Post on 16-Nov-2014
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Drafting Embryo Transfer Contracts for Livestock Producers
Texas Bar Agriculture Law Conference
May 23, 2013By Cari B. Rincker, Esq.
Who I Am• Grew up on a beef cattle farm
in Central Illinois– Seedstock cattle– Use of Artificial Insemination &
Embryo Transfer (“ET”)– Emphasis on “show cattle”
• B.S. in Animal Science from Texas A & M University
• M.S. in Ruminant Nutrition from the University of Illinois with Dr. Larry Berger– Thesis on DNA markers for
marbling with early-weaned feedlot cattle
Who I Am• Food and agriculture lawyer in
NYC• Actively involved in the
livestock industry– National Cattlemen’s Beef
Association’s Young Producers’ Council Leadership Board (2009-2012)
– Past-President and Founding Member of New York Agri-Women
– Director of New York Simmental Association
ET Contracts
• Background– What is “ET”?– Why is it used?– Costs– Applicability
• Types of ET Contracts– Recipient Agreement– Breeder Agreement– Flush Agreement
• General Considerations
What Is “ET”?• Important to understand some of the “Animal Science”
Behind the Transaction• Embryo Transfer Requires Several Steps– Selection of the Donor Cow– Superovulation of the Donor Cow– Insemination of the Donor Cow– Flushing of Embryos– Evaluation of the Embryos– Selection of Recipient Cow– Preparation of Recipient Cow– Transfer of Embryos
Photo of Brent Rincker’s Champion Cow-Calf Pair
Selection of the Donor Cow• Characteristics vary
among cattle operations– Showring presence– Genetic strength – Carcass characteristics– Qualitative characteristics – Reproductive Soundness– Health– Body Condition Score– Breed registration
Photo from the Illinois State Fair
Superovulation of the Donor Cow
• Donor Cow must be “superovulated”– Follicle Stimulating
Hormone (“FSH”) injected twice a day for 4 days
– Estrus occurs 48-60 hours afterwards
• Cow will produce approximately 7-20 eggs– Around 5-15 will be
transferable
Insemination of the Donor Cow
• Artificial Insemination is typically used on the Donor Cow
• Bred at 8, 16 and 24 hour intervals (or 12, 24 and 36 hours) after standing heat
Flushing of Embryos
• Embryos are collected 7-8 days after breeding date from the Donor Cow
• Embryos are put into cylinder or petri dish with flushing fluid
Evaluation of the Embryos
Embryos are evaluated for Grade and Stage under a microscope
Evaluation of the Embryos
Grades: The embryos are classified numerically as to the potential likelihood of success if transferred to a Recipient Cow. • Grade 1 (Excellent or Good), • Grade 2 (Fair), • Grade 3 (Poor), • Grade 4 (Dead or Degenerating).
Typically, only Grade 1 embryos are used for freezing.
Evaluation of the EmbryosStages: Embryos are also evaluated for their state of development: • Stage 1 (Unfertilized egg) • Stage 2 (2 to 12 cell) • Stage 3 (Early morula) • Stage 4 (Morula) • Stage 5 (Early Blastocyst) • Stage 6 (Blastocyst) • Stage 7 (Expanded Blastocyst)• Stage 8 (Hatched Blastocyst) • Stage 9 (Expanded Hatched
Blastocyst)
Stage 4, 5, and 6 embryos are best with the freezing and thawing procedures.
Selection of the Recipient Cow• The “Recip” should be
reproductively sound, have good milking ability and maternal characteristics, adequate calving ease, good body condition score, and be in good health.– Stay away from heifers if
possible– Docility may also be a factor
University of Illinois Orr Beef Center
Preparation of the Recipient Cow
• Recipient Cow should be synched to the Donor Cow with the use of prostaglandon & CIDR
• Timing of Recipient Cow’s estrus should match the Donor Cow so that the uterine environment is similar approximately 7 days later
CIDR
Transfer of Embryos
• A trained ET technician loads the embryo into an insemination straw with an aid of a syringe
• Ovaries are palpated- embryo placed in the uterine horn on the same side as ovary with an active corpus luteum (“CL”)
Westwood Embryo
Why Use “ET”?
• Increases the number of progeny that superior females can propagate during their lifespan
• Recipient Cows are more affordable than genetically superior cows– Way to enhance quality of
calf crop without buying more superior quality cows
Photo from Rincker Simmentals
Costs• Cost can vary significantly• For cattle, a minimum cost of $250 has been
reported, excluding costs for– Pharmaceuticals used for superovulation and
synchronization– Registration– ET Certificates verifying grade and stage of embryo– Semen ($25-$300/straw)– Board for maintaining cow-calf
Photo from Lautner Cattle
International Sales
• International sales are possible with frozen embryos
• Pay attention to special regulations from importing country that may affect the transaction
ET Contracts for Cattle Producers
• 3 Types of ET Contracts– Recipient Agreement– Breeder Agreement– Flush Agreement
• Client may not use these terms- this is my classification– Client may just ask for an
“ET Contract”
Photo from Rincker Simmentals
Recipient Agreement
• Applicability:– Where a cattle
producer is selling a bred embryo transfer recipient cow and/or ET calf to another cattle producer
Photo from Dixon Springs Beef Center
Example Transaction
• Farmer Rincker enters into a contract with Farmer Smith. Farmer Smith is either: – Non-certified embryologist
and therefore takes the recipient to an embryologist (e.g., Transova)
– Certified embryologist and then conducts the ET themself.
Example Transaction
• The embryogist needs embryos to transfer into the Recipient Cow.– Frozen embryos can be shipped from a cattle
operation of choice (e.g., Hudson Pines Simmental cattle operation) or a donor female is at the embryolist site where she was recently flushed (7 day embryos) (could be from Rincker’s Donor Cow).
– Fresh embryos or frozen embryos are transferred into the recipient cow.
Example Transaction
• Recipient Owner must now confirm the pregnancy– He/she takes the
recipient cow home and waits 2-3 weeks to see if she is bred (waits to see if she has an estrus cycle and is in standing heat).
Example Transaction
• Recipient Owner must now confirm the pregnancy– Performs a pregnancy
check at 45 days. If pregnant, then Farmer Smith notifies Farmer Rincker.
Example Transaction
• Recipient Owner must now confirm the pregnancy– Farmer Smith performs
another pregnancy check (either by palpation or ultrasound) at 60 days. Ultrasound necessary to determine the sex. At this point, the pregnancy is confirmed.
Example Transaction• Farmer Smith typically pays for labor and costs associated with
prognosticating; however, Farmer Smith could charge Farmer Rincker $5-10 per cow.
• During this holding pattern Farmer Rincker does not typically owe money during this time. Payment not due until pregnancy is confirmed at 60 days.
• Farmer Rincker will pay Farmer Smith $X per cow that is confirmed pregnant. Not every Recipient Cow will be pregnant.
– In this hypothetical, Farmer Smith informs Farmer Rincker that he has 5 confirmed pregnant cows.
Example Transaction• Pick-up Recipient Cow and Calf or ET Calf Only-
What kind of agreement is it?– Option One: Farmer Rincker will pickup the 5
pregnant Recipient Cows within 70 days and pay $X for the cow who is confirmed pregnant ($1800-$2200). • If Farmer Rincker does not pickup the cow-calf on time
then late fees pay apply. • Could be assessed a late fee plus daily boarding and
maintenance fees (feed and/or pasture).
Example Transaction• Pick-up Recipient Cow and Calf or ET Calf Only-
What kind of agreement is it?– Option Two: Alternatively, Farmer Smith will care
for the pregnant Recipient Cow through weaning (paying for feed and labor). • Weaning is typically done between 4-6 months of age
(could be specified in the ET Contract). • Typically, Farmer Rincker will only get the ET calf (no
cow) and will pay upon receipt of the calf ($1100-$1500).
Example Transaction• Farmer Rincker takes the ET (Cow and) Calf
home to the Rincker Ranch– If Farmer Rincker uses an embryo that he does not
own (i.e, purchased from another producer with the use Flush Agreement), then most cattle breed associations require verification of the parentage of both the dam and sire before registration will be allowed (e.g., genetic test on hair sample).
– Farmer Rincker is the person applying for the registration- not Farmer Smith.
Example Transaction
If Farmer Rincker does not pay his fee to Farmer Smith then the ET Contract may ask for Farmer Rincker to assign the ET calf’s registration paper to Farmer Smith as security.
Recipient Agreement
What is Currently Done in the Cattle Industry
– Recipient owner will sometimes have an agreement drafted to give to the breeder
– This typically is not drafted by an attorney (although it should be)
– Breeder rarely given a chance to negotiate the terms of the Recipient Agreement
Photo from Rincker Simmentals
Recipient Agreement• Provisions to consider:
– Purchase/lease price of the Recipient Cow, her management and her ET calf
– Payment terms – Instructions for the receipt or
shipment of frozen embryos– Embryo transfer fees for “open
cows”– Dates, procedures and costs
associated with pregnancy checks • Palpation and/or ultrasound
Photo from University of Illinois Dixon Springs Beef Center
Recipient Agreement• Provisions to consider:– Embryo transfer fees for “open
cows”– Dates, procedures and costs
associated with pregnancy checks • Palpation and/or ultrasound
Photo from University of Illinois Dixon Springs Beef Center
Recipient Agreement• Provisions to consider:– Duration that the
Recipient Cow will stay under the care of the owner
– Daily boarding/maintenance fees for Recipient Cow• Feed and/or Pasture
Photo from University of Illinois Dixon Springs Beef Center
Recipient Agreement• Provisions to consider:– Reimbursement for
routine veterinary care and transportation
– Limitation of congenital birth defects
– Limitation of reasonable birthing difficulties (dystocia)
Photo from University of Illinois Dixon Springs Beef Center
Recipient Agreement• Provisions to consider:– Security on the embryo
transfer progeny if bill unpaid• Assignment of registration
papers
– Additional fees for genetic testing
– Marketing services
Photo from University of Illinois Dixon Springs Beef Center
Picture of me taking a blood sampleduring graduate school
Breeder Agreement
• Applicability:– If the cattle breeder can
negotiate the terms of the Recipient Agreement, these provisions can be inserted into a master “Embryo Transfer Contract”
– Alternatively, the cattle breeder could have a standard agreement that he/she will give the recipient owner for each transaction
Breeder Agreement
• From a practical standpoint, these are rarely used in the cattle industry
• Should be used more often than they are– Especially important in the
situation where the Recipient Owner is managing the cow-calf pair through weaning plus
Breeder Agreement• Breeders should make sure that the recipient
owner agrees to bear the burden that the Recipient Cow is – in good health – obtains necessary vaccinations; – within the appropriate age range; – has an acceptable body condition score; – if appropriate, a certain breed or color pattern (e.g.,
solid black/red hided); and, – is structurally sound (enough).
Breeder AgreementTort Liability: The cattle breeder may want to hold the recipient owner liable for gross negligence or intentional misconduct relating to the care of the Recipient Cow and the progeny, including but not limited to birthing complications.
Breeder Agreement
Should require that the recipient owner use best management practices. – Can list these
management practices as an exhibit to the contract
Cattle branding at Crim Bros. nearCasper, Wyoming
Flush Agreement
• Applicability– Used if the cattle
producer is purchasing an embryo transfer flush from another cattle owner
Flush Agreement• Side of the Purchaser
– Minimum number of transferable embryos from the flush (e.g., five embryos)
– Grade of the embryos– Date/procedures for the
receipt of frozen embryos– Guarantee that the flush is
what was ordered (e.g., use of particular bull’s semen) • note liquidated damages in
case of an error
Flush Agreement
• Side of the Seller– Enumerate the payment
terms, including shipping expenses
– Ensure that he/she is not responsible for the transfer of the embryos to the Recipient Cow or birthing problems that may occur
– Seller would benefit from a split above a guaranteed minimum
General Contract Provisions• Legal name of parties (including
D/B/A’s or state where incorporated)– DBA’s are regularly used in the
livestock industry• Has a Certificate of Assumed Name
(or DBA) been correctly filed?• In some states, cannot sue for
breach of contract if DBA has not filed a Certificate of Assumed Name
– Certification that corporation or LLC is in good standing
General Contract Provisions
• Contact information of the parties (and attorneys)
• Choice of Law (especially important if across state lines or international transaction)
General Contract Provisions
• Alternative Dispute Resolution (e.g., mediation or arbitration) or forum selection clause– Most states have a free
mediation program for agriculture producers funded by the USDA (e.g., New York Agriculture Mediation Program)
• Attorneys’ fees for the prevailing party in a dispute
General Contract Provisions• Confidentiality (or mutual non-disclosure agreement)
– Very rare (but should be encouraged)– Term (e.g., 1-3 yrs)– What is confidential?
• price/financial information• conversations about breeding/feeding/marketing strategies• identification of ET technician• discussion about potential buyers or sale price • trade secrets
– Exceptions to confidentiality (e.g., public record, court ordered disclosure)
– Maintenance of confidential information
General Contract Provisions• Binding to heirs,
successors, and assigns • Payment instructions– Whether credit card
information is accepted (or used as security for late payment)
– Other forms of payment such as PayPal or Google Checkout
University of Illinois Beef Center
General Contract Provisions
• Stating the relationship between the parties (i.e., not forming a partnership or joint venture)
• Severability (i.e., if a provision in the contract was not enforceable that the other provisions of a contract will be enforceable)
General Contract Provisions
Compliance with all federal, state, and local laws including but not limited to livestock animal cruelty laws.– Proper animal handling
techniques
General Contract Provisions
• Use of smartphones by employees on the Recipient Owner’s property– Undercover video
surveillance– Only if believe there
might be a potential issue
Practical Pointers for Attorneys
Remember that you’re working with a conservative culture where it is widely accepted to do business with a “handshake” and not involve attorneys
– Need to sell the fact that you add value into the transaction
– Don’t overcomplicate things and use too much “legalese”
Rincker Family Circa 2000
Practical Pointers for Attorneys
• Recommend to use “flat fee” bids for these transactions– Hourly rate if more than
minor negotiation needs to take place
– Create an ET Contract form that can be used by the farmer for similar transactions
My brother and I at the Illinois State Fair
Please Stay in Touch• Send Me Snail Mail: 535 Fifth Avenue, 4th Floor, New
York, NY 10017• Call Me: (212) 427-2049 (office)• Email Me: cari@rinckerlaw.com• Visit My Website: www.rinckerlaw.com • Read My Food & Ag Law Blog: www.rinckerlaw.com/blog• Tweet Me: @CariRincker @RinckerLaw• Facebook Me: www.facebook.com/rinckerlaw • Link to Me: http://www.linkedin.com/in/caririncker • Skype Me: Cari.Rincker