17 August 2023 | Category: Agriculture, Environmental economics

Heat affects dairy farms in Belgium economically, but less than previously thought

By Tobias Dalhaus

Assistant Professor, Business Economics Group

This blog was written by Willemijn Vroege, (former PhD student at ETH Zürich), Robert Finger (professor at ETH Zürich), Erwin Wauters (Senior Researcher at the Flanders Research Institute for Agriculture, Fisheries and Food) and Tobias Dalhaus (assistant professor at Wageningen University & Research).

Heat can affect the economic performance of dairy production. Especially high temperatures in combination with high humidity levels can be harmful and economically relevant. More specifically, this can cause decreases of milk quantity as well as affect milk quality, e.g. the fat and protein contents. To avoid these consequences, farmers can apply different risk management strategies. Potential unmanaged effects of heat might differ from those under managed conditions. Thus, studies using real-world observations are needed to complement experimental studies.

In a new paper, we estimated the adapted response of milk quality and quantity to hot and humid conditions using non-linear regression modelling. We use a unique dataset covering dairy production of all farms in the Belgian Flanders region using farm-level data covering 6 years (N = 178.843). We match observation of monthly milk quantity and quality with high resolution weather data on temperature-humidity-indices (THI).

Using fixed effects regression, we particularly focus on heat shocks, i.e. the deviations from the average climate at the farm location, on production shocks, i.e. deviations from the average production of the farm. We use non-linear restricted cubic splines regression to estimate the response of milk quality and quantity to hourly temperature-humidity (THI) exposure. Our analysis allows to provide evidence on actual impacts of extreme heat exposure for a highly representative population of farmers.

Figure 1: Adapted response of milk quantity and quality to THI exposure

We find reductions of milk quantity and protein contents under hot and humid conditions, while milk fat content appears unaffected. These identified effects are of large economic relevance. However, our results show that critical THI thresholds above which exposure reduces milk quantity and milk protein contents are higher than previous experimental studies suggest. Moreover, our finding that milk fat contents are unaffected by heat contrast earlier experimental work. From this we conclude that farmers are at least partly able to manage heat impacts to protect their milk deliveries. This highlights the value of using real-world in addition to experimental data.

The structure of our data, however, does not allow to identify single strategies farmers take to avoid heat stress, and to assess their costs and benefits. Such strategies can comprise, for example, ventilation or adjustments in the dairy herd. Therefore, future research should zoom in on the efforts farmers make when heat occurs.

Adapting to heat stress

Our findings show that farmers are able to partly adapt to heat stress. Yet, our results also show that there are limits for that adaptation and losses occur. The relevance of heat stress effects is expected to increase with climate change. To cope with increasing heat stress, additional adaption responses may be needed at the farm level.

Policy makers can support on-farm adaptation (e.g. in terms of extension and financial support), and provide solutions for other risk management instruments, the establishment of weather insurances. The here identified effects are also relevant for the dairy industry perspective, because heat waves that usually occur in the entire region at large can lead to substantial variations in milk quantity and quality.

By Tobias Dalhaus

Assistant Professor, Business Economics Group

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