The Economics of Dairy Robotic Milking Systems

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Robotic milking systems are widely used all around the world. Currently, more than 35,000 units are operational on dairy farms across the globe. Dairy producers prefer using milking robots to expand their operations without the need to hire additional labour and for the improvement it brings to their lifestyle.

Profitability of Robotic Milking Systems (RMS)

Some of the major factors that affect the profitability of robotic milking systems include labour savings, useful service life, milk produced by each robot each day and overall milk production per cow. The biggest limitation in the adoption of RMS is the huge capital investment required. Around $150,000 – $200,000 is required for each robot capable of milking 50 to 70 cows each day. Historical data suggests that milking robots lag behind traditional milking systems in terms of profitability. However, improvement in management skills, advances in technology and higher labour costs have the potential to change these results.

Labour Efficiency

As per the 2016 USDA report, the wages of livestock workers went up by 3{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} in 2014 and the corresponding number was 4{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} in 2015. The labour savings from robotic milking systems vary a lot, as research data suggests that these savings vary from 0 to 29{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. Much of this variation might be explained by management and barn design. As per Farm Management Records, RMS farms in Upper Midwest produced an average of 2.2 million pounds of milk for each full-time worker whereas the corresponding number stood at 1.5 million pounds for herds of similar size in milking parlours.

Another factor that will affect the adoption of robots is the future availability of labour. As per a 2014 survey, 51{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of all the labour on farm was immigrant workers. The availability of immigrant workers might get reduced in case US passes tighter immigration laws or fewer foreign workers decide to work on farms.

Change in Milk Production on Transition to Robots

The biggest factor that affects the milk production rate is the change in milking frequency. As per data provided by de Koning (2010), the production increased by 5 to 10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} when using robotic systems (milking twice) but the overall production was down by 5 to 10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} when milking three times. We have done our own survey and we found that the milking frequency for RMS farms ranged from 2.4 to 3.2 with the average at 2.8.

In order to achieve optimum efficiency, it is recommended higher milking frequency is recommended in early lactation followed by lower frequency in the later lactation period. There are many factors that affect the individual cow as well as hard average milking frequency. Some of the primary factors include:

Permission settings for milking
Number of cows a robot has to milk
Quality and palatability of robot box feed and partial mixed ration
Idle robot time
Policy to fetch cows
Working distance as well as barn design, especially in case of grazing herds.

Conventional Parlour Systems vs Robotic Milking Systems

The economic performance of Dutch farms was compared by Bijl et al in 2007. The comparison was made between farms using robotic milking systems, like those supplied by Fullwood Packo, and closely matching conventional farms when milking twice. Due to the higher set up costs for robotic milking systems, traditional farms generated more profit. On the other hand, RMS farms had 29{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} lower labour requirement that resulted in higher milk production and consequently, higher income per worker. The conclusion drawn was that investment in robotic milking systems allows farms to produce more milk and to milk more cows with reduced labour.

Milk Produced by Robots

The key to maximising profitability is maximising the daily milk output per robot. The net annual income can be increased by approximately $4100 for every 500 pound increase in the production of milk per robot in a 4 robot system over a 20 year time period and considering 2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} annual wage inflation. There are farms in the US that are able to consistently harvest more than 6000 pounds of milk daily per robot. They are able to achieve these numbers with the help of high numbers of cows milked by each robot (often more than 60) and higher milk production per cow. The primary factors that can help achieve higher production include: