Motivations of Dutch farmers to invest in an automatic milking system or a conventional milking parlour

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1 Motivations of Dutch farmers to invest in an automatic milking system or a conventional milking parlour Henk Hogeveen 1,3, Kees Heemskerk 1 and Erik Mathijs 2 1 Business Economics Group, Wageningen University, Wageningen the Netherlands 2 Department of Agricultural and Environmental Economics, Catholic University Leuven, Leuven, Belgium 3 Current address: Department of Farm Animal Health, Utrecht University, Utrecht, the Netherlands Abstract Besides business economics other motivations might also play an important role in the adoption of new technology. The objectives of this research were to gain insight in the motivation and background of the farmers who choose for an automatic milking (AM) system in comparison with those who choose for a conventional milking (CM) system. In total 120 randomly selected farmers (60 who recently invested in an AM-system and 60 who recently invested in a CM-system entered the study. The farmers answered a questionnaire with questions on motivation to invest in the milking technology, farm structure, personal circumstances and reduction in labour. The five most important motivations for the farmers to invest in an AM-system instead of a CM-system were: less (heavy) labour, increased flexibility, the possibility to milk cows more than twice a day, the leaving of an employee and the need for a new milking system. The five most important motivations for a farmer to invest in a CM-system instead of an AM-system were: lower costs, being standby for 24 hrs per day, lower operational security of the AM-system, less flexibility with an increasing farm seize and the higher expenses with an increasing farm seize. On average, farmers who invested in an AM-system were of the same farm seize as farmers who invested in a CM-system. There was no difference in educational level between the two groups. In the group that invested in an AMsystem, there were more farmers without a successor. Introduction One of the key factors influencing the adopting process is the perceived economic gains that producers will reap from new technology. Without knowing the economic consequence of adopting a new technology, managers will be extremely reluctant to employ them. However the economic consequence is not the only factor that will influence the adoption process. Other influential factors include the degree in with the mix of resources (e.g., labour and capital) utilized in the production process is changed, the level of management skills needed to make effective use of the technology, institutional constraints such as government regulations, and the motivation and goals of the producer (Dijkhuizen et al., 1997). 1

2 It is suggested that social reasons are more important than economic reasons to adopt an automatic milking (AM)-system. Many farmers delay adoption for more information (less uncertainty) concerning the technology itself as well as the institutional environment. In addition to a trade-off between the direct financial costs and benefits of AM-system adoption, the AM-system also brings about non-financial costs and benefits which are difficult to measure, such as increased flexibility of the farmers working day, impact on animal welfare, etc., but which are important elements in a farmers choice (Meskens and Mathijs, 2002). Despite the many farmers who adopt an AM-system, in the Netherlands, still more than the half of the farmers, investing in a milking system, choose for a conventional milking (CM)-system (milking parlour). The research of Meskens and Mathijs (2002) does not take this group in consideration. There is no known information of the characteristics of this group of farms and the motivation for a CM-system in relation to farmers who adopt an AM-system. The objectives of this research were to gain insight in the background of the farmers who choose for an AM-system compared to those who choose for a CMsystem. Materials and methods An random group of 60 farmers who adopted an AM-system and a random group of 60 farmers who adopted a conventional milking system, both in 1998 and 1999 in The Netherlands, have been included in this research. These 120 farmers all have been interviewed by the same person, with the difference that the farmers with an AM-system have been visited and the farmers with a CM-system were interviewed by telephone. This person interviewed the farmer with the help of a questionnaire. Both groups were informed through the robot manufacturers. Descriptive analyses have been carried out on the collected data. For the non-discrete data, statistical differences between the groups have been calculated using students T- test. To analyse the non-numerical, discrete data, the Fisher-Irwin test, using a hypergeometric distribution is used with PQRS. PQRS is is a tool for calculating probabilities and quantiles associated with a large number of probability distributions. Quantiles and probabilities are displayed and edited in their natural position relative to the probability (density) graph (Knypstra, 2002). Results and discussion The response rate of the AM-system group was slightly lower (64%) than of the CMsystem group (72%). Motivations of farmers investing in an AM-system 2

3 Of the farmers buy an AM-system, 26 % had seriously considered buying a conventional milking parlour. There was a large variety in motivations to invest in an AM-system instead of a CM-system (Table 1). Table 1 Most important motivations to invest in an automatic milking-system Motivation Reason 1 Reason 2 Reason 3 Total % Less (heavy) labour Flexibility Milking more than twice Less labour available Need new milking system Improved udder health Higher milkproduction Building new stable Future Other Total Not all farmers did have more than 1 important motivation for investing in an AM-system. More than the half of the robot farmers gives less (heavy) labour as a motivation to invest in an AM-system. This is especially true, considering that the motivation less available labour on a farm (due to an employee quitting or a father retiring) has also to do with a decreased need of labour with an AM-system. An improved labour flexibility is many times given as second or third motivation. The possibility to milk more than twice a day and thus improving milk production and/or cow welfare is also an important motivation, while the higher milk production as such was also a motivation for 6 % of the farmers. The need for a new milking system was for 9 % of the farmers part of the motivation to invest in an AM-system. This indicates that these farmers are under the impression that an AM-system is often bought without the necessity of investing in new milking technology. Improved udder health is connected with the possibility to increase the milking frequency. In particular for high productive animals, it is better for the udder health if the animals are milked more than twice a day. Some farmers gave the necessary building of a new stable as reason for investing in an AM-system. An important aspect in this is the lower space requirements of an AM-system compared to a CM-system, thus reducing building costs. Moreover, when a farm is replaced because of extending cities, these farmers do have a rather large building budget in which a more expensive milking system is less of a problem. Motivations of farmers investing in a conventional milking parlour Of the farmers that invested in a CM-system 78% had considered buying an AMS, which is much higher than the other way around (26 %). The motivations they had to invest in a CM-system instead of in an AM-system are summarized in Table 2. 3

4 Table 2. Most important motivations to invest in a conventional milking-system. Motivation Reason 1 Reason 2 Reason 3 Total % Costs AM-system too high Dependency on AM-system Uncertainty AM-system Poor growing possibilities nd milking unit expensive Better fit in the stable Other Total The most important most important reason for farmers to invest in a CM-system is the cost of the AM-system (depreciation and maintenance). A second important motivation for not investing in an AM-system is the dependency on the system. Although an AMsystem gives more flexible working times, failures might happen 24 hours a day and that gives a dependency. A third reason to invest in a CM-system is the uncertainty about the AM-system. Some farmers believe the development of AM-systems is only beginning and that there are still too many weaknesses in AM-systems. AM-systems are still something for the future. Another motivation for investing in a CM-system is the fact that with an AM-system there is a narrow optimal capacity. This means that the farmer is less flexible in expanding the milk production. When the maximum capacity is reached, an increase in milk quota makes investment in an additional milking unit, while in a CMsystem the milking times are extended in such a case. Moreover, the farm structure may be such that an optimal capacity of the AM-system is not possible. This fact is resembled in the motivation 2 nd milking unit expensive. Some stables are not very suitable for an AM-system, which can also be a motivation for investing in a CM-system. Farm structure In Table 3 structure of the farms data are given. Farms that invested in an AM-system are, on average, more intensive in terms of kg milk per cow and kg milk per ha, than farms that invested in a CM-system. From the 60 farms with an AM-system, 36 kept their cows inside all year around, compared to 8 of the CM farms. This agrees with the higher intensity of the farms with an AM-system. 4

5 Table 3. Farm structure of the farms with an AM-system and a CM-system. Automatic milking Conventional milking Mean sd Mean sd P Cows Hectares Quotum (kg) 752, , , ,000 Milk/ha Milk/cow No grazing Age farmer Married (nr) No successor Milking system did not need replacement AM Conventional 20 Nr. of farms < >10 Milk quota (* 100,000 kg) Figure 1. Distribution of milk quotum for the farms that invested in an AM-system and CM-system. Although there was no significant difference in average quota size between the two groups of farms there was a difference in distribution (Figure 1). A larger proportion of the group of farms with an AM-system has a milk quota between 500,000 and 700,000 kg, which is considered to be ideal for a one milking box AM-system. There was a large number of farms with a CM-system and a milk quota under 400,000 kg, whereas there were no farms with an AM-system in this category. It can also be noticed that in the group of farms who invested in an AM-system a larger proportion did make this investment without the direct need of investing in milking technology. When an investment in equipment is made when the old equipment is not completely depreciated, other than pure economical reasons are the reason to do this. There was no difference between both groups of farms with regard to the age of the farmer. The farmers that 5

6 invested in an AM-system were more often married, but did also have more often no successor. There was no difference in educational level between both groups. Conclusions As expected, there was a large difference in motivations between the farmers that invested in an AM-system and in a CM-system. Most important motivations of the robot farmer are the reduction of (heavy) labour by adopting an AM-system, flexibility and the possibility to milk more than twice a day. Most motivations to invest in a CM-system are related to economics (investment and maintenance and costs of a non-optimal herd size). It is clear that for the farmers that invested in an AM-system other factors than pure economical play a major role when adopting the AM-system. Since most of the reasons for CM-system farmers to not invest in an AM-system were economics related, it can be expected that with a (relative decrease) in price of AM-systems when compared to CM-systems in the future a larger proportion of farmers will invest in an AM-system. Almost the half of the farmers who adopted an AM-system did not need to invest in a new milking system in comparison with 18% of the CM-system farmers. Also robot farmers considered less often the adoption of another milk system. Furthermore farmers with an AM-system are more often married and have more often no successor. Acknowledgements The farmers co-operating in this study are gratefully thanked for their hospitality and their time. Also the manufacturers of milking systems (conventional as well as automatic) are acknowledged for their co-operation in contacting the farmers. References Dijkhuizen, A.A., R.B.M. Huirne, S.B. Harsh and R.W. Gardner, Economics in robot application. Computers and Electronics in Agriculture, 17: Meskens, L and E. Mathijs, Motivation and characteristics of farms investing in automatic milking systems. Deliverable D2 of EU project Implications of the introduction of automatic milking on dairy farms. DeliverableD2.pdf Knypstra, S., PQRS, Rijksuniversiteit Groningen. knypstra/pqrs.html 6