Robot Economics Balanced by Quality of Life

M ilking with robots can be expensive when looking at the cost of purchase and maintenance. However, when considering quality of life and milk production improvements, it helps make the math easier.

A World Dairy Expo seminar focused on the economics and implementation of robotic milking systems on farms. A financial analysis of robotic milking includes three factors, says Larry Tranel, dairy specialist for Iowa State University Extension and Outreach.

1. Cash flow
2. Profitability
3. Quality of life

While sales people and bankers tend to focus on cash flow, Tranel would rather see producers focus on making a robotic milking system profitable.

“Quality of life is a big reason people put robots in, because they hate dealing with labor,” Tranel says.

A study from Iowa State showed milking labor can decrease 75% when implementing automated milking.

Besides labor savings, increased milk production is another benefit. Tranel has heard of farms gaining 25% to 30% in production from a change to automatic milking systems due to greater milking frequency. However, he cautions producers who milk 3X could see a drop in production.

A 10% increase in milk production would be a more conservative estimate. Tranel points out data from University of Minnesota and European studies show a 3.5% to 5% increase just from the robots.

“If you get a 10% increase, the rest of that tends to be from the facilities you just built,” Tranel says. For instance, a new freestall barn would factor into the increase for new farm build. Retrofits would be around 5%.

When thinking about adding robotic milkers, producers should consider how efficient their current facilities preform.

An outdated parlor or tiestall barn is probably less efficient than robotic milking. If the parlor is milking at least 75 cows per hour per person milking, then it is likely not a good choice to go with robotics.

Tranel says producers should ask “How much are you willing to spend to have cows milked?”

In a milking system comparison Tranel calculates the cost to milk cows on five different types of parlors milking 140 cows when labor is $14 per hour and mailbox milk price is at $17.50 per cwt:

“The milk price is pretty sensitive to determine if these systems pay or not. The higher the milk price means producers will get more benefit from a robot because of increased milk production with a higher price,” Tranel says.

Repair costs should also be taken into account for robots, and sometimes those repairs can be more costly than what a producer anticipates.

Tranel says to also account for years of useful life in an economic outlook, noting robot milker unit life can range from 10 to 15 years.

When just looking at the net financial impact or profitability robots are near a breakeven, Tranel says. “Profitability wise the financial impacts are balancing out pretty well.”

Where the true benefit comes is quality of life. From surveys of dairy producers the average benefit to quality of life is approximately $15,000 per year.

Not being forced to wake up at 4 a.m. to milk cows or having time to see your child’s baseball game in the afternoon might be reason enough to move forward with a robotic milking system.