Robotic Technology is a Long-Term Investment, But Potentially a Great One

Chad Huyser with Lely says often the question isn’t so much if producers want to invest in big technology, the question is more of when. Especially as producers wade through a tough financial dairy outlook.

By Karen Bohnert

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March 13, 2024 09:00 AM

Farm Journal’s Smart Farming Week is an annual week-long emphasis on innovation in agriculture. The goal is to encourage you to explore and prioritize the technology, tools and practices that will help you farm smarter. Innovation today ensures an efficient, productive and sustainable tomorrow.

Dairy producers have carved out time in the first 60 days of the New Year to catch up on bookwork and have had conversations with their lenders and other team members to help determine the next steps for their operations. According to Chad Huyser, president of Lely North America, 2024 is unlikely to be a banner year for dairy, as producers are still wading through some of the uncertainties like interest rates and what is to come from the Farm Bill to determine their operation’s next steps.

“We just need to get some stability and clarity around those things so that producers and bankers and everybody else who’s around the kitchen table with our producers have a little bit more confidence to be able to make more mid to long term type decision,” Huyser says, noting that is where bigger capital investment, likes robots, are made.

Huyser says he and his Lely team try to determine what the long-term goal is of the farm because often the move to integrate new technology investments happen over a series of meetings. He shares their clients are visionary in terms of looking to the future to figure out how they are going to milk cows, as well as feed cows, in the years to come.

“Often the question that we get isn’t so much about if they want to do this [invest in big technology], the question is more of when,” he says, sharing that lenders are conversing with producers on different financial situations.

According to Curtis Gerrits, senior animal ag lending specialist for dairy with Compeer Financial, it is essential for producers to evaluate how these changes impact their farm’s overall financial position when reviewing business updates and opportunities.

“In today’s world, evaluating financial metrics is crucial due to rising costs, global supply and demand dynamics, narrow profit margins and ongoing market volatility,” he says.

Rate of Technology Adoption

The conversation of introducing automation to an operation helps alleviate what Huyser says are psychological challenges that dairy farmers face.

“Do I have enough people to continue to milk cows or even feed cows,” he says. “There is that kind of undertone that’s been there for a while.”

2023 was a record-setting year for Lely, showcasing significant growth that Huyser says reflects producers, in general, growing to accept technology.

“More producers are understanding and making that next step into investing in some form of technology because they do see the financial benefits,” he says, noting the trend was hard to predict how fast it would transpire. “I think it’s safe to say that across all of agriculture, if you look at the amount of investment from all manufacturers introducing different and various forms of technology, whether that’s in the cab of a tractor or chopper, or even inside the barn when you look at how we’re feeding cows, milking cows or handling the nutrients streams that are coming out of these barns… it’s honestly a pretty significant curve. The rate of technology adoption is moving in a very positive direction.”

According to Huyser, this is where long-term optimism lies, as Lely can look beyond the short-term bumps the dairy economy is currently showing.

“Fundamentally, if you forecast in longer periods, you can see a reason to be excited and see an opportunity out ahead of us,” he says. “That doesn’t mean it doesn’t take hard work.”

Help from Legislation

In the past, often when dairies would take on additional debt, lenders would recommend adding cows to produce more milk to help offset that cost. Today, this isn’t an option for many producers, as many processors don’t currently need additional milk.

For Lely, they go back to their vision ‘sustainable, profitable and enjoyable future in dairy farming.’ With any investment in new technology, a dairy needs to see a return on this investment. If dairy producers cannot produce more milk to offset the cost, these returns need to be supported in other areas. This is where recent legislation in some states can help. Huyser says the need for more conversations with legislators can help educate and ultimately support producers to reap the benefits of adopting technology that in normal financial modeling may be out of their reach. “We want producers to see a path forward in dairy,” he says.

The Iowa Legislature authorized the grant program during the 2023 legislative session with the intent of helping smaller dairies and farmers increase on-farm dairy processing, reduce labor costs, and expand the selection of Iowa dairy products. The highly competitive grant will match up to $100,000 per project.

“I was happy to see the state of Iowa lead the wayward with this bill,” Huyser says. “I’m a firm believer in fact, partnerships supporting investment in technology at the state level and/or even federal level can help dairy farmers connect with those types of resources both in terms of financial incentive as well as supporting dairy’s sustainability efforts. It is a win-win for all.”

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