Organic Farming as a Tool for Productivity and Poverty Reduction in Asia

This concise synthesis paper is based on some recent developments and also primarily on an IFAD evaluation of small farmer experiences of organic projects under different conditions in Asia led by this author. It briefly reviews key issues ranging from the adequacy of fertilizers, labor, and plant protection to important considerations about certification and marketing. It finds significant evidence that organic methods could be favorable for small farmers but that the immediate impact on the farmer differs depending on the organizational support available and whether the farmer transitions to organics from traditional low-input methods or from conventional and more intensive methods of production. Some of the related externalities, including resource conservation and soil fertility, may be even more valuable in the long run. Evidence also indicates that the organic supply chains of processing and trade also earn more money. The paper considers that further growth and meeting the demands of increasingly mainstream distribution channels such as supermarkets will nevertheless be difficult for most producers and will require the both the effective organization of small farmers and a combination of well-targeted public and private support especially in terms of research, extension, and market development. Although organic agriculture is certainly growing in popularity, there are conflicting opinions about its potential and the benefits it can offer, in particular whether organic methods can actually improve the livelihoods of smaller farmers. Similarly, questions remain about what impact organic methods have on labor, soil quality, local economies, and risk. Two areas of debate are most prominent: the local risk-benefit ratio of organic adoption and the marketability of smallholder organic products. This brief note will attempt to address both issues based on lessons learned and also set the context for understanding the basic characteristics of organic producers in the region Characteristics of Organic Production It is important to understand the rationale that farmers follow when considering adoption of organic methods. Greater income is the reason most farmers give for converting to organic agriculture, followed by health (personal and family), ideological, and environmental reasons. First movers tend to be either farmers using rustic or traditional methods of cultivation or the most sophisticated farmers with access to certification and marketing opportunities. Farmers that convert only because of the promise of higher prices are more likely to only participate in a perfunctory manner, not apply or adhere to the standards, and fail to receive the full benefits. Those who have a holistic understanding of organics are likely to be motivated by local benefits such as improved soils, fewer toxic chemicals, and self-reliance with inputs; these are likely to better withstand setbacks and difficult periods especially during the conversion stages and reduced premiums,. The IFAD evaluation found that organic adoption initially tends to increase labor costs and concurs with other studies (Diop 2002; Damiani 2003; Pretty et al. 2005; UNCTAD 2006) that note the switch to organics from a traditional or rustic form of cultivation has positive consequences in terms of yields and profitability, thereby providing better incomes. When switching from intensive forms of agriculture to organics, labor costs are again higher, yet input costs are typically lower especially after conversion phases, yields may be reduced at least initially, and overall income from sales at a premium price is higher. First and second year losses in yields were often considerable as farmers and their ecosystem adapted. By the third year, yields had typically stabilized. Although many stabilized at a The International Fund for Agricultural Development commissioned an evaluation in 2004-05 to determine the role of organics in development programs and under what circumstances they should be integrated into future strategies to enable a better understanding of organic agriculture in Asia and to clarify how organics can serve or hinder small farmers and rural communities. Information was drawn from case studies conducted by a team of nine scientists in China and India, as well as reviews of five other Asian countries and more than a hundred related studies and documents. An independent International Scientific Committee of esteemed experts was appointed to ensure that the evaluation adopted scientifically valid methods with a holistic perspective that considers economic, social and ecological subsystems. Committee members: Alain de Janvry, Jikun Huang, Gunnar Rundgren, M.S. Swaminathan, and Raffaele Zanoli. yield level lower than before, some of the more sophisticated farmers were able to actually improve yields with organic methods. The need for improved production technology is especially clear in the case of converting farmers. In most cases, it is more appropriate to measure total farm yields rather than measuring single crops since organic systems insist on some diversification away from dependence on a single crop. Organics, mostly because of current price premiums, are generally more profitable than conventional agriculture and more than make up for yields or productivity losses that may occur during transition. According to IFAD inquiries, the most difficult hurdle for small farmers to surmount is the lack of adequate technical advice (extension) on production technology. The second most important requirement is market information or promotion. Its importance reflects the not only the need for market orientation but also the limited success of farmers and their supporting organizations when undertaking marketing and sales. Financing for transition or expansion was ranked next in importance followed by lower cost of certification and then assistance with quality management and internal control systems. Farmer ranking of intervention priorities to facilitate conversion Ranking of importance of interventions (1 is most desired and 5 is least desired) Technical advice (extension) on production technology 1 Market Information or Promotion 2 Financing for start-up, transition period, or expansion 3 Lower cost of certification 4 Quality management and internal control systems 5