Efficiency and Costs Associated to Environmental Adequacy for Milk Production in Minas Gerais, Brazil

Abstract

Milk production presents an elevated potential for environmental degradation due to the nitrates presents in cow waste. Thus, this study aimed at analyzing the economic and environmental performance of dairy producers in Minas Gerais, Brazil, in 2005, incorporating nitrogen pollution in the efficiency criteria, as well as the technological specificities between producers. These were considered in the analysis and calculation of the economic costs associated to the reduction in the environmental impact, using the factorial analysis, cluster analysis and data envelopment analysis as methodologies. The results indicated: (i) low environmental performance in milk production; (ii) existence of economic costs associated to reducing emissions; (iii) lower economic performance of intensive producers in the long-term; and (iv) lower environmental performance of extensive producers in the long-term. Thus, government policies to reduce the environmental impact should focus on the extensive producers, while policies to improve economic performance should focus on intensive producers.