Deciding when to replace dairy bulls presents a complex challenge for artificial insemination (AI) companies. These decisions encompass multiple factors, including a bull's age, predicted semen production, and estimated genetic merit. This study's purpose was to provide a practical, objective tool to assist in these decisions. We utilized a Markov Chain model to calculate the economic valuation of dairy bulls, incorporating key factors such as housing costs, collection and marketing expenses, and the bull's probable tenure in the herd. Data from a leading AI company were used to establish baseline values. The model further compared a bull's net present value to that of a potential young replacement, establishing a relative valuation (BullVal$). The range of BullVal$ observed spanned from -USD 316,748 to USD 497,710. Interestingly, the model recommended culling for 49% of the bulls based on negative BullVal$. It was found that a bull's net present value was primarily influenced by market allocation and pricing, coupled with the interaction of semen production and genetic merit. This study offers a robust, data-driven model to guide bull replacement decisions in AI companies. Key determinants of a bull's valuation included market dynamics, semen production rates, and genetic merit.
Keywords: Markov chain; bull valuation; herd simulation.