The effect of heat stress on risk and efficiency in dairy farming.

This article investigates the effects of heat stress on production risk and technical efficiency (TE) in Swiss dairy farming using a stochastic frontier analysis with a heteroscedastic generalized true random effects model. Employing farm-level panel data from 553 specialist Swiss dairy farms between 2003 and 2014, the study measures heat stress via the temperature humidity index (THI) and distinguishes between short- and long-run impacts on production risk and efficiency. Results indicate that farms experiencing persistently higher heat stress levels exhibit greater long-run efficiency and lower production risk, while in the short run, higher heat stress is associated with increased efficiency but no significant reduction in production risk. The study also finds that farm-specific characteristics such as farmer age and stocking density influence both efficiency and risk patterns, with policy implications emphasizing the need to support farmers’ short-run risk management and promote long-term efficiency improvements under changing climatic conditions.