Dairy farmers turn to technology to avoid going broke
Pickett, Wis. – At Rosendale Dairy, each of the 9,000 cows has a microchip implanted in an ear that workers can scan with smartphones for up-to-the-minute information on how the animal is doing – everything from their nutrition to their health history to their productivity. Feed is calibrated to deliver a precise diet and machines handle the milking. In the fields, drones gather data that helps bump up yields for the row crops grown to feed the animals.
Technology has played an important role in agriculture for years but it’s become a life and death matter at dairy farms these days, as low milk prices have ratcheted up pressure on farmers to seek every possible efficiency to avoid joining the thousands of operations that have failed.
“If I use 100 bags of seed on a field and I change the way I distribute the seed, I can yield more without a single extra dollar of input,” said Matt Wichman, Rosendale’s director of agronomy. Such tools “are becoming so economically viable that anybody that’s of a decent scale is adopting these,” Wichman said.
Technology can mean survival, but it involves a perilous gamble: Will the machines produce savings fast enough to cover the debt they incur?
“The last five years have really been treacherous,” said Randy Hallett, who has 85 cows in Casco, Wisconsin, and has spent $33,000 on new milking equipment. He would invest more if his operation could afford it. “I broke even, mostly.”
The dairy industry is caught in a vise between consumer trends and competition. Americans are buying less milk as changing tastes steer them to milk substitutes from soy and almonds, or to entirely different drinks like flavored water. Two big milk processors, Dean Foods and Borden Dairy Co., filed for bankruptcy protection in the past three months, undone by declining demand and also pressured by big competitors like Walmart, which opened its own milk processing plant in 2018.
And then there are milk prices.
After hitting a historic high in 2014 of more than $26 per 100 pounds on the strength of massive buying from China, the bottom fell out. When China stopped its milk-buying spree, there was already oversupply from both American and European Union producers, said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin.
Prices fell to $17.30 by the following year, and for producers, it’s been mostly misery ever since. Nationwide, the number of dairy farms dropped from 40,199 in 2017 to 37,468 in 2018. In Wisconsin, a state that takes pride in its image as “America’s Dairyland,” the toll has been particular severe. Though California produces more milk, Wisconsin has more dairy farms than any other state. And more than 1,600 of those have gone under in the past three years.
But there are reasons to believe the worst might be over, said Jim Ostrom, a partner at Milk Source, the company that owns Rosendale. In November, milk prices in Wisconsin rose to $22.40. Nationwide, they reached $21, finally above the $18 price point that Stephenson cited as a general benchmark for producers turning a profit.
With dairy prices outside farmers’ control, they have to focus on controlling costs. That’s where technology comes in. A rotary milking parlor can handle 10 cows a minute and can sense when an udder is empty so cows aren’t overmilked, which can harm their health. But a robotic milking system can run more than $200,000.
“It can be very difficult for a smaller farm to afford this technology because you need, you know, a larger operation to spread those expenses across,” said Liz Binversie, an agriculture educator in Brown County for the University of Wisconsin extension office. She said she knows of one farm that went out of business because it couldn’t find enough workers and could not afford a robotic milking system.
Wisconsin leads the nation in farm bankruptcies with 45 Chapter 12 filings from July 2018 through June 2019, according to the American Farm Bureau Federation. Minnesota was not far behind with 31 during that time.
Because of debt, the cost of producing milk varies among farms. While some farmers can break even at a price of $18 per hundred pounds, others need $21 because of their debt load.
Sometimes the way to survive is to join forces with neighbors.
Hallett shares some advanced machinery with a neighboring farmer, like a combine and planting equipment. And, fortunately, some technology isn’t expensive. Hallett’s cows carry the same microchips as Rosendale uses, so he can know from the comfort of his office the milk weight for each cow and whether a particular cow had less milk that day. The chips cost about 12 cents per month per cow.
Hallett said he wishes he could afford to update his cow stalls, but that getting credit from banks is difficult because they consider bigger operations less risky.
“Who do you think they’re going to work with to keep them afloat?” Hallett said.
The University of Wisconsin hopes to help with a project that would integrate all the data farms collect each day on cows’ production, feed and health, among other things.
Integrating the data and using artificial intelligence and machine learning “would be very helpful to farmers making the best decisions every single time” in real time, said Victor Cabrera, the professor at the University of Wisconsin-Madison who is leading the project. He’s collecting data from five farms now and expects to have the project completed in three years.
Farmers could tell whether to keep breeding an animal or let it go.
“I’d use it yesterday if I had it,” said Mitch Breunig, who is contributing data from his farm, Mystic Valley Dairy, where he has 460 cows.
He said sometimes it’s weeks before he can pinpoint how much milk a cow produced on a particular day and how much it ate.
“I think it doesn’t matter what size your farm is, it’s information you need to know,” he said.