The impact of climate change on the cost efficiency of dairy farms in Iran

Dairy cows are very sensitive to heat stress caused by climate change, and this directly affects the efficiency and profitability of these farms. Despite the importance of this issue, economic studies that analyze the relationship between the efficiency of dairy farms and climate change are very limited. Therefore, the purpose of this study was to evaluate the effect of climate change on the cost productivity of dairy farms. The information of 16 main production provinces in 1990, 1993, 2000, 2007, 2013 and 2016 was used and the stochastic frontier cost function was estimated by considering THI index. The result indicates that the average cost efficiency of dairy farms is about 0.70 and its highest and lowest values are 0.78 and 0.50 for east Azerbaijan and Esfahan provinces respectively. Also, the changes in the THI index have a negative and significant effect on cost efficiencies in the studied provinces. Therefore, it is not necessary to consider genetic selection for raising milk production in the breeding policy, but also its adaptation to climate conditions.