Dairy NZ

There will be many factors to consider when looking at the installation of automatic milking system on a farm. However a major factor is the economics of such a system and how it stacks up against a conventional dairy farm.

Historically, when looking at funding new projects or capital ventures the majority of farmers and their bankers have looked at the capital required, cash flows and capital appreciation over time. However when comparing two or more options such as, a conventional conversion with a rotary shed versus an AMS farm, an investment analysis is required. 

One investment tool is the Net Present Value (NPV) calculation. This looks at the capital requirements, expected lifetime of the investment, cash flow, residual value and looks at the returns of that investment in today’s (present) dollar terms. It includes taxation and depreciation. The majority of this information can be sourced by the farmer, although someone with the skills to calculate a NPV, such as an accountant may be required.

Capital Requirements

Conversion of Greenfield’s Site

New Building Requirements:

• Roof and shelter over the milking robots
• Office
• Machine room
• Storage area
• Concrete floor area to include waiting area, machines, entry, exits and a feed area if included
• Area for the main vat and holding vat
• Effluent system as with any dairy operation
• Pipe work – Generally less pipe work due to lower numbers through the shed and resulting lower pressure from stock

Selection Units:

• Pre-selection system – at the farm dairy and/or out on the farm
• Power and compressed air to the pre-selection system
• Concrete area under the units (high traffic)

Farm Races:

• Will depend on the farm design, but only small races required as there is little need to traffic the whole herd at once
• Big enough to get farm machinery down
• In some cases these will need to be set up to allow two lanes on the race

Water System:

• The same volume and quality of water is required, but potentially less troughs, water lines and fittings are required. One option is to only have water at the farm dairy and/or selection units

Plant, Milking Robots & Stock Identification: 

• Milking robots including herd management software, vacuum pump and compressors
• The number of AMS are dependant on the farm system and how many cows are going to be milked
• The desired specifications of the machines
• Vat
• Buffer tank/vat (for when tanker takes milk and main vat awaits washing)
• Specialist vat – for example for colostrum or specific milk from certain cows in the herd (may be supplied by the dairy company)
• Cow identification
• Electronic tags, pedometers or infrared detection
• In shed feeding system
• There is a basic requirement to feed a small amount of concentrates in the shed. What farm system do you plan to run and how much concentrate will be fed at the machines and what system is required to store and deliver it?

Fencing:

• This will depend on the design. Initially look at setting up blocks A, B and C with permanent fencing, but using temporary fences to allocate pasture within blocks

Housing and Vehicles:

• Given staff numbers, what are the housing and vehicle requirements?

Existing Dairy Farm

Farm Dairy:

• Can the existing farm dairy be modified to house the robots?
• Pit area will need to be filled in
• Are there other buildings on farm that can house robots?

Farm Races:

• Can the races be modified to traffic cows around the farm?

Otherwise all factors related to the design, machines, selection units and farm is the same as for a new conversion.

Cash Flow Implications

Income:

In the first year, budget on 5-15 percent less milk production per cow as cows are trained and people get used to the system. Subsequent years can be comparable to a conventional system whether seasonal supply or all year milking. Unless there is plans to supply specialty milk, budget on your normal milk supply.

Expenses:

Go through individual budgeted items and see what will change using automatic milking. The main items are:

• Labour – will less people be required to run the farm?
• Animal Health – less stress and its impact on lameness and in calf rates?
• Feed costs – what will it cost to feed concentrates at the robots
• Herd testing – The machines collect milk volume information each milking but at present fat and protein yields will need to be determined by a herd test. The automatic sampling device will add to the capital expense
• Farm dairy and robot servicing costs
• Servicing of the robots is a major cost difference and will depend on the servicing contract – check it out with your supplier

If you are looking to compare a conventional system with an AMS, then you will need to collect all the information as above for the conventional farm.

Replacing an existing conventional farm dairy with an AMS is unlikely to be economic due to the capital involved. However, if converting a farm or replacing an old farm dairy and plant, then do your analysis and see if the two systems are comparable!

To help you with comparing the economics of converting from a conventional milking system to an automatic milking system, use the budget template below:

• Partial budget on the economics of implementing an Automatic Milking System (AMS) View PDF (106kb)