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June 9, 2017

The ROI of High Tech Dairying

 |  By: Dairy Talk

By Jim Dickrell

It’s easy to get wowed—and quickly overwhelmed—by the dizzying array of technology and sensors now available to manage dairy cows.

That was abundantly clear at the Precision Dairy Conference in Lexington, Ky. a few weeks ago, co-hosted by the Universities of Kentucky and Minnesota. What was also clear was the economics of these technologies are still, in most cases, largely wanting.

Immediately after the conference, I had lunch with a farm consultant and he candidly admitted he had difficulty justifying some of the technology to lenders. How do you justify an automated calf feeder? If well managed, you can get better growth rates and you can eliminate the misery of feeding calves in hutches when it’s 90° in August or -20° in January. But how does that translate to the bottom line? How do you depreciate these machines? Are these feeders the best use of capital in operations struggling to prioritize where to put their precious re-investment resources?

Others wonder the same thing: “Economic advantages of Precision Dairy Farming (PDF) applications either come from reduced costs (the PDF application replaces something else, such as labor) or increased returns because of improved herd productivity,” says Henk Hogeveen, with the Business Economics Group at the Wageningen University and Research Centre in the Netherlands.

“For PDF applications, the economic advantages are rarely studied,” he says. And the economic benefits of improved management because of PDF applications is often unknown, he adds.

Hogeveen’s work, and studies by other universities, tend to show the greatest return on investment for automated estrus detection systems. These systems have been around for decades, and reduce or eliminate the need for visual heat detection or tail chalking. But they are not fool-proof, since some portion of cows—maybe 20% or more--don’t exhibit increased signs of activity. At some point, these non-responders have to be placed on a heat synchronization program.

A study of more than 400 Dutch dairy farms, conducted between 2013 and 2015, showed about a 21-day reduction in days to first service on farms with automated heat detection in   conventionally milked herds. While the conventional farms tended showed greater profit, there was so much noise in the data that there was no statistical difference. The reduction in cost was less on farms with robotic milkers, likely due to higher capital costs.

The ROI equation gets even murkier with robotic milking, calving detection, sub-clinical mastitis monitoring and rumination sensors. While these systems can reduce labor, it might not be enough to off-set high capital costs. On small farms with just family labor, the labor saving costs are nil unless that labor is re-directed toward higher-return management functions.

The other problem is what to do when an automated sensor is triggered or a cow shows up on an alert list. Interpreting those alarms and alerts becomes critical. “In order to be successful, PDF applications need to address a clear problem with clear actions or standard operating procedures,” says Hogeveen.  Therein lies the crux of the issue.