The Hidden Value of Frozen Semen

September 28, 2011
Posted by Julie Skaife in Frozen Semen

You know the value of your stallion…X amount of dollars, your broodmares…X amount of dollars, and your stallion’s offspring…X amount of dollars. But if asked the value of your stallion’s frozen semen you may answer “I don’t know” or “Priceless.” Why do you need to know the value of your stallion’s frozen semen? Unfortunately, stallions pass away, partnerships dissolve due to sales or divorce, bankruptcies are filed, semen is exported, etc. and in these cases you need to be prepared to handle your frozen semen as an asset. The value of frozen semen can be determined either by the cost of production or the number of breedings that potentially could be sold.

The simplest method to determine the value of your frozen semen is to base it upon the cost of production.

For instance, if semen is being exported to another country for storage and distribution a commercial invoice for the value of the semen must accompany the shipment. In this case, if the semen is not being sold to a specific mare owner but remains under the ownership of the original semen owner the cost of production for the frozen semen may be sufficient. Import taxes are then determined based upon the quoted cost of production. The costs incurred may include the money charged for collecting and freezing the semen, any associated health testing and board while the stallion is resident at the collection center. The total cost of production can be divided by the number of doses produced during the freezing session to calculate the cost per dose. This would then be multiplied by the number of doses in the shipment or in storage.

Estimating the value of the frozen semen by the number of breedings that could potentially be produced or sold is not as easy to determine.

This figure can be dependent upon the value of the stallion, the demand for his genetics, whether he is still alive or deceased, the amount of frozen semen in storage and how the frozen semen is sold. For example, let’s take a stallion with a breeding fee on a frozen semen contract of $2000; and a contract that includes an allocation of 5 doses. Therefore if you have 50 doses of frozen semen in storage, this may represent a value of $20K (10 mares x $5000). However, one must remember that in this case the value is only perceived if all the frozen semen is sold and results in the birth of a live foal. Alternatively, frozen semen may be sold on a per dose basis at say $300/dose, therefore in the example of 50 doses in storage, the value would be $15K. In a completely different example a theoretically high profile stallion at the height of his competitive success and demand as a breeding stallion may have recently deceased, leaving only a very limited amount of semen in storage. This limited frozen semen inventory could be divided into partial doses or sold by the straw, necessitating the use of assisted reproductive techniques like low volume hysteroscopic insemination or ICSI. There have certainly been examples of this in the industry. In this case the value of the frozen semen could be exceptional and driven by the demand of interested breeders.

It is important to check with the facility where you store your frozen semen to determine whether they provide insurance and what the limitations of the policy are.

In some cases the insurance may only cover the cost of production; therefore you will need to purchase additional insurance if you wish to insure the semen for more than this amount. It is possible the insurance broker may request some form of validation for the value of the frozen semen, so you may need to provide evidence to support your claim. Obviously the greater the declared value you put on the frozen semen, the more it will cost you in insurance. Insurance companies may also require that the semen is stored under certain conditions by a professional storage facility with a contracted nitrogen supplier and other precautions in place and documented.

In bankruptcy cases the frozen semen may need to be sold in order to pay off debt.

In this situation, your perception of the value of the frozen semen may come secondary to the necessity to sell the semen in order to raise adequate funds. It is possible this semen will be sold at a discount to entice customers. Remember, that not all frozen semen is created equally and mare owners are likely to pay more money for frozen semen processed by a reputable company, one that provides them with some confidence in the viability of the product they are purchasing.

When partnerships dissolve the frozen semen inventory may need to be divided between a number of owners.

Again, not all the frozen semen in inventory could have the same value. For example, doses of semen that don’t meet the recommended commercial threshold of 30% progressive motility may have a lesser value than other semen in inventory that is >50% progressive. Therefore, when dividing frozen semen it is important to specify how the doses of frozen semen will be distributed with respect to quality as well as quantity. These and other specific details concerning the disposition of frozen semen should be carefully addressed in partnership or syndication agreements.

In conclusion, when determining the value of your stallions frozen semen you should take into consideration the reason you need to know the value, the number of doses in storage, the quality of the frozen semen, the reputability of the facility that produced the frozen semen, the value of your stallions breeding fee and the cost to produce the semen. Don’t forget that your frozen semen is an asset and therefore you should outline & specify the fate of your frozen semen in cases of divorce, death or sale.