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Robot Economics

October 22, 2010
By: Jim Dickrell, Dairy Today Editor
 
 

 

Can labor savings cash-flow robotic milkers? 

D10174a

Tom Pfaff expanded his dairy to 420 cows and seven robots

to justify adding a herdsman.

 

Bonus Content


More on robotic milkers:

Delaval

Lely

Even with a 20% volume discount, robotic milkers demand a pretty good milk flow in order to be able to cash-flow above and beyond conventional milk parlors. But as labor rates creep higher and labor availability becomes more uncertain, proponents says robotic milkers will slowly catch on. Perhaps.

The volume discount and labor savings make robotic milkers a better fit in herds with 300 to 500 cows than in smaller herds. That’s because robots in the larger facilities displace more labor.

“On a single-robot farm with 60 cows, there’s not much labor to replace. The owner still has to be there to manage it, so there’s no direct labor savings,” says Tom Anderson, a farm business instructor at Riverland Community College in Albert Lea, Minn.

When you run the numbers for interest, principal and maintenance, he says, you need to realize cost savings of about $33,000 per robot per year. With benefits added in, milkers can cost $12.50 to $14 per hour, according to Farm Credit System data. If they work 2,400 hours per year, that’s an actual cost of $30,000 to $34,000. The larger the installation, the larger the labor savings—to a point. A larger dairy might have to hire a herdsman to oversee the milking operation, but he’ll be managing the robots and not a labor force of six or more milkers.

 

That’s exactly what Tom Pfaff of Melrose, Wis., did when he built a 420-cow barn equipped with seven Lely robots. Prior to that, Pfaff was milking 160 cows 2X in a 60-cow tiestall barn with two employees and family labor.

Since moving to the new barn in November 2009, Pfaff hired a herdsman to manage the herd and the robots. With a conventional parlor, he figures he would have needed five to six additional employees to milk the expanded herd.

His existing workforce, plus the herdsman, can now handle almost triple the old herd size, feeding them and cropping a little more than 1,000 acres. At $179,000 per robot, it’s a true capital-for-labor exchange.

But it’s still a tight fit. Pfaff originally wanted to simply double his herd size to 300 cows or so. “But with just five robots, it was hard to justify the herdsman,” he says.

 

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Dugan Valley Dairy owners (left to right) Scott Kees and Dale and Larry Deetz did not hire additional labor when they built their 300-cow, five-robot barn.

Even now, he figures he needs 80 lb. of milk per cow per day at $14.75 cwt. to cash-flow the system. And because he’s been in the facility only a year, he’s still not sure what his production will be. He hit 80 lb. per cow once (with 70% first-calf heifers), but then ran into some feed issues when the wrong mix was delivered to the bin.

The good news is that his somatic cell count has dropped below 200,000 cells/ml since moving to the new facility and has been as low as 140,000 cells/ml. That, plus component and volume premiums, means he usually claims a mailbox price $1 to $2 higher than Class III.

Pfaff’s lender, Brad Rommel of Jackson County Bank in Black River Falls, Wis., says he lent the money based on labor savings alone. “We were real conservative and took just the benefit of not having extra hired labor over the 10-year life of the robot,” he says. Even then, he budgeted only $20,000 to $25,000 per year per employee.

 

Dugan Valley Dairy, Mondovi, Wis., approached the problem from a different angle. Brothers Dale and Larry Deetz teamed up with their neighbor Scott Kees to build a 300-cow, five-

robot facility. The men kept their existing herds and built the dairy on a site suited for doubling. Neither of their old facilities, with 100 to 125 cows each, was expandable to more than 200 cows.

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FEATURED IN: Dairy Today - November 2010

 
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