Influence of climate stress on technical efficiency and economic downside risk exposure of EU dairy farms

Sylvain Quiedeville*, FiBL Grovermann, FiBL Leiber, Giulio Cozzi, Isabella Lora, Vera Eory, FiBL Moakes

*Corresponding author for this work

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Abstract

This paper assesses the influence of heat and drought stress on the economic performance of the European dairy sector. Climatic data from the Gridded Agro-Meteorological data in Europe were combined with dairy enterprise data from the Farm Accountancy Data Network, resulting in a dataset of 4,412 farms in 22 EU countries over the period 2007-2013. Since the performance of dairy farms is influenced by the context in which they operate, farms were grouped into areas representing similar climatic conditions through the use of a Latent Class Analysis. Technical efficiency (TE) and economic downside risk were used as performance indicators against which the effect of climatic stress factors was evaluated. Technical efficiency was estimated using a 'true-fixed' effect stochastic frontier model. Economic downside risk was based on gross margin deviations. Regression analysis suggests a significant negative effect of drought and heat stress on both TE and the downside gross margin difference in most climatic classes, with few exceptions. Results imply that both drought and heat stress related issues need to be considered when designing adaptation strategies to address threats to the economic performance of the EU dairy sector.

Original languageEnglish
Number of pages13
JournalThe Journal of Agricultural Science
Early online date20 Jul 2022
DOIs
Publication statusFirst published - 20 Jul 2022

Bibliographical note

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© 2022 Cambridge University Press. All rights reserved.

Keywords

  • climate stress
  • Dairy farms
  • economic resilience
  • stochastic frontier analysis
  • technical efficiency

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