More U.S. Milk Will Be Coming From Robots

January 30, 2018 10:06 AM
 
milking parlor

(Bloomberg) -- The robots are coming -- this time, to a dairy farm near you.

It wasn’t long ago that cow-milking robots were a novelty in the U.S., but today, automation is showing up on more farms. One of the big factors spurring the trend: more than half of all workers on dairy farms are immigrants, and the Trump Administration’s hard-line policy stances are signaling that labor could be even harder to come by. Robots can cut the number of workers on a dairy farm by 50 percent.

Along with labor worries, cheap credit and improvements in technology are coming together to tip the scales in favor of robotics on dairy farms, said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin, Madison.

“We’ve even had people who’ve worked for years on some farms that left because they’re concerned about being picked up as undocumented,” Stephenson said by phone. “You don’t want to wake up one morning and have a thousand cows to milk and not have the labor to do that.”

Currently, fewer than 5 percent of U.S. dairy farms use robots. That number will probably increase by 20 percent to 30 percent a year for the foreseeable future, according to Chad Huyser, vice president for North America at Lely, a manufacturer of milking robots based in Pella, Iowa. Globally, robotics for dairy farming is already a $1.6 billion industry, a number that will continue to grow, according to a January report by market researcher IDTechEx.

While early models of robot milkers didn’t work as well, the technology has now become feasible and reliable, Stephenson said. Robots work by attaching equipment to cows’ udders, milking them and cleaning them. In a popular model, cows walk up to a stall to get milked whenever they want, and one robot handles around 60 a day. Mechanization is showing up in other ways, too, with mobile robots pushing feed and cleaning up after animals.

It’s an expensive upgrade. One robotic unit can cost a couple of hundred thousand dollars, said Marcia Endres, a professor of dairy sciences at University of Minnesota who has done economic modeling on robotic milkers. Still, if the machine lasts for about 15 years and if a farmer’s total costs for workers are about $25 to $30 an hour, those that install the technology can expect to break even in the end, she estimated.

“You’re prepaying your labor costs for seven to eight years, depending on the loan you get,” said Chad Kieffer, whose family dairy, Kiefland Holsteins in Utica, Minnesota, reduced labor on the farm by half after adding robotics. They have five robots that milk 300 cows.

With talk of building a wall between Mexico and the U.S. from the White House, and a standoff over immigration in the U.S. Congress recently shutting the government down for three days, there’s fear that the traditional agricultural labor pool of immigrant workers, including undocumented ones, may further dry up. Earlier this month, a dairy farmer in Michigan was sentenced to two years in prison for hiring undocumented immigrants.

Rising costs of labor will also continue to drive farms toward automation, according to Bruce Dehm, whose company Dehm Associates LLC in Geneseo, New York, analyzes the financial performance of dairies. Since workers are harder to come by, they’re asking for higher pay, he said. In New York state, where minimum wages are increasing, Dehm projects labor costs per cow to rise 22 percent in the five years through 2021.

Cows often like the robot way of life. The animals gain some autonomy and aren’t interrupted by human beings all the time, said Matt Gould, the Philadelphia-based editor for the Dairy & Food Market Analyst newsletter. More natural cow behavior starts to emerge in the herd, for example, they’ll start licking each other.

Josh Folts, owner of Folts Farms LLC, in North Collins, New York, started his dairy farm from scratch two years ago, and has two milking robots that milk 120 cows. It cost him $400,000 to put in, but now, with the help of the robots, the farm produces more milk that’s higher quality than average because the cows are less stressed, he said.

“By having the automation, it does allow us some free time,” Folts said. “We can go out to dinner, my 12-year old plays hockey and I can make all of his hockey games.’

“The only reason why we don’t have migrant labor is we started out with the robotics, and for that reason we didn’t really have the need,” he said. “We were ahead of the curve as before the election, there was not the scare that people seem to have now.’

 

©2018 Bloomberg L.P.

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