Automated Milking Systems: A Case Study of a U.S. Midwest Dairy Farm Decision-Making Process

Luis Peña-Lévano, Shaheer Burney, James Salfer, Jennifer Clark, Luis Garcia Covarrubias and Cesar Escalant

Applied Economics Teaching Resources (AETR), 2025, vol. 7, issue 4

Abstract: This case study examines the Schmidt family’s decision at Pioneer Farm in the U.S. Midwest: whether to adopt Automated Milking Systems (AMS) on their dairy farm. AMS are robots that autonomously milk cows, potentially increasing operational efficiency, reducing labor reliance, and improving milk quality. However, installing AMS requires high upfront costs, maintenance expenses, and adjustments to farm management practices, making it a challenging decision for small and mid-sized dairy operations. Using detailed financial data from Pioneer Farm—a fictional farm based on a real farm in the Midwest—the case enables students to analyze the economic feasibility of AMS adoption and explore its impacts on labor dynamics, animal welfare, and long-term sustainability. The case draws on general industry insights; however, it specifically examines Pioneer Farm’s unique circumstances, providing a realistic and practical framework for classroom discussion. The case illustrates that while AMS can offer substantial long-term economic benefits, initial investment, and maintenance can be major constraints, leading to lackluster adoption rates nationwide. Engaging students in this decision-making process gives them valuable insights into the opportunities and trade-offs associated with technological innovation in the dairy industry. This research also offers valuable lessons for policymakers and educators, contributing to the ongoing discourse on technological innovation in agriculture.

Keywords: Teaching/Communication/Extension/Profession (search for similar items in EconPapers)
Date: 2025
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