Dynamic programming to determine optimum investments in information technology on dairy farms

The feasibility of integrating the information about a number of informatio n technology (IT) applications on dairy Farms is gaining interest because o f the potential to improve economic results. In this study optimal investme nt patterns involving five IT applications are evaluated: (1) automated con centrate feeding systems; (2) measurement of daily physical activity of cow s; (3) in-line automated parlour systems recording milk production; (4) mil k temperature; and (5) electrical conductivity of milk. The investment deci sions are optimised by dynamic programming taking into account price reduct ion and technical progress over time. The objective is to determine the pat tern value of (stepwise) IT investments that maximises the net present over a given planning horizon. Optimal investment patterns are calculated under different assumptions of technical progress, farm characteristics and farm scale. In this way it is determined under which conditions the application s under research would be incorporated. Results for a typical Dutch dairy f arm show that the optimal investment pattern includes automated concentrate feeders. The incorporated electronic individual cow identification and har dware facilitates the appraisal of other in-line sensor investments such as activity measurement of cows. (C) 1999 Elsevier Science Ltd. All rights re served.