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Contract Considerations for Exporting Equine Frozen Semen

Posted by Erin Bishop on Tue, Sep 13, 2016 @ 07:57 PM

Considerations_for_Exporting_Frozen_Semen_-_Lufthansa_Airlines_Photo.jpgThe tests have been done and the frozen semen is ready for export…Now what? In our article, Exporting Frozen Semen from the United States, we covered topics ranging from determining if there is a foreign market for your stallion, to how to export the semen once it’s been frozen. Stallion owners/agents also need to consider how they are going to offer the frozen semen to a foreign market in the form of their breeding contract. In this article, we will discuss ways to sell the semen (by the dose or with a live foal guarantee), responsibility of shipping fees, what is to be done with leftover doses as well as who covers the costs of health testing and freezing, plus more.

Select Breeders Services (SBS) has been in the frozen semen importing and exporting business for nearly 30 years. It was 1983 when SBS first imported frozen semen from Germany into the United States. Also, to the best of our knowledge, SBS was the first to export frozen semen from the US when we shipped Abdullah’s frozen semen to Europe. Since then we have exported thousands of frozen semen doses all over the world including, South America, Europe, South Africa, the Middle East, Australia, and New Zealand just to name a few.

Before the frozen semen can be shipped you need to make sure it was processed under the CURRENT import regulations of the destination country. It is not uncommon for a foreign country to change their regulations with little to no warning. Often the USDA import/export officials are not notified of such changes until a health certificate is presented to them for approval. It is also important that you DO NOT make a contractual commitment with a client in a foreign country until you know for sure the semen from your stallion can be frozen successfully and that the import requirements can be met. We also recommend that once the semen is frozen that mares be bred in the United States so you can demonstrate some level of fertility before sending the semen abroad. You can find more information on this subject in our article, Test Breeding Mares as an Aid to Marketing Equine Frozen Semen.

In the process of facilitating export shipments, we have seen numerous types of contracts arranged between stallion owners and their buyers whether they are brokers or mare owners, some are good and some are pretty bad. You may wish to download our free Frozen Semen Contract Guide and Template for additional information on frozen semen contracts. Below are some important things to take into consideration when drafting a contract to sell frozen semen overseas.

Who is Responsible for the Health Testing and Frozen Semen Processing?

Tank_Red_Seal Stallion Owner/Agent: Typically, the stallion owner/agent is aware of a desire for their stallion’s frozen semen in a foreign market. They proceed with covering all costs for health testing and processing of the frozen semen. They anticipate recouping their costs when breedings are sold overseas.

Mare Owner/Broker: Occasionally, a mare owner or broker is interested in the genetics of a stallion in a foreign country. The stallion owner/agent may not have the means or the desire to have frozen semen processed from their stallion. Thus, the mare owner may offer to pay for the health testing and processing fees. In such instances, it could prove beneficial for the mare owner/broker to find others in their country who may wish to breed their mares to the particular stallion to share the costs.

Shared Costs: It’s possible a stallion owner/agent may come to an agreement with a mare owner/broker to share the costs of the health testing, freezing and shipping of the semen. For instance, if the mare owner pays for the health testing and freezing of the semen for export the stallion owner may agree to cover the costs of board during the stallions stay and any processing of frozen semen for domestic use.

Who is Responsible for the Shipping Fees to the Destination Country?

Stallion Owner/Agent: Sometimes the stallion owner/agent has determined there is a market for their stallion in a foreign country. Thus, they take it upon themselves to pay for the testing, collections, and all shipping fees to the final destination. It is possible to combine the frozen semen from their stallions with other clients shipping semen to the same destination. This allows them to save money on shipping and document fees.

Broker: There are several reputable frozen semen agents (brokers) available as distribution outlets for stallion owners. Concentrated in Europe, these agents typically specialize in one breed. For example, nearly all Standardbred trotter semen exported to Europe is handled through an agent. These agents advertise and promote the stallions, arrange import, storage & distribution, execute contracts with mare owners, and collect stud fees for mares which become pregnant. Once the fees are collected, the agents subtract a percentage (10-40%) of the fees paid and forward the balance to the stallion owner. Since the agent’s income (in the Standardbred industry) is directly dependent on the results obtained with the semen, they typically distribute only to approved AI centers and monitor the use of the semen carefully.

The broker may also save money on shipping by importing semen from several stallions at one time. Then they can cover their shipping costs with income they receive from the breeding fees.

Mare Owner: Another option is to ship the semen to a foreign country for one specific mare owner. There may not be a large market for your stallion in a particular country but there may be a single mare owner interested in his genetics and this mare owner may be willing to cover the costs of the shipment to have in order to have opportunity to breed to your stallion. Therefore, the number of doses specified in the contract can be shipped directly to them. It is also possible to combine these doses with a shipment of other stallions going to the same destination in order to save money on shipping and document fees.

How Will You Sell the Semen?

Fee Per Pregnancy (Full Guarantee):

SBS recommends stallion owners offer frozen semen from their stallions just as they do with cooled semen…with a live foal guarantee. For example, the stallion owners sell a “breeding” which includes the guarantee of a live foal. A certain number of doses, usually 3 – 6, are offered with the signing of the contract but with the option of additional doses should the mare not obtain a pregnancy. The offer of a mare substitution is usually included as well. This is the ideal situation for international distribution of frozen semen. This option is the most attractive for mare owners and the best way to efficiently manage the inventory of your stallions frozen semen to produce the maximum number of foals.  For additional information please visit our article, Frozen Semen - Sell by the Dose or as a Breeding?

How to Prepare Your Older Mare - Mare and Foal As mentioned above, some stallion owners/agents may decide to send a “bulk shipment” with enough doses to breed 10 or more mares to an SBS Affiliate Lab for storage and distribution. It’s possible they may not have even sold one breeding before the semen is exported. Once a breeding is sold they are able to authorize the number of doses they wish to have shipped to the mare owner. For example, the breeding contract may come with a live foal guarantee and four doses of frozen semen with the option to purchase more doses if needed. The stallion owner/agent may authorize the semen be shipped 2 doses at a time. Therefore, the remaining two doses for the contract remain safe in storage at the SBS Affiliate Lab. Should the mare get in foal with the first two doses shipped it is not necessary for the remaining two doses to leave the SBS facility. Thus, the remaining two doses can be used to sell a breeding contract to another mare owner.

Fee Per Dose (No Guarantee):

This has typically been a popular option for selling frozen semen internationally. In this situation, the buyer usually pays in advance for each dose. They are then permitted to breed as many mares as they wish. For example, if you sell four doses of frozen semen it is possible they could obtain four foals or no foals at all. This is a risky way for brokers or mare owners to purchase semen.

This is not an advantageous option for stallion owners/agents because the buyers may poorly manage the use of the frozen semen. They may not utilize personnel who are experienced breeding with frozen semen. It’s also possible buyers may use an inadequate number of doses or breed mares of poor quality in the hope of maximizing the number of foals they obtain for the money they spent. However, if the semen is mismanaged the end result will likely be few or no foals produced.

It’s important to remember that one unsuccessful year of breeding with frozen semen can forever ruin a stallion’s reputation in any given country. We recommend you do everything possible to insure success the first year as you are likely not to get a second chance.

Fee Per Breeding (No Guarantees):

With this option the stallion owner provides several doses, usually 3 – 6, of frozen semen in exchange for a “breeding fee.” Typically, there is a limit on the number of breeding certificates offered per breeding fee paid. Without a limit this option is no different than selling the semen by the dose. The stallion owner will usually request that any unused semen be returned or destroyed. The buyer has no reason to use less than the optimum number of doses per breeding. It’s possible the mare could conceive easily and therefore there will be a number of unused doses remaining. If this occurs, the stallion owner can execute another contract and collect another breeding fee. Then the buyer is free to use the semen on another mare or again on the same mare the following breeding season.

Free Return Guarantee (limited number of doses):

This option is similar to the “Fee Per Breeding (No Guarantees)” but with this option there is a pregnancy guarantee. A specified number of doses is sold with the “breeding”. However, if the mare fails to conceive the buyer is entitled to an additional allotment of frozen semen for a second attempt. The fees are paid in advance and there is no return even if the mare fails to produce a live foal on the second allotment doses.

What is to Be Done with Unused straws/doses?

The Test Freeze - Straws on Rack Your contract should specify what is to be done with any remaining doses should the mare obtain a pregnancy quickly without using the total number of doses offered in the contract. There is no need to specify what to do with unused doses if the semen was sold on a “per dose” basis because the buyer has free rein to determine the number of mares they breed with the offered doses. However, if you choose another option for selling the frozen semen there are ways to prevent the unauthorized use of the remaining frozen semen. A few of those options are the ability to use the semen on another mare, breed the same mare the following year or destroy the unused doses. It is important to point out that due to current health regulations, it may or may not be possible for unused doses to return to the United States once they have been exported to a foreign country.

Use on Another Mare: It is possible the buyer may have other mares they wish to breed to your stallion. Once the first mare is checked safely in foal, they may wish to breed an additional mare with the remaining doses. This allows them to breed to your stallion by paying another breeding fee but without the cost of importing additional doses.

Same Mare Next Breeding Season: Once the initial foal hits the ground the mare owner may be very pleased with the cross between their mare and your stallion. They may choose to pay an additional breeding fee to produce a full sibling to their current foal.

Destroyed: Some stallion owners/agents are concerned with the unauthorized use of doses which remain after a breeding contract if fulfilled. Thus, one option would be to have them thaw the semen at room temperature and provide you confirmation, possibly via a photo of the straws or returning them by mail, that the semen was destroyed. This will provide assurance to the stallion/owner agent that the semen was not used to breed additional mares. Another option is for the stallion owner/agent to provide an ‘insemination certificate’ whereas the veterinarian has to sign that “x number of doses were used and the remaining x number of straws were destroyed.”

For additional information concerning what should be done with unused doses please see our article, Three Ways Stallion Owners Can Prevent Unapproved Use of Frozen Semen.

These are just a few of the important things which the stallion owner/agent should make sure to include in their contract. The contract should also clearly explain which party is responsible for all of the associated costs of the program. For example, frozen semen production, export health testing, nitrogen tank rental, shipping, brokers fees, customs fees, import permits, advertising, semen storage, insurance and registration fees. As always, do your homework, work with reputable/ established companies and be sure to not rush into an agreement until you have all the facts.

Tags: Frozen Semen, Contract Considerations, Semen Import