Cleaner milk and higher output: hyperbolic DEA-based environmental efficiency assessment of EU milk-specialized farms

This study asseses the environmental efficiency of milk-specialized farms across 25 EU member states by applying a novel α-quantile hyperbolic Data Envelopment Analysis (DEA) model to data from over 110,000 farms (2013–2020). The model jointly incorporates desirable outputs (net farm income or milk production) and undesirable outputs (CO₂ emissions), allowing efficiency to be assessed under varying levels of benchmarking stringency: α = 0.95 (stricter) and α = 0.75 (more lenient). This dual perspective captures both economic and biological dimensions of environmental performance. Results reveal substantial efficiency variation across countries and benchmarks. Average efficiency scores are considerably lower under the more lenient benchmark—0.326 in the income-based model and 0.552 in the milk-based model—compared to 0.792 and 0.909 under the stricter α = 0.95 frontier. Central and Eastern European countries such as Romania, Slovakia, and Poland exhibit stable performance across both frontiers, while Western and Southern countries—including France, Germany, and Luxembourg—experience pronounced efficiency declines under stricter evaluation. Countries like Latvia, Ireland, and Portugal maintain relatively high scores in milk-oriented models, whereas others such as Malta and Luxembourg remain persistently underperforming. Fractional probit regressions indicate that structural, economic, and policy-related factors have a more visible and statistically significant impact under the α = 0.95 frontier. In particular, environmental policy shows a strong positive association with efficiency only at this stricter benchmark. By contrast, under the more lenient benchmark (α = 0.75), regional contrasts and governance effects become obscured, reducing the interpretive clarity of performance patterns. These findings highlight the importance of benchmark selection in efficiency analysis and support a shift in the Common Agricultural Policy (CAP) from input-based subsidies to performance-based instruments. The results emphasize the value of strict benchmarks in revealing institutional effectiveness, regional disparities, and the real impact of environmental policy. With appropriate tools and tailored support, “Cleaner Milk with Higher Output” emerges not as a theoretical aspiration, but as an attainable sustainability goal for the EU dairy sector.