RoboticMilkEc

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Published on January 4, 2008

Author: Alfanso

Source: authorstream.com

Robotic Milking Economics: Is the Technology Profitable?:  Robotic Milking Economics: Is the Technology Profitable? Jeffrey Hyde Phoebe Engel Department of Agricultural Economics and Rural Sociology Penn State University Penn State is committed to affirmative action, equal opportunity, and the diversity of its workforce Revised 2/14/02 Coming Attractions:  Coming Attractions Brief History Market Players Economic Considerations Other Considerations Wrap Up Brief History of the Technology:  Brief History of the Technology Experimentation and innovation: 1980s Brief History of the Technology:  Brief History of the Technology Experimentation and innovation: 1980s First farm installation: 1992 Brief History of the Technology:  Brief History of the Technology Experimentation and innovation: 1980s First farm installation: 1992 Over 1000 units installed world-wide Most in Europe, half of all new systems are robots Some in Japan About 25 in Canada 6 in PA, 8 in WI, several others planned Players in the Market:  Players in the Market Lely - Astronaut Players in the Market:  Players in the Market Lely - Astronaut Source: Lely Web Site Players in the Market:  Players in the Market Bou-Matic Source: Bou-Matic Web Site Players in the Market:  Players in the Market DeLaval Source: DeLaval Web Site Players in the Market:  Players in the Market AMS – Liberty Players in the Market:  Players in the Market Lely, Bou-Matic, and Delaval Single unit systems Each unit serves 60-65 cows Players in the Market:  Players in the Market Lely, Bou-Matic, and Delaval Single unit systems Each unit serves 60-65 cows AMS-Liberty Multiple units served by one robot Four units serves ~150 cows Milking System:  Milking System Source: Lely Web Site Economic Considerations:  Economic Considerations Can a producer afford to purchase a robotic milking unit relative to a new parlor? Economic Considerations:  Economic Considerations What are the investment’s costs? Machinery and Equipment About $125,000 per unit Other costs depend on other construction Economic Considerations:  Economic Considerations What are the investment’s costs? Maintenance costs Higher than parlor! Maybe twice that of a parlor Depends on contract Economic Considerations:  Economic Considerations What are the investment’s costs? Increased feed bill Cows milked more often eat more Increase costs by about 10% Economic Considerations:  Economic Considerations What are the investment’s costs? Potential decrease in component levels Butterfat percentage may fall Research has used a 1% decline in price Economic Considerations:  Economic Considerations What are the investment’s costs? Shorter life than parlor Not as many years to recoup investment Parlor: 12 years – Robots: 7 years Economic Considerations:  Economic Considerations What are the investment’s costs? Herd health concerns Economic Considerations:  Economic Considerations What are the investment’s costs? Herd health concerns Transition period substantial – 2 years Economic Considerations:  Economic Considerations What are the investment’s benefits? Labor savings Not as significant as you might think! Increase over time Around 31% savings in the long run Percentage may be greater for larger herds Economic Considerations:  Economic Considerations What are the investment’s benefits? Increase milk production Increase some cows to 3X or more About 7.5 pounds/cow/day Economic Considerations:  Economic Considerations What are the investment’s benefits? Free time to focus on other things Economic Considerations:  Economic Considerations What are the investment’s benefits? Free time to focus on other things Wealth of information per cow Production Health Milking frequency Economic Considerations:  Economic Considerations What are the investment’s benefits? Free time to focus on other things Wealth of information per cow Production Health Milking frequency Increased cow comfort?? Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Need to weigh the costs and benefits Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Need to weigh the costs and benefits Time aspect is very important! Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Need to weigh the costs and benefits Time aspect is very important! Much uncertainty Milk price Feed price Production Useful life Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Research at Penn State on robot values Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Research at Penn State on robot values Simulation Analysis Economic Considerations:  Economic Considerations Can Pennsylvania farmers afford it? Research at Penn State on robot values Simulation Analysis Estimated breakeven robot values: The maximum the producer can pay for the robot(s) given other parameters in the model (cost of parlor, changes in production, etc.) Economic Considerations:  Economic Considerations A series of scenarios were developed based upon: Herd size Alternative milking equipment (parlor) cost Production level Labor cost Length of useful life of the systems Others Economic Considerations:  Economic Considerations Research Results With 60 cows (1 unit - $125,000) Base Case Breakeven Value = $188,380 Parlor cost = $100,000 Production = 18,000 Labor cost = $10,000 Milk Price = $14.00 Economic Considerations:  Economic Considerations Research Results With 120 cows (2 units - $250,000) Base Case Breakeven Value = $361,198 Parlor cost = $150,000 Production = 18,000 Labor cost = $20,000 Milk Price = $14.00 Economic Considerations:  Economic Considerations Research Results With 180 cows (3 units - $375,000) Base Case Breakeven Value = $534,016 Parlor cost = $200,000 Production = 18,000 Labor cost = $30,000 Milk Price = $14.00 Economic Considerations:  Economic Considerations Economic Considerations:  Economic Considerations Sensitivity Analysis – Parlor Cost $1000 increase = $690 increase in breakeven Economic Considerations:  Economic Considerations Sensitivity Analysis – Labor Cost $1 increase = $3.68 increase in breakeven Economic Considerations:  Economic Considerations Sensitivity Analysis – Production 1 lb./cow increase = -$2.84 per robotic unit -$5.68 for two units -$8.52 for three units… Economic Considerations:  Economic Considerations Sensitivity Analysis – Milk Price $1 increase = $8,583 per robotic unit Economic Considerations:  Economic Considerations Sensitivity Analysis – Useful life of robot(s) 1 year increase = about $18,000 per robotic unit Economic Considerations:  Economic Considerations Sensitivity Analysis – Useful life of parlor 1 year increase = about -$3,750 per robotic unit Economic Considerations:  Economic Considerations Sensitivity Analysis – General Can (roughly) add effects of individual sensitivity analyses Other Considerations:  Other Considerations Milk quality is a concern Other Considerations:  Other Considerations Milk quality is a concern Transition period is substantial – 2 years Other Considerations:  Other Considerations Milk quality is a concern Transition period is substantial – 2 years More information on cows Other Considerations:  Other Considerations Milk quality is a concern Transition period is substantial – 2 years More information on cows Avoid labor management Other Considerations:  Other Considerations Milk quality is a concern Transition period is substantial – 2 years More information on cows Avoid labor management “Free” time Tough Choice!:  Tough Choice! Good record keeping is the key! Without, possibility of bad choice increases Tough Choice!:  Tough Choice! Good record keeping is the key! Without, possibility of bad choice increases Do your homework Take a trip! Tough Choice!:  Tough Choice! Good record keeping is the key! Without, possibility of bad choice increases Do your homework Take a trip! Use the Penn State Decision Tool http://farmmanagement.aers.psu.edu Thank You!:  Thank You! A computer doesn’t charge for overtime and doesn’t get health care benefits. -Adam Smith

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