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Financial management experts, lenders and accountants share ways for dairy producers to improve money and credit management. Look for help on budgets, taxes, loans, financial performance and even bankruptcy.

Precision Dairy Farming – Is It for You? (Part 1)

May 24, 2013

From robotic milking to precision feed management, these new technologies promise great benefits. How will you determine if they justify their cost?

Steele Greg (2)By Greg Steele, AgStar Financial Services

It has now been several years since Global Positioning Systems were introduced to U.S. crop farms. Now it’s a common management tool for many tasks associated with planting, monitoring and harvesting crops. There is no question that this type of technology has optimized management in many areas by improvement in matching fertility need to soil type, enhanced water and soil protection, better economics, and improved decision- making--just to name a few.

Precision ag: not just for grain producers

So, what do these new technologies have to do with the dairy industry? Quite a bit. If you made it to World Ag Expo, World Dairy Expo or any of the many state and regional dairy industry trade events, you likely noticed the introduction of tools and concepts that improve management, replace labor and enhance milk production. These technologies can be grouped into four categories:

1. Robotic milking
2. Feed management
3. Automated calf feeding
4. Herd management sensors

Robotic milkers: This precision technology continues to gain acceptance in the dairy industry. Several companies have released their version of the robotic milkers, which were designed specifically to replace the manual task routinely done by humans to milk cows two, three or even four times a day. The benefits of robotic milkers may include:

• Reduced labor costs
• Decreased need for employee management
• Consistent preparation and milking procedures
• Improved production, milk quality and udder health

Automated calf feeders: Feeding dairy calves manually is a two-or three-times-a-day task. The development of automated calf feeders has brought many benefits, specifically:

• Increased labor efficiency
• Improved immune system development
• Environment conducive to social interaction and welfare
• Maximized growth potential, which can positively influence future milk production

Key considerations when implementing automated calf feedings systems are building layout and machine type. Good planning to design a coordinated system is a requirement.

Herd management sensors: Wouldn’t it be great to be able to monitor cow welfare 24 hours a day, seven days a week? New sensor technology, which works in a variety of environments — from freestall barns to loose housing to pasture — makes this a reality and can help dairy producers:

• Increase reproductive performance
• Detect sick cows one to two days earlier
• Eliminate manual data entry

Precision feed management: Given the rapid rise in feed and grain prices, precision feed management has become very important over the past several years. Technology has gone beyond the common truck scale and computerized software designed to monitor feed costs per ingredient and adjust for shrink and moisture. State-of-the-art feed management devices can measure out various feed ingredients to prescribed levels of accuracy. The benefits of precision feed systems may include:

• Increased feed efficiency
• The ability to match nutrients fed to individual cow needs
• Feeding requirements based on dry matter intake, body weight changes and milk yield
• Inventory management

All of these technologies tout improved economic performance. Most of them provide significant statistics and data points that can improve management intervention and decisions. Precision technology does indeed hold great promise for the industry; however, what will be the cost to adopt these technologies?

Your lender will want to understand the cost benefit analysis of the investment. He or she will also need to know how it meets the investment test of improving efficiency, reducing costs and increasing production. How does a dairyman determine if these are wise investments that will provide the returns that justify the cost?

Preparing a partial budget can help. This decision-making framework compares the costs and benefits of alternatives being evaluated by a dairy business. It will focus only on the changes in income and expenses that would result from implementing a specific system such as a calf feeding system. Then further determination can be made for how the precision technology investment impacts the overall profit and loss statement for the dairy business.

Next in this series on precision farm technologies, Steele will examine how to use a partial budget as a decision tool and how it may benefit your dairy operation.

Greg Steele is vice president, dairy industry, for AgStar Financial Services. He can be reached
at greg.steele@agstar.com.

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