Dairy robots can more than pay for themselves but only in the right farm structure, writes Martin O'Sullivan
In recent years, we have seen a steady increase in the number of robotic milking systems amongst our dairy farmer clients. Some are new entrants, but many were existing operators who needed to upgrade their facilities and decided that robots were the way forward.
My very first client who went down the robot route was a man in his late 60s milking 60 cows on his own and was seriously considering getting out of cows, but wasn't really thinking of retirement. He did his research on robots and decided he'd give it a shot as his farm layout lent itself ideally to a robotic milking system and the existing parlour facilities could be modified with moderate outlay.
Suffice to say, that five years on in his 73rd year, he is more than content with his lot and is happy that the robot has more than paid for itself already if he compares the income he would have had if he switched to beef production.
The big advantage of a robot is that it reduces labour dependability and will improve the farmer's lifestyle in terms of the twice-daily commitment for up to 10 months of the year.
Elaborate milking systems don't necessarily make for better grassland management, but they can free up time to devote to such matters. Installing a robotic system can potentially save up to four hours a day when things are running smoothly. A further advantage is the potential to increase milk yield by the increased number of daily milkings, which can be up to three per day. They have also been proven to be of benefit to the cow's health, offering useful data on the animal's feeding habits, weight and activity. Overall, it enables a farmer to spend more time managing his herd.
Unless one has opted for a zero-grazing system, the farm structure in many instances may present a difficulty as, ideally, the milking facility should be central to the grazing platform. Cows walking a long distance to be milked up to three times a day will expend a lot of energy getting to and from the parlour - energy that could otherwise go into milk production.
A further negative is that service and electricity cost will be considerably higher than a conventional parlour.
A trial carried out by Teagasc showed that robotic systems use 68pc more electricity per litre of milk produced than the conventional herringbone parlour. The main culprits were water heating and the air compressor, while water consumption also increases.
What might also be considered a negative by some is the fact that expansion can not be achieved in the same way as it can in a herringbone system. Each robot will accommodate 65-70 cows for optimum usage, so expansion beyond that multiple will first necessitate the installation of an additional robot. The financial implications of this may be challenging.
However, the main disadvantage is the capital cost, with some systems costing as much as three times that of a basic traditional herringbone system. Typically, the robot alone will cost in the region of €110,000, which means that a two-robot facility, along with the necessary infrastructure, can cost in the region of €260,000.
Clearly, if one was happy to install a basic herringbone system for say €80,000, it would be hard to justify spending a quarter of a million euro on the milking facility alone.
That said, labour availability and lifestyle can be crucial factors in arriving at a decision.
For those who are already established in dairying, the change from the conventional herringbone parlour to the robot can be less of a financial challenge, as much of the infrastructure may already be in place.
For these farmers, most being considerably older than those entering dairying for the first time, the 6am starts, the 24/7 commitment punctuated with few, if any, holidays help to make the decision an easier one. Typically, the cost in such instances will be in the region of €2,000 per cow.
For those new entrants to dairying, the purchase of the robot, bulk tank, drafting gates, housing and general infrastructural modifications, and other ancillary work such as farm roadways, water and electricity will bring the cost to €4,000 per cow and beyond before we even talk about the cost of stock.
If this is to be financed by debt, we are talking about a total borrowing requirement in the region of €280,000 on a 60-70 cow enterprise.
This represents an annual repayment of approximately €26,000 over 15 years which, on a 60-70 cow enterprise, is not realistic in the vast majority of cases.
I am currently dealing with a considerable number of clients who have gone the robotic route and the experience, without exception, has been positive. Units typically contain one or two robots and no more, and most of those operators were existing dairy farmers.
Admittedly, there has been a lead-in period before the rewards are evident, but in all cases, the quality of the farmer's life has immeasurably altered for the better. So for those existing dairy men whose farms are suitable, have a few euro available and are toying with the robot option, I would say go for it.
For those setting up in dairying for the first time who do not have significant cash reserves, I see the cost factor as being a serious obstacle when added to all of the other establishment costs.
Servicing a debt of perhaps €4,000 per cow in a start-up situation will be challenging, to say the least. Our most profitable and successful clients are those who operate a low-cost system with a primary focus on growing grass. When the unit is well established and profitable, more elaborate systems can be considered.
Martin O'Sullivan is the author of the ACA Farmers Handbook. He is a partner in O'Sullivan Malone and Company, accountants and registered auditors: www.som.ie.