the number of sperm within a dose.

For more information on creating your own breeding agreement, see our Free Contract Guide and Templates.

Tags: Contract Considerations