Assessing the Impacts of Compost-Bedded Pack Barns on the Productive Efficiency of Brazilian Dairy Farms

The objective of this study was to evaluate differences in the technical efficiency of alternative milk production systems on Brazilian farms. Using a panel from 2014 to 2021 (1117 observations of 383 dairy farms) we compare the technical efficiency of more recently adopted Compost-bedded Pack Barns (CPB) with that of Semi-confinement (SC), and Unstructured confinement (UNS) systems. A stochastic frontier was estimated by a Generalized True Random Effects to assess the relationship between technical efficiency and the production systems adopted, decompose efficiency into Transient (short-term) and Persistent (long-term) components, and control for unobserved heterogeneity. We found that farms using confined systems are more efficient than those using semi-confined systems. The decomposition of the Overall Technical Efficiency in its Persistent and Transient components suggests that farmers can be more efficient when dealing with short-term shocks than when deciding which system to use. The use of more capital-intensive technologies such as CPB may provide opportunities to improve dairy farm profitability and productivity growth in Brazil.