Milking robots Do they pay?

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1 Milking robots Do they pay? J.A. Salfer, M.I. Endres 2, W. Lazarus 2, K. Minegishi 2, E.R. Berning University of Minnesota St Cloud, MN; 2 St. Paul, MN Results-Why Choose AMS? Top reasons for choosing AMS Frequency Labor 60% Lifestyle/Time flexibility 55% Human Health 28% Need for investment 23% Access to Information/Technology 8% Cow Health 5% Increased Production/Quality 5% Consistency of Milking 3% Individual milking/quarter milking 0% Seiwert, 207 2

2 Potential AMS Advantages Provides Data Milk production etc Over 00 measurements at every milking Timely decision making Other benefits: Consistent milking routine Higher skilled labor Never late for work Never needs training Doesn t need scheduling or holidays off 3 Potential challenges Plug and play, Plug and pray, or Plug and pay Low Return on Investment? (compared to what?) Obsolescence Repair costs Adapted from Bewley,

3 Outline Types of robots Comparing profitability of robotic systems to parlor systems Herd size effect Milk production effect Labor effect Keys to optimizing robot efficiency 5 Choices in the market place Box robots Rotary robots Single box Free flow Guided flow Multibox Batch milking Voluntary milking Free flow Guided flow 6 3

4 Keys to success with robots You must like working with cows Management makes milk Robots only harvest it Doug Kastenschmidt Ripon WI Cow management must still come first 7 Free flow traffic system 8 4

5 Milk first guided flow 9 Key barn design considerations Need to accommodate movement of: Feed Manure Cows Comfort Easy access to robot People Challenge: Minimize labor Work around cows in pens for bedding and/or manure removal Design to encourage natural cow movement to milk box area System to handle cows that need management interventions 0 5

6 Free Flow vs Guided Flow Item Free Flow Guided Flow Fetch rate (labor) 6% 8.5% Initial investment lower higher Level of mgmt complexity Feeding complexity lower higher higher lower Rodenburg, 2007 Rotary Robots Photo compliments Barr 2 6

7 Batch vs Voluntary Milking Batch Similar mgt to conventional milking Control over milking frequency Labor in barn 24/7/365 If milking 24/d Pens are empty for activities No change in feeding Voluntary Deal with imperfections of cow behavior Lose some control of milking frequency Flexible milking frequency Flexible labor Feed changes have impact on visits Fetch cows in each pen Regents of the University of Minnesota. All rights reserved. Cost/Value (small farms) Expensive compared to what??? Family dairy looking to expand Trade offs labor (hired and family) capital investment lifestyle Choices: low cost parlor hired/family labor modern parlor hired/family labor AMS family labor 4 7

8 Cost/Value (larger farms) Do you need a new parlor? How much is the information worth? 2X vs 3X vs robot milking How much time is spent hiring, training and managing labor? Future labor availability Trade offs (what devil do you want to deal with?) labor (hiring, training and managing) repair costs on call 24/7 trickier feeding management 5 Conventional farms have greater margin than robot farms Item Robot Conv P Gross margin over direct costs $23,542 $232, Total nonaccountable costs $79,64 $65, Contractor labor $2,783 $5, Utilities $0,337 $8, Mach & Equip maint & ins $28,088 $24, Land, Bldg, maint & ins $7,404 $5, Avail for overhead & profit $5,98 $67, Bijl et al, 2007, JDS, 90:

9 On a FTE-basis, robots have greater margin than conventional farms Item Robot Conv Cows/FTE Total revenues/fte $206,378 a $64,250 b Total costs/fte $57,796 $48,463 Margin on dairy production/fte $48,582 a $5,787 b Gross margin/fte $63,056 a $27,939 b Avail for overhead & profit/fte $0,372 $88,429 Bijl et al, JDS, 2007, 90: a,b Difference within row (P <0.05) 7 FinBin Data indicates that robot farms produce more milk per cow and FTE with less labor per cow. Item Avg AMS Top 40% AMS Conv Milk/cow, lb 25,70 26,255 22,393 Milk per FTE, lb 2,649,40 2,983,293,685,597 Feed cost/cwt milk $8.06 $7.27 $8.63 Milk price/cwt milk $5.94 $6.06 $7.07 Turnover rate 33.7% 32.3% 35.% Estimated labor/cow 26.9 hrs hrs hrs Net Margin, $/cow $-86 $446 $222 U of MN Finbin www://finbin.umn.edu, data from

10 Direct costs per cow and per cwt. Item Robot Top 40% AMS Conv Feed cost 207 (8.06) 907 (7.27) 932 (8.63) Veterinary 37 (0.53) 36 (0.5) 0 (0.45) Repairs 84 (0.72) 66 (0.63) 37 (0.6) Utilities 80 (0.3) 38 (0.4) 42 (0.9) Hired labor 52 (0.59) 46 (0.56) 423 (.2) Total labor 38 (.55) 372 (.42) 532 (2.34) U of MN Finbin www://finbin.umn.edu, data from Overhead costs per cow and per cwt. Item Robot Top 40% AMS Conv Interest 236 (0.92) 208 (0.79) 92 (0.4) Depreciation 406 (.58) 353 (.34) 6 (0.72) Building leases 62 (0.24) (0.7) U of MN Finbin www://finbin.umn.edu, data from

11 Assumptions consistent across all scenarios Item Value Chore labor rate Management labor rate Milk Price Cost per kg/dm Loan interest rate 5% Equity interest rate 5% Weighted avg cost of capital 3% Loan term on barn Loan term on robot $6.00/hour $25.00/hour $7.7/kg ($7.00/cwt) $0.050/kg ($.0/lb) 20 year 0 year 2 20 cow scenario assumes two robots and D8 parlor Investment Robot (2) $,440,000 Parlor (D8) $804,000 Includes new barn cost Milking Labor Robot (45 min/rms/d).5 hr/d Parlor (64 cows/hr) 2 people 8.5 hr/d 22

12 Net Annual Impact (Robot Parlor) /2/208 Two robot system compared to D8 Parlor $0,000 $9, $8,000 $7, $6,000 $5, $4,000 $3,000 $2,000 $,000 $0 % wage inflation 2% wage inflation 3% wage inflation Robot milk per cow +5.0 lb/day 20 cows 2X milking cow scenario assumes 4 robots and D8 parlor Investment Robot (4) $2,400,000 Milking Labor Robot (45 m/r/d) 2.5 hr/d Parlor (D8) $,352,000 Includes new barn cost Parlor (64 c/hr) 2X - 6 hr/d 3X 24 hr/d 24 2

13 Net Annual Impact (Robot Parlor) /2/208 Four robot system compared to D8 Parlor $25,000 $20, $5, $0, $5, $0 % wage inflation 2% wage inflation 3% wage inflation 240 cows 2X milking 240 cows 3X milking Robot milk per cow +5 lb/day for 2x milking and -2.0 lb/d for 3X milking cow scenario assumes 25 robots and D24 parlor Investment Robot (25) $3,750,000 Milking Labor Robot (45 min/rms/d) 6.75 hr/d Parlor (D24) $6,786,000 Parlor (200 c/hr) 8.2 hr/d 26 3

14 Net Annual Impact (Robot Parlor) Breakeven labor $/hr /2/208 Net annual income for a 500 milking cow dairy - 25 robots compared to D24 parlor $0 -$20,000 -$40,000 -$60,000 -$80,000 -$80,672 -$00,000 -$,20 -$96,080 -$20,000 -$30,57 -$40,000 -$47,542 -$60,000 -$62,672 -$80,000 % wage inflation 2% wage inflation 3% wage inflation Robot -2.0 lb m/c/d Robot +0 lb m/c/d 27 Breakeven labor rate for 500 milking cow dairy - 25 robots compared to D24 parlor $35 $30 $32.30 $29.59 $25 $20 $27.23 $24.95 $27.05 $22.9 $5 $0 $5 $0 % wage inflation 2% wage inflation 3% wage inflation Robot -2.0 lb m/c/d Robot +0 m/c/d 28 4

15 Net Annual Impact (Robot Parlor) Projected Projected Projected Milking Labor (min/robot/d) Milking Labor (min/robot/d) Milking Labor (min/robot/d) /2/208 Milk production and wage inflation affect annual impact 25 robot system compared to D24 Parlor $60,000 % wage inflation 3% wage inflation $50,000 $40,000 48,385 $30,000 $20,000 $0,000 7,445 22,433 $0 -$0,000 -$20, $30,000 -$40,000-34,07 Robot +3.0 lb/m/c/d Robot +4.0 lb/m/c/d Robot +5.0 lb/m/c/d 29 Affect of labor and lifespan on annual profitability per robot for 4 robot system Robot lifespan (years) ($9045) ($6223) ($3475) ($267) ($03) 45 ($9526) ($677) ($3989) ($2694) ($644) 60 ($0,489) ($7706) ($506) ($3748) ($2725) Robot lifespan (years) ($568) ($2789) $62 $439 $ ($659) ($3283) ($452) $92 $ ($722) ($4272) ($480) ($43) $950 Robot lifespan (years) ($2329) $527 $385 $5026 $ ($280) $33 $3067 $4499 $ ($3774) ($855) $2039 $3445 $ lb/cow/d decrease in milk yield No change in milk yield 2 lb/cow/d increase in milk yield New robot investment only no new barn investment 30 5

16 Net Annual Impact /2/208 Affect of production and useful life on annual profitability for 4 robot system $0,000 $8, $6,000 $4, $2,000 $0 23 -$2,000 -$4, $6,000 -$8, year robot useful life (3 robot installations) 5 year robot useful life (2 robot installations) Robot +4 lb milk/cow/d Robot +6 lb milk/cow/d Robot +0 lb m/cow/d New robot and barn investment 30 year barn life 3 Milk per robot 32 6

17 Net Annual Impact compared to 4000 lb/robot/d /2/208 Net Annual impact by milk yield per robot $25,000 $20,000 $5,000 $0,000 $5,000 $ lb/robot 5000 lb/robot 5500 lb/robot 6000 lb/robot 6500 lb/robot Net annual impact per robot compared to 4000 lb/robot/d 33 Visits per day, milking speed, cows per robot and robot feed, residual feed and failed visits are associated with more milk per robot. Variable Effect Milking visits per day +++ Milking speed, lb/min +++ Cows per RMS unit +++ Robot feed, lbs/cow ++ Residual feed, lbs/cow/d --- Failed visits/cow/day -- Refused visits/cow/day -- P<0.000 Siewert et al,

18 Herds with automatic feed push up had more milk per robot and milk per cow. Item Milk per robot (lb) Milk per cow (lb) Automatic feed push up 458 a 80.2 a Manual feed push up 3805 b 69.4 b Contained bunk 478 a,b 73.9 a,b a,b,c Means within variables differ (P < 0.05) Siewert et al, Keys to increasing milk per robot High milk production per cow Fetch early lactation cows more frequently to maximize lactation potential Well balanced diets and excellent transition cow program High reproductive efficiency Excellent cow comfort Low somatic cell count Minimize box time per cow Cows that attached fast Cows that milk fast Carefully thought out milking permission settings Each 5 seconds more/milking = one less cow Minimize free time May increase the number of fetch cows in free flow systems 36 8

19 Reduced box time per cow Select for cows that milk and attach fast Keep RMS equipment in top working condition Singe udders Trim tail switches 37 Milk per cow 38 9

20 Milkings per day, milking speed, robot feed, residual feed and failed milkings are associated with more daily milk cow. Variable Estimate Milking visits per day +++ Milking speed +++ Robot feed ++ Residual feed, lbs/cow/day --- Failed visits/cow/day -- Refused visits/cow/day -- P<0.000 Siewert et al, First lactation cows get off to a slow start compared to older cows But once adjusted first lactation cows milking frequency exceeds older cows Siewert, et al, 207 Week of lactation Month of lactation 40 20

21 Fourth week milking frequency was lower than desired for many herds Siewert et al, Pre-training heifers decreases fetching after calving 42 2

22 Labor Efficiency 43 Reported labor savings varies greatly No labor savings (Steenveld et al, 202; Wade et al, 2004) 8-9% labor savings (Gustafson, 2004; Mathijs, 2004) >25% labor savings (Bijl et al., 2007, Finbin U of MN, 207) 44 22

23 $ per cwt /2/208 Larger guided flow farms were more labor efficient $2.00 MN 2 Finbin Avg Top 40% Cost/cwt $.53 $ lbs/c/d Guided Flow Data 86 lbs/c/d $ lbs/c/d $.56 $.24 $ lbs/c/d $0.75 $0.00 One robot 2-3 robots 4-5 robots 6-8 robots Labor cost/cwt Linear (Labor cost/cwt) Personal communication, Jeff Peissig (8 farms) ; 2 (6 farms) 45 Fresh cow management Special observation of fresh cows Observe rumination, activity and manure daily Palatability of PMR as well as pellets is important Frequent fetching of fresh cows Multiple feeds through robot box allows flexibility 46 23

24 Feeding COWsistency Consistent PMR dry matter Consistent mixing and delivery Consistent feed push ups Consistent and frequent fetching Highly palatable PMR Highly palatable, consistent, high quality milking box feed 47 Keys to success with robots Focus on maintenance Daily maintenance important Equipment is expensive Downtime is more expensive Be prepared for higher repair costs 48 24

25 Keys to success with robots Start up & Dealer support Use proven tactics at start up Successful start up minimizes financial stress Good dealer support is essential 49 Keys to success with robots Requires excellent business and management skills Higher management than conventional system Mindset to maximize output/robot 50 25

26 Summary Main management factors affecting profitability include: Milk production per robot Milk production increases compared to other milking systems Trading manual to more productive management labor Labor savings compared to other milking system option 5 Summary Other factors include: Robot useful life Wage inflation 52 26

27 This material is based upon work supported by USDA-NIFA under Award Number Jim Salfer Phone: