Robotic milkers might work best where you least expect

PIPESTONE, Minn. — Installing robotic milkers is a sizable investment and a big management change for a dairy farm.

University of Minnesota Extension dairy specialist Jim Salfer and others looked into figuring out the finances and returns involved in installing the machines and shared his work with I-29 Dairy Consortium's Moo University Winter Workshop Series participants.

More than 35,000 robotic milking systems are used around the world, the U.S. Department of Agriculture estimates. More than 5,000 were sold in 2014 alone. While many producers may turn to robots to improve their lifestyle, farmers should be conscientious about system profitability, Salfer said.

Some of the biggest benefits involve data and labor. More than 100 measurements at every milking can help producers make timely decisions. Robots also offer a consistent milking routine, are never late for work, never need training and don't have scheduling issues.

Not that the systems don't come with their challenges. Robotic milking systems can have technical difficulties and may require specialized knowledge to be repaired. Farmers should have realistic expectations about maintenance costs, Salfer said. Eventually, systems become obsolete. One early installation from 1992 was milking until 2016.

Farmers have to consider how soon they want to replace the models they start with. (On the upside for others, the potential for used robotic milking systems to become available that are still in good working condition grows as more adopt the system and/or implement upgrades as they are able.) The potential for a low return on investment exists.

If robotic milking systems are squared off against parlor systems, herd size, milk production and labor can all affect profitability, Salfer said. Efficiency maximizes profits.

On small farms, robotic milkers may seem expensive, but maybe not so much if they're compared to the price of installing a new double 12 parlor. In smaller operations, robotic milking systems can allow for expansion. It may give an opportunity to go from having some hired labor to using only family labor.

The questions shift on farms with more than four robots. How much is the information from the robots worth in better management decision making? How much time is spent hiring, training and managing labor? Will milk production be the same as or better than two- or three-times daily milking? Will quality labor be available in the future and can adequate pay, raises and other benefits be provided?

More cows means more alerts and a person who is on-call essentially around the clock. Higher skilled labor may be needed to keep repair costs in line. Robotic milking systems can also lead to trickier feeding management.

Turning to the numbers, Salfer found a mixed bag.

A study from the Netherlands that compared financials from 31 farms with robots and 31 farms with parlors and all with the same number of cows showed that parlors came out slightly ahead when looking at money left for overhead and profit. Shifting the picture to look at measures on a full-time employee basis, robotic systems came out ahead in every category: cows per FTE, total revenues/FTE, margin on dairy production/FTE, gross margin/FTE and overhead and profit/FTE.

Of note, though: Robotic systems also were tops in total costs per full-time employee.

Back in the Midwest, Salfer turned to FinBin from the University of Minnesota's Center for Farm Financial Management, which includes primarily farms from Minnesota.

Considering farms with 100 to 200 cows from 2011 to 2015, FinBin showed farms with robotic milking systems had higher costs, but also higher milk production per cow and per full-time employee.

Salfer and his research team used some standard assumptions to work out additional scenarios for considering robotic milking systems:

Investment cost per cow will always be higher for robotic milking systems, but there are efficiencies of scale for larger producers, as there would be within a parlor system.

Salfer then threw wage inflation into the mix. For a 120-cow dairy and standard assumptions, robotic milking systems were more profitable whether wage inflation was up to 3 percent. In a 240-cow operation, robots were more profitable compared against three-times daily milking.

"For small farms, robotic milking systems can be a good economic decision," Salfer said. "As it stands now, you're not using your milking (equipment) capital as efficiently as you could with robots."

The script flips when looking at 1,500-cow farms. There, parlors are often operating essentially 24 hours per day. In this case, no added milking efficiency can come from using robots, no matter the wage inflation rate.

"No data supports that you could get more milk (from robots) than three times a day milking," Salfer said. "The future will be milking the right cows at the right time. Maybe six times a day for a fresh cow, but two times a day for a near-dry cow."

Labor time savings from adding robots can't l go toward a lifestyle of laziness, Salfer said. To realize the profit potential of robotic milkers, farmers need to do things they couldn't otherwise.

"You better be doing something with that labor that's more productive," Salfer said. "Get your feed up on time and think about that labor."

A website that uses some of Salfer's study data to plug in individual numbers and see if a robotic milking system might be a fit or a parlor is the way to go: z.umn.edu/robotparlor . A virtual peer group for those with robotic milking systems is available at z.umn.edu/robotnetworksignup .