The boards of directors from Select Sires Inc. and five local member cooperatives have voted to unite the federation to become Select Sires Cooperative Inc., according to a company press release. The decision must next be ratified by delegates or member-owners from each of the five member cooperatives. If approved, Select Sires will remain a farmer-owned and controlled cooperative.
“The decision to unify is going to be a pivotal force for Select Sires. We have had a tremendous history of success, but we can’t lean on our laurels,” said Dorothy Harms, chairman, Select Sires Inc. Board of Directors. “We must move forward, look to the future and make changes to secure our position as the industry leader.”
“The Select Sires Board has done an amazing job of forward thinking and strategic planning and then taking something that is an emotional issue and turning it into something that takes the best of what Select Sires has been successful at over the years and to bring that forward and then add in the things that we need to do as an organization to be successful in the future.” says David Thorbahn, president, and CEO of Select Sires.
The Bullvine had the opportunity to sit down with Dorothy and David to get answers to many of the questions that farmers have been asking.
Why Now?
“When you look at the genetics industry, specifically The Bullvine Article entitled The Stud Wars, it becomes very apparent that the competition is very keen within the industry and, as Select Sires has a history of being a leader in AI, I think remaining at status quo leaves us liable for losing some of that positioning within the industry. So, we felt that the member coops coming together can be stronger together, as a cooperative, and we can better align resources and people to best serve producers across the country.” comments Harms.
“This is not a snap reactionary decision” Harms shares, “Starting in 2016, the board with the help of Dr. Allan Grey from Perdue identified that research and development in the agriculture sector is growing at an exponential rate and if Select Sires wanted to continue to be a global leader in the bovine breeding space, they would need to invest significantly more.”
David Thorbahn points out that “We have to fund this through our own industry, whereas some of our competitors can do that with funds that come from other industries.” Not wanting to increase prices to their customers or charge for services they don’t currently charge for, it was decided that they had to find other ways to fund these initiatives and be able to continue to be a global leader.
“Future needs include embryo transfer services to reduce the cost of sire development as well as biopsy and genotyping embryos to increase the rate of genetic progress while reducing costs. A genomics lab is needed to reduce program expense and provide genomic service to our farmer-owners. Select Sires has collected and has access to data, but we must have scientists to develop management solutions and expand investment in next generation technologies of sexed semen.” reports Thorbahn.
What does this mean for farmers?
The board is also not wanting to change the fact that Select Sires is farmer owned and farmer led. So, in working with Dr. Michael Boland, they decided that the current boards of the member cooperatives would form a representative assembly of about 45-60 producer members, and their role would be to oversee the operations and set the direction for Select Sires Cooperative Inc. Select Sires is an industry leader, and market share leader in the US and the board is not wanting to change the service. What they do see is the opportunity to streamline and increase the efficiency of how the organization supports those service representatives.
“I think, short term service should not change at all, but long term, I think it will improve” comments Thorbahn. “The reason is we are going to be able to improve speed to market more products and services and do it in a way that is less costly to deliver. “
“As our member coops currently sit, none of the territories overlap, so there is no need for any changes there” points out Harms. One of the directives from the board is that there would be minimal if any changes to the customer facing portion of the business. “These are the people that really are the strength of Select Sires. There will be the same technicians, sales managers, the same people coming onto the farms as currently.” adds Harms.
The proposed benefits to customer-owners include: access to a broader, more diverse team of experts; increased efficiencies will ensure long-term sustainability for the cooperative; and valuable investment in research and development translates to innovative solutions and tools for dairy and beef producers.
Not all member cooperatives are in favour. Why is that?
“While we cannot speak for them, it is important to remember that we are a federation of farmer-owned cooperatives and this decision was made by their board. This plan allows Premier Select Sires to continue as a part of the unified Select Sires and provides their members with access to the genetics. We can tell you they will not be able to take advantage of some of the same benefits as those members joining the unified cooperative, such as board representation and input on the cooperative’s direction. The opportunity for them to join is certainly something that could be revisited down the road.” adds Harms.
Who will have control?
Select Sires Inc. was founded on cooperative principles and will remain a farmer-owned and farmer-led organization. “And with that we wanted to ensure that we could remain a grass roots governed organization by farmers.” Harms adds. The current member boards of farmer directors will become the representative assembly. The representative assembly will meet at least four times per year, with at least one meeting to be held in-person, to discuss cooperative matters and provide guidance for the board of directors. The board of directors will meet four times per year in-person and provide direction for the cooperative. In the future, members of the representative assembly will be elected by member-owners in their respective divisions throughout the U.S., maintaining a grassroots cooperative. Committees will be developed to monitor local service to mirror the current cooperative territories. The representative assembly will elect a board of directors, which is like the Select Sires board today.
“This is the way that we take the best of what we did before, which was a grass roots cooperative, and improve it by improving the communication and coordination of the board and it’s ability to govern the cooperative going forward. We get the best of being local and the best of being a global entity.” says Thorbahn.
What changes internationally?
The global piece unified in 2017 with the merger with Accelerated Genetics, with that we assumed 100% control of World Wide Sires” says Thorbahn. Outside of the Americas, Select Sires is marketed under World Wide Sires and has developed a strong brand and has no plans to change that. They will continue to represent their three brands, Select Sires GenerVations for elite dairy genetics, Accelerated Genetics known for high commercial value, and the Select Sires brand known for being America’s best.
What is your vision/goals?
“In our vision statement we talk about being a global leader, being the premier provider of bovine genetics to producers across the globe, as well as providing a great place for our employees to be working.” points out Harms.
“We are fortunate to have a board that is very much looking to the future and setting the direction to go and has the confidence that management can achieve this.”, comments Thorbahn, and as a result in 2016 the board set the goal to double their business in 10 years and, three years into that strategic plan, they have achieved their 5-year milestone.
“Our goals are almost 5-fold. We need to be a tier one genetics company, but I believe that genetics in the future will be achieved by both semen and embryos.” says Thorbahn. “With the advent of sexed semen, dairymen are now able to produce their own replacements. We will need to deliver elite outcomes not only on the sexed semen side, but we will also need to deliver the most value outcome on the remaining part of the herd, representing 30-55% of the cows. In some cases, it will be an elite dairy beef animal or it could also be a full blood beef animal from an embryo, which would bring you an even higher value calf” adds Thorbahn. With that comes the need to develop and ensure that Select Sires is a premier provider of the programs and genetics these outcomes require. Thorbahn also highlights the need for data management, “We have several major projects going in this area that will show fruit over the next couple of years.” Select Sires is also looking into what is the 2nd generation of sexing semen, from possible means of gene editing to make an animal that only produces one sex, as well as continuing to be elite in the quality of the semen they produce.
When will this happen? What is the timeline for execution?
Select Sires Inc. and member cooperative boards voted in support of unification. The decision must now be ratified by member-delegates and member-owners. If unification is approved, it is estimated that Select Sires will transition to a unified cooperative by July 2022.
What happens after that?
“I think the heavy lifting comes on delivering on the business plan the board has set forward. Some of that can not happen till the board gives the direction to go ahead. Once that starts there will be a lot of work for a lot of people. It will be very exciting work because everyone realizes they are doing this to improve the long-term sustainability and strength of Select Sires” comments Thorbahn.
The Bullvine Bottom Line
While these changes will certainly alarm many, there could also be an argument that this should have happened 10 years ago. The industry is becoming more competitive than ever and stakeholders need to be as efficient as possible. With making this move, Select Sires boards are demonstrating that they are willing to make the challenging moves to set up the cooperative for the future.
