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Even Robots Need a House: The Robotic Milking System Facility Investment Decision Case Study

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  • Feuz, Ryan
  • Larsen, Ryan

Abstract

In a classic labor vs. capital trade-off, some dairies are opting to install automatic milking systems (AMS). AMS has the potential to increase efficiencies but comes at a cost. Although the AMS units themselves are costly, the facility that houses them can often be a more significant expense. This case presents a fictional family dairy, typical for the western United States, that is now considering adoption of AMS. The case analyzes the economics of installing AMS under three facility investment scenarios; minimal retrofit to an existing facility, building a new open-sided barn, and building a new fully enclosed barn. This case study provides an opportunity to apply capital budgeting to a modern agriculture investment and addresses broader questions related to technology investment and adoption on farm.

Suggested Citation

  • Feuz, Ryan & Larsen, Ryan, 2020. "Even Robots Need a House: The Robotic Milking System Facility Investment Decision Case Study," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 2(1), February.
    • Handle: RePEc:ags:aaeatr:301864
    DOI: 10.22004/ag.econ.301864
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