Jim Salfer, a University of Minnesota dairy specialist who has looked at the records of dozens and dozens of robotic herds in the Midwest, says Green Wave Farms’ financial performance is among the better that he’s seen.
“Sixty-cent per cwt labor costs are very, very good,” he says of the St. Michael, Minn. robotic dairy owned by the Berning family. Occassionally he sees labor costs above 70¢ per cwt even in excellent robotic herds. More typically, labor costs in most robotic herds are $1 to $1.25 per cwt, but that’s still a dollar less than many parlor herds.
But he says those higher labor costs are sometimes driven by the fact that the robotic herds rely on automation for milking only. Oftentimes these herds are still scraping freestall alleys and pushing up feed with skid steers.
“If you are going to maximize labor savings, you have to think in terms of whole farm technology and go with automated feed pushers and manure systems,” he says. That will drive up capital costs, but it’s about the only way to dramatically lower labor costs.
Like most robotic herds, the Bernings’ feed costs make up a larger share of the budget. Robot herds feed a partially mixed ration in the feed bunk while using higher priced pellets fed through the robotic system to entice cows for more frequent milking.
Salfer says robotic herds often feed for milk volume to optimize milk per day through each robot. But the push for volume can sometimes lead to lower components and lower milk prices per cwt.
Conventional herds can often feed a lower priced total mixed ration because they include cheaper commodity feeds. Plus, they might be able to achieve higher components as well and higher milk prices per cwt.
Capital costs are difficult to compare among robotic farms because some farms retrofit the milkers into existing facilities while others, like the Bernings, build completely new set-ups, Salfer says.
A second unknown is whether farms can secure significant cost-share funding for manure systems. If they can, that can dramatically reduce capital outlays, debt repayment and interest cost.
The cost of interest is a third unknown to be considered when comparing robotic milking farms. Interest rates are a function of both timing and the financial strength of the operation. A strong balance sheet in addition to a good loan repayment history are often useful in securing lower interest rates, thus lowering the dairy operation’s borrowing costs, Salfer says.
For more on how Green Wave Farms and the Bernings are keeping their cost down read:
Note: This story appears in the December 2017 magazine issue of Dairy Herd Management.