The economic viability of automatic milking systems in Australia's pasture-based dairy farm systems: a case study analysis

© 2016 William TaingFluctuations in prices, costs and seasonal conditions, and increasing competition will continue to place pressure on profit margins for operators of all dairy systems. Good management and decision making skills is fundamental to ensuring that introducing new technologies, such as automatic milking systems (Mcwilliams et al.), are integrated into the whole farm system to make the best use of a given set of resources and circumstances, and realise the wide array of benefits technology has to offer some people in dairy. Increasing intensity of dairy farms and rising labour costs have helped to induce wider adoption of AMS technology in Europe and other countries. Similarly, the characteristics that have led to the wide adoption of AMS technology are increasingly evident in Australia’s dairy industry. Adapting the AMS technology to Australia’s pasture-based dairy systems has in the recent past been considered a complex challenge and requiring careful implementation as information remains limited on a national and global level. However, in recent years, the knowledge around the adoption of AMS in Australia’s pasture-based dairy systems has increased markedly with the ‘practical operated experience’ of AMS farms being fine-tuned and operating competitively. The key research question to be investigated in this thesis is if AMS technology adopted in Australia’s pasture based systems with voluntary cow traffic is competitive, in terms of profit, returns to capital, risk and non-pecuniary net benefits, when compared to Australian dairy farmers using conventional milking systems. This proposition will be tested by assessing the biophysical and economic performance of two dairy farm case studies, a Gippsland farm using ‘single box AMS’ and a Tasmanian farm using the ‘automatic milking rotary’. These two dairy farm case studies were chosen because they are deemed to have successfully integrated AMS into their whole farm system and are realising the benefits that are available from AMS. The case studies represent the use of the AMS technology at a steady state. For each case study, its biophysical and economic performance for an individual year was compared with the performance of other farmers in the region using conventional milking systems in the same year, where possible, and also over a hypothetical run of years with ranges of prices and seasonal conditions. Risk and uncertainty is also investigated in detail by running scenarios that represent long term typical prices, costs and rainfall. The major finding of this investigation is that the two AMS farms studied in Gippsland and Tasmania are capable, under the current management, of operating competitively under the seasonal and economic conditions that have occurred in the past and are likely to occur in the future, when compared to farms using conventional milking systems in the same region and under the same conditions. Ultimately, the success of incorporating AMS into Australia’s pasture-based dairy systems will depend almost completely on the human element. Good managers can make almost any system work well and profitability