ISU Extension develops tools for evaluating finances of robotic milking system

ISU Extension develops tools for evaluating finances of robotic milking system
Larry Tranel

DUBUQUE, Iowa - Larry Tranel, Iowa State University Extension dairy specialist, sees robotic or automatic milking systems transforming the dairy industry in the coming years.

"Installation of robotic milking systems in Iowa is expected to more than triple in 2012, and it is possible that by 2020, 10 to 30 percent of dairy producers will be using robotic systems," Tranel told bankers attending the recent Tri-State Agricultural Lenders Seminar in Dubuque.

Westfalia, Lely and DeLaval offer systems in the Midwest, and Boumatic will soon be back with a new system. Other European companies are likely to follow.

The automatic systems clean udders, attach milkers using 3D digital cameras or laser beams, milk and disinfect.

"We're seeing exponential growth, and I don't see that stopping," Tranel said. "There are about 14,000 robotic systems worldwide."


Robotic milking works for all segments of the industry from small to large and from grazing to confinement operations, Tranel said.

To help producers and lenders make informed decisions on the economic variables associated with robotic systems, Tranel and Kristin Schulte, Extension farm and agribusiness management specialist, have developed a partial budget spreadsheet.

The tool should be available on the ISU Extension Dairy Team website within a couple months.

"There are two very important things to note when comparing robotic versus conventional parlor milking," Tranel said. "First, many factors are highly variable with slight changes in milk price or milk production significantly changing the financial impact. Second, there is limited research data on which to base various assumptions."

Herd size is important in calculating the number of robots needed, Tranel said. One robot can handle an estimated 55 to 65 cows. Another 10 percent to 12 percent can be added when including dry cows. So a 70-cow total herd per robot would be feasible.

Milk price should be estimated as a long-term, projected average. Estimated cost per robot should include a new building or modifications to an existing structure to house the robot and adequate alleys for cow flow. Tranel and Schulte added $10,000 per robot for housing. Most robots on the market in 2011 are estimated to cost around $200,000.

Tranel said many robots installed in 2000 are still in operation, so years of useful life is an unknown variable. He and Schulte chose nine years for their calculations.

A major appeal of robotic systems is reduction in labor, Tranel said. Current hours of milking for the designated herd size in a conventional parlor needs to be compared to the anticipated hours of milking labor after the robot is installed.


Herd management software that accompanies the robotic milking system can lead to labor savings from heightened heat and mastitis detection and identification of other sick cows. On the other hand, there will likely be an increase in records management with the robot.

Research shows producers may experience milk production losses of 6 percent to 9 percent if they were milking three times a day, but if they were milking two times a day, they could expect a 3 percent to 5 percent production increase.

Robotic systems use pelleted feed during milking, which may increase feed cost. However, feed cost could decrease relative to previous feeding practices as cows are individually fed.

Schulte and Tranel calculate a total positive impact of $89,262 for a robotic system. Total expenses would be $93,390 for a net financial impact of minus $4,128.

"But quality of life improvements from a flexible management schedule and not being tied to an early morning milking schedule is valued at $5,000," Tranel said. "Valuing the ability to micro-manage the herd with the herd record system at $2,000 puts the net impact at $2,872."

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