Financial Feasibility and Environmental Implications of Adopting Automatic Milking Systems by Dairy Farms in Wisconsin and Minnesota

View the project report

Commodities

• Animal Products: dairy

Practices

• Animal Production: Adoption of robotic milking systems
• Education and Training: on-farm/ranch research
• Farm Business Management: agricultural finance, labor/employment
• Sustainable Communities: quality of life

Title. Financial Feasibility and Environmental Implications of Adopting Automatic Milking Systems by Dairy Farms in Wisconsin and Minnesota

Problem. In recent years, dairy farmers experienced substantial market volatility, hiring challenges and rising labor cost. These factors, and the substantial time that farmers must dedicate to their dairy operations are forcing an exodus from this industry. Automatic milking systems (AMS) offer a potential solution to these issues. This technology also decreases the reliance on labor while improving animal welfare and resource management. However, AMS requires a significant investment, and its net economic benefits depend on several aspects including daily milk production, herd size, and infrastructure needed to accommodate the milking robot in the barn. As a result, small farms are constrained financially to adopt this technology.

Goal. This project will assess the financial sustainability and environmental implications of AMS adoption in Wisconsin and Minnesota dairy farms. Three farm typologies are considered: traditional non-adopters (particularly small-sized operations), farms transitioning to AMS and established AMS adopters. The project’s aims are:

1. Identify and quantify demographic, economic, and environmental attributes that influence dairy farmers’ decisions to adopt or transition into AMS.
2. Evaluate changes in labor skills profile required among AMS adopting farms and explore labor-hiring challenges and alternatives for dairy farms with traditional labor-intensive milking production.
3. Assess the overall feasibility of AMS technology by analyzing financial and operating management practices required to adopt AMS and determining specific sets of business strategies that optimize farm profitability for each of the three farm typologies.

Methods. This project will employ several analytical methods. An extensive producers’ survey will be conducted in both states. Supplementary qualitative evidence will be compiled from focus group discussions, case studies and a choice experiment (measuring farmers’ monetary valuation of AMS attributes). Moreover, analyses will extend to a comprehensive financial assessment of AMS adoption and non-adoption decisions, and a benefit-cost analysis to evaluate the financial feasibility of implementing AMS.  Participating farmers will provide valuable inputs as members of our advisory committee and focus groups, and in the validation of project results.

Outcomes  

• Learning outcomes. Dairy farmers will learn about the financial feasibility and environmental implications of adopting AMS. Smaller farms will also gain a clearer grasp of labor savings and key factors to consider when deciding to install robotic milking.
• Action outcomes. Dairy farmers will use financial decision benchmarks to determine the feasibility of implementing AMS depending on their farm characteristics and milk production.

The project’s goal is to exhaustively study the feasibility of AMS in Wisconsin and Minnesota from the financial and sustainability perspective. The outcomes expected from our study are:

• Learning outcomes. Dairy farmers will learn about the financial feasibility and environmental implications of adopting AMS. Smaller farms will also gain a clearer grasp of labor savings and key factors to consider when deciding to install robotic milking.
• Action outcomes. Dairy farmers will use financial decision benchmarks to determine the feasibility of implementing automatic milking systems depending on their farm characteristics and milk production