Are Robots Socio-Economically Viable?

Robotic (or automatic) milking systems (RMS) are gaining in numbers around the world, particularly in Europe. Greater numbers of units on farms mean that we now have a better “laboratory” for studying the socio-economic impacts of adopting this technology. As part of a large, grant-funded study, researchers in the European Union carried out an extensive set of analyses between 2001 and 2003. These results were presented at a symposium in The Netherlands in March. This paper provides an overview of the highlights of those studies.

In one study, Erik Mathijs of Belgium surveyed 107 farmers who had recently invested in an RMS. He was interested in understanding the characteristics of the farm owners and the farms. The average age of these farmers was 44 years, much younger than the overall average age of farmers either in Europe or the U.S. These farmers cited several social reasons for purchasing an RMS. These include decreased labor use, increased free time, ability to avoid milking cows, and increased animal welfare. Economic reasons include increased milk production, better management information, and farm expansion. Interestingly, respondents indicated that the average labor decrease was about 20% with RMS adoption.

A second study by Hogeveen, Heemskerk, and Mathijs included results of a survey of 120 farms; 60 of whom had recently purchased an RMS and 60 of whom had recently purchased a milking parlor. When asked the reasons for their choice, the RMS farmers indicated less labor usage, management flexibility, and increased milking frequency as primary reasons. In contrast, the parlor owners indicated that the RMS was too expensive, that they did not want to rely on the RMS, and that the RMS limited expansion opportunities.

In a third paper, Wade, at al. showed that milk production in an RMS increased by only 2% on farms they studied. Further analysis indicated that this is not enough of a boost to make the RMS a profitable investment in Europe. They conclude, therefore, that non-economic reasons were driving investment patterns to a large extent. That is, farmers must be placing a high value on many of the social factors noted in earlier studies.

Finally, Wauters and Mathijs use a simulation model to assess farm-level economics in four European countries (Belgium, Denmark, Germany, and The Netherlands). Their results showed that farm profits increased in Belgium and Denmark, but not in Germany or The Netherlands. Why? The paper does not provide adequate details to assess that. But it does indicate that these farms tend to use more labor than is used in the other countries. This suggests that they may have greater opportunity to save on labor costs. It is also possible that RMS adopters place a positive value on simply avoiding labor management.

What does all of this mean? It appears that farm economics are not sufficient, in many cases, to warrant RMS adoption. If a strictly financial analysis were completed, these farms would have purchased milking parlors. However, some farmers do place a high premium on increased free time which can be spent with family, used to make better management decisions, or exploring other farm enterprises.

The studies, like much of our research, may leave as many questions as answers. The most important one being, “What management tools will make it financially attractive to invest in an RMS?” The farmer investing in an RMS must know how to get a greater than 2% milk production increase. He must know how to manage the information generated by the system to make better nutrition or culling decisions. He must know how to improve milk quality so as to obtain price premiums. Although the body of research results discussed here indicate that investment is not, on average, economically justified, it doesn’t mean that many farmers can’t increase farm profitability substantially by investing in an RMS. Like most things, the answer revolves around management decisions.

Jeffrey Hyde, Ag Economics and Rural Sociology and Robert Graves, Agricultural, Biological, and Engineering Extension