Why not investing in sensors is logical for dairy farmers

There are many claims regarding the potential of sensors for dairy farming, but in general the adoption on farms is still low. For sensor manufacturers, it is important to realize that uncertainty about future technological progress may influence the adoption of sensors. The aim of the current study was to explain why dairy farmers do not (yet) adopt sensors on their farms. To explain this, the uncertainty of the investment decision for highly adopted sensors (automated estrus detection) and recently released and thus hardly adopted sensors (automated body condition scoring (BCS)) was illustrated. The illustration makes use of the real options theory to analyze the timing of investment decisions. The results indicated that investing now in automated estrus detection resulted in higher economic returns than investing 5 years from now, while for the automated BCS postponing the investment resulted in higher economic returns compared to investing now. These results show that farmers indicating that they did not (yet) invest in sensors because they are waiting for improved versions made rational decisions. Based on the illustration it is economically worthwhile to postpone investments in sensors for which there is much uncertainty. Also, the current high adoption of automated estrus detection sensors is logical because the net present value of investing now is higher than the net present value of investing in 5 years. This study illustrated that uncertainty about the benefits of a sensor system, potential future improvement of sensor technology, and expected better management information from a sensor system, form rational economic reasons to postpone investment in sensor systems.