October 30, 2018

Could Robots Slow Dairy Consolidation?

 |  By: Anna-Lisa Laca

Automation in the dairy industry could help slow consolidation. New reports from CoBank and the U.S. Department of Agriculture Economic Research Service show robotic milking systems could level the playing field for dairies of all sizes.

There are really two categories of milking robots on the market: “box” style units and robotic components installed on rotary parlors. According to a new study from CoBank, they both provide an alternative to traditional dairy labor, which has become an ever growing challenge for producers of all sizes.

“Labor and finance are two of the most important issues when large farms are considering dairy robotics, but when I spoke to smaller-scale producers, the primary drivers of adopting this technology were around quality of life,” said Ben Laine, senior analyst with CoBank. “As the technology improves and labor costs increase, we will see the tradeoffs continue to shift in favor of robotics.”

According to USDA, autonomous robots appear to be a “constant-returns-to-scale technology.” Meaning they don’t provide lower per-acre costs for larger farms than smaller farms because large farms would need additional robots to milk their cows.

Before robots, one source of large-farm cost advantage was in the milking system, USDA says.

”A single large rotary milking parlor with a crew of 4-5 workers can handle 2,500 to 3,000 cows 3 times a day, and realize significant unit cost advantages over smaller farms,” the agency’s latest farm consolidation report says. “Smaller operations are, however, starting to adopt robotic milking machines, which free labor (usually family labor on smaller farms) to work on herd management and crop production. A single robot serves about 70 cows, and larger farms simply add more machines. Thus, robotic milkers appear to be “constant returns” technologies, beyond 70 cows, and therefore can reduce per-unit costs more on small than on large farms, thus favoring smaller operations.”

Still, Laine says there are plenty of unknowns that will cause producers to think twice about the machines including the useful life of the units, milk production efficiency, and lifetime maintenance costs.