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Computerworld - When retailing giant Wal-Mart Stores Inc. began its push to integrate state-of-the-art radio frequency identification technology into its supply chain four years ago, the world took notice. But one industry might have greeted the announcement with a collective ho-hum. Dairy farms, which began using computerized record management systems in the 1950s, have been using electronic smart tags and sensors to manage dairy herds since the early '80s.

Since 1991, the number of dairy farms in the U.S. has dropped by more than half, to 75,140, and the remaining farms are getting bigger. As dairy farms consolidate and expand, they are increasingly relying on a range of IT systems, sensors and wireless technologies to support that growth.

Dairy operations use technology to help improve health, breeding and milk production. The result: Milk output per cow has increased by about 15% over that same period, according to the U.S. Department of Agriculture (USDA).

"As you get bigger, having information at your fingertips is a lot more valuable," says Mary Wilson, president of Thomas Farms of Garland Maine Inc., which manages about 420 dairy cows. And in a capital-intensive business with tight margins, small increases in productivity can make a big difference.

Dairy farm operators now use communications technologies such as wired Ethernet, Bluetooth, Wi-Fi and RFID. IP video cameras monitor animals in the barns. Biometric sensors include pedometers that measure each cow's activity level, and emerging temperature-sensor technologies that detect reproductive heat cycles and early signs of illness. Computerized systems in the barns, in the back office, at feed-mixing stations and in the milking parlors are now integrated and centralized around ISO-standard passive RFID tags, each with a unique, USDA-approved 15-digit identifier.

"These systems provide a means for ongoing, real-time monitoring of the performance of the business, right down to the individual cows," says Terry Smith, president and CEO of Dairy Strategies LLC, a consultancy n Bruce, Wis.

Overall, about one in five dairy operations uses on-farm computers, according to the USDA -- a growth rate of about 14% since 1991 -- and penetration is much higher in large farms, say dairy system vendors.

Cow Tagging

RFID tags were used on about 9% of dairy cows in 2007, according to the USDA, but adoption is increasing rapidly. The reason: At $2 to $3 per tag, RFID systems are just beginning to replace proprietary transponder tags that can cost more than 20 times that. But if the advent of inexpensive, industry-standard RFID tags and readers has dramatically cut costs for dairy herd identification systems, it has also upended vendor business models by shaving lucrative hardware margins and opening the market to new competitors.

Traditionally, tags have been provided by milk machine manufacturers. "They've started selling systems with the $3 [industry standard RFID] tags, but they hate it because profit margins went from 90% to zero," says Steve Eicker, vice president of Valley Agricultural Software (VAS), a maker of dairy management software in Tulare, Calif. "The new tags are a commodity."

Thomas Farms has been using electronic tags to help manage dairy operations since 1987. The dairy first deployed electronic ID tags to identify cows and monitor feed consumption. Today, it uses collar-mounted transponders from milk machine manufacturer BouMatic LLC that act as ID tags and pedometers. "We use that [pedometer data] to tell if a cow is in heat or sick. If she's overly active, she could be ready to breed," Wilson says.

The milking system identifies the cow, measures milk weight and other data, and pushes it into a VAS DairyComp 305 dairy management system in the back office. That system matches up the data with veterinary visits, vaccinations and other information for every animal and issues reports and to-do lists.