Enabling poor rural people
to overcome poverty
The characteristics of organic production and markets
Observing a farmer that uses no pesticides or fertilizers, one could easily assume that this is organic practice. To many observers, organic practices appear very simple on the surface. The common understanding that organic standards merely mandate the absence of synthetic agrochemicals is widespread and leads to the perception that most poor or remote farmers are organic by default — and some certainly are. However, while many such farmers may come close to the organic ideal of integrating their farming practices into the greater biological system and its cycles, there are nevertheless a number of clearly defined standards that their methods must meet if organic certification is a goal. Although these requirements are usually not onerous, they do necessitate a measure of preparation and attention for most farmers.
“In the first year of conversion, they just had an obscure understanding and thought that using no pesticide and fertilizer was equal to organic farming, in the second year organic farming was becoming gradually clear to them and in the third year they could have a deep recognition of the essence of organic agriculture and begin to master organic production techniques.”
Field report from Anhui Kiwi Case.
For farmers practicing more intensive cultivation methods these requirements also require radical changes that may be costly in terms of both time spent learning and initial crop yield response. Adjustments will be necessary in cultivation methods, the production and use of organic inputs such as fertilizers and pesticides, and the use of labour.
The promise of higher prices is often the primary driver used to induce adoption of organic methods. It is often farmers who bear the shock of realizing that the market for their organic product may not be so easy to access or may not pay much of a premium. As many of the case studies point out, the organic requirements and the realities of those markets sometimes surprise farmers and development professionals alike, and lead to a first useful lesson: it can be devastating to unfairly raise expectations that any farmer can readily convert to organic and earn considerably more.
While organic adoption may require more than refraining from the use of synthetic agrochemicals, it also offers many other benefits beyond the simplistic chemical-free caricature. The more successful farmers appear to convert for several reasons that go beyond earning a higher price for their crops. While income considerations are predominant, there are at least five major reasons why farmers choose to adopt organic practices:
- to earn more for their production
- to reduce or eliminate the need for purchased inputs
- to avoid potentially harmful agrochemicals
- to reduce their risks through crop diversification and improved soil quality/stability
- to maintain or improve valuable local natural resources and biodiversity.
Production
Who converts
Although a few cases demonstrated that farm groups or communities converted their entire production to organic (i.e. Jianxi, China and Maharashtra, India), the majority did not. Some farmers took a cautious approach and converted one product or field first. The comparison between farms in marginal conditions and those in comparatively better conditions illustrate some of the differences in farmers' willingness to undertake a shift to organics if that shift is perceived as a risk. The early adopters tend to be the more resourceful, better skilled, and typically better educated farmers (Madhya Pradesh cotton, Uttaranchal). They tend to have a higher tolerance for risk and are sometimes leaders in the community. Once identified, they can be useful as pilot or demonstrations plots early in a project.
Reducing the perception of risk certainly tends to increase the adoption of organic methods. The strong institutional support for some projects clearly facilitated the adoption. The complete converters shared having both the firm leadership of a strong organization (external in both Jianxi and Maharashtra) and its full financial support and guidance. The other cases proceeded more cautiously with conversion. Such risk aversion can be expected when neither farmers nor their project organizers have a full understanding of the potential benefits or disadvantages of organic conversion.
The organizational structure and its usefulness
Without exception all of the case studies demonstrated the importance of strong organizational structures. These are vital for disseminating information, supporting farmers through the early adaptation processes that encouraged many to undertake conversion, as well as for continuity and for successful marketing. It has been argued that operating on a small scale within the partially privatized common property regime, the Chinese farmers are too poor, too weak and too isolated to embark on conversion to organic agriculture, and that some form of collective organization is necessary to reach a minimum efficient scale of production and marketing (Sanders, 2001). All of the case studies in India and China generally concur with this conclusion insofar as conversion for marketing purposes is concerned. Since marketing can be one of the more alien undertakings for a typical farmer, government, NGOs or private companies are typically required to help. Given the distinct national contexts of India and China, a central issue is what kinds of organizational forms and institutional arrangements are more appropriate for learning and more economically effective in coordinating tasks and helping farmers to reach organic markets. The studies found that the organizational structures supporting smallholder organic agriculture took four primary forms and had distinct outcomes:
- farmers organized by a company
- farmers organized through an NGO
- farmers organized by government
- farmers forming their own organization.
Company organizations
In China, contractors and trading companies play the biggest role in concentrating land under organic farming. Many of these farmers had not converted to organic agriculture of their own initiative, but because of initiatives from trading companies, and they may have a limited understanding of the concepts of organic agriculture. Some experiences suggest that this limited understanding leaves little incentive for farmers’ own establishment of organic production systems (Zong 2002). In some cases, farmers had little voice about their role and the benefits they receive. Occasionally, where companies have seen business opportunities in organics, they may use farmers merely as tools of production. In cases where farmers are unorganized, they receive very little training and support and/or only marginally higher income for being organic (Yunnan beans, Inner Mongolia). It is not clear whether it correlates with lack of training or the lack of farmer organization, but one of these cases also showed incomplete compliance with organic standards. Where the companies studied are particularly benevolent (e.g. Madhya Pradesh) farmers receive considerable benefits. All of the companies involved in case studies were very effective at reaching organic markets. Private companies are more likely to have the marketing experience but also to have their own profit motives and these may not correspond with the farmers' needs. In contract farming situations that are common in Asian organics, private firms typically take on this role. While it facilitates getting farmers to the market, the trade-off is that it often also prevents them from learning the process and leaves them wholly dependent on the company.
Non governmental organization (NGO)
In India, private companies also play a major role in organizing larger-scale conversions to organic systems. The firm involved in the Madhya Pradesh case, as noted above, is regarded as a considerable asset for its farmers However, India also has a strong NGO sector promoting organic agriculture among small-scale farmers operating under various forms of collective organization (Mahale 2002). NGO-led organizations were more prominent among the India cases. These indicate that NGOs are also successful at marketing although many have undergone a sometimes difficult and costly learning process in the past. Unless they have experience, often hard earned, NGOs may not have the necessary business skills to succeed at marketing. NGOs appear to excel at the learning aspects of organic agriculture and all established demonstration farms and supported practical research that was reportedly very beneficial for local farmers, particularly Karnataka. NGOs in all cases also seemed to excel at issues of farmer equity and resource management. Sustainability is not clear since some NGOs encourage farmers’ organizations to develop while others tend to retain their position paternalistically.
The government as organizer
Organizations tend not to be formally encouraged by government bodies, particularly in China (Yunnan Tea, Jianxi Ginger Soybeans and Rice) where government support is usually channeled to private companies or to the village leadership. In many cases, local government has been very supportive of organic farmers and in some Chinese cases the organic initiative emanated from local government itself and utilizes the government's resources (Yunnan Kidney Beans, Jianxi, Uttaranchal). In at least one case (Jianxi) it was evident that the government-run structure was very beneficial to farmers, especially for marketing, but given the strong trend of government disengagement from marketing, such an approach would be difficult to recommend.
The Uttaranchal government, recognizing that its organic farmers would have many unmet needs, particularly in marketing their products, established the Uttaranchal Organic Commodity Board (UOCB). In its second year of operation, it has already conducted research on the availability of organic products in the state and their demand both nationally and internationally, assessed potential areas/crops for development, and has helped to establish retail outlets as well as export opportunities.
Farmer organizations
Both governments (Uttaranchal) and NGOs (Kerala) have used farmer organizations known as self-help groups (SHG) that are already established in rural areas as a base and help them to integrate professional services such as extension services to leverage extra value and reduce duplications or redundancies between similar groups in rural areas. The state of Karnataka is considering the potential supporting the establishment of farmer-owned companies that can serve as full-time managers of the post harvest, processing, and marketing needs, thereby allowing farmers to concentrate on farming.
Where farmer organizations are directly involved, they appear to more wholly adopt organics and consequently appear to have better results in the field (Karnataka, Maharashtra, Madhya Pradesh, Kerala). Those cases where farmer organizations were clearly evident and encouraged were also among the ones to receive a higher percentage of the selling price (Karnataka, Maharashtra, Kerala).
Where farmer organizations have been formed, they have required considerable support on a number of levels. In Anhui, IFAD and Dutch donor funding provided tangible assistance for the association’s start-up costs, operational expenses, tea processing machines, and training. By training the organization to manage its own processes and to provide value for its members, it set a useful best practice example.
Farmer led organizations, even when they required a fee from their members (Anhui Tea), were well accepted by farmers as a means to improve both their cultivation and marketing. The Anhui Kiwi case study usefully summarizes the farmers' perception of their association's function and is representative of others:
- Creates a platform for farmers to exchange experiences and ideas.
- Improves quality control.
- Serves as an information and technology center for local organic production. Illiterate or poorly educated farmers can receive technical support from the association.
- Has introduced useful techniques and varieties.
- It plays an important role in organic products marketing.
- It ensures that farmers own the benefits of their labours i.e. the association has registered a brand for its organic products.
Reasons for conversion and the consequences
Common reasons given for the decision to convert to organic systems include farmer and community health, environmental benefits, and community solidarity. More than one project noted that farmers converted because the reduced yields of conventional production (i.e. rice and sugarcane) have been exacerbated by increasing cost of agrochemicals inputs to maintain soil fertility. But economic benefit was by far the most common reason given for converting to organic agriculture. In some cases, the economic benefit was perceived as the result of reducing dependence on costly external inputs. In most cases, conversion occurs because of promise of higher market prices for organic produce. This may however be one of the least sustainable reasons for doing so (see Price Premiums and their Trends).
Farmers in India were more likely to have a fundamentally distinct approach to organic conversion from those studied in China. Nearly all of China's cases prioritized a market-driven orientation and rationale for being organic while acknowledging as secondary the environmental benefits. India’s cases also valued the economic aspects but were more likely to put primary emphasis on the environmental, health, and farmer empowerment aspects of organic agriculture. This concurs with the findings of the UNESCAP studies (2003).
For many, but not all, the first step in accepting organic principles is to forego the ‘science conquers nature’ approach in favour of a view that ‘science works with nature’. Several of the case study authors note that without this sort of basic conceptual understanding, the conversion process tends to be more difficult and conversion may be less likely to last. For example, Anhui Kiwi farmers were initially impatient at the beginning of conversion, but after several years’ practice, they recognized that three years’ conversion period was actually necessary; otherwise they couldn’t have achieved a useful and integrated understanding of organic methods. Farmers in Jianxi said that adopting new farming ideas was only part of the change and that time and practice were required in order to recognize the benefits of organic farming. Studies in northern India indicated that when the promise of higher prices did not materialize quickly enough, some farmers that converted strictly based on that factor reverted to earlier methods.
Not unlike the switch decades ago to chemically-oriented products during the Green Revolution, the conversion to organic also requires a fundamental shift. Likewise, the shift must include systematic training in the use of a new technology. The failure rate is higher where there is not adequate training for farmers and also for their support systems i.e. extension services and technology providers. Some of the Chinese cases note only partial adoption of organic standards and the Uttaranchal study notes that some farmers reverted to conventional methods due to failures stemming from the lack of training and support in organic methods. Conversely, a model farm in Karnataka conducts research and development for testing and standardization of organic practices and provides both on-site and off-site training. This practical component improves the success of farmers and encourages both the adoption and maintenance of organic methods.
There are a number of good lessons from the successful adoption of Green Revolution technologies. Just as hybrid seeds and synthetic agrochemicals were then a necessary part of adoption, so now are organic planting materials, fertilizers, and bio-pesticides necessary for organic adoption. Fortunately, from a sustainability point of view, many of these inputs can initially or eventually be produced right on the farm or shared between neighbors rather than being purchased. Similar to the way that investment in irrigation was often required for Green Revolution technologies, investment in certification and secure (non-contaminated) storage, processing, and transport is necessary for organics.
Since the switch to organics from a traditional or rustic form of cultivation rarely has negative consequences in terms of yields or output, little direct financial help is necessary to bridge conversion. However, when switching from intensive forms of agriculture, the potential natural resource advantages i.e. biodiversity and reduced contamination, must be paid for during the interim phase when many crops show significant yield reductions at least until the natural soil tilth and fertility are sufficiently developed. The Karnataka case illustrates conversion from a conventional high-input cropping system wherein first-year losses in yields were considerable ranging from 21% in rice, 27% in sugarcane and 31% in banana although it must be noted that conventional crops also suffered significant yield reductions in those same years. By the third year yields had stabilized, and beginning with the fourth year after conversion they consistently surpassed the current conventional yields. Organically managed banana actually surpassed the highest yields that were earlier achieved (pre-conversion) under conventional management.
The availability and cost of organic inputs
There is no evidence that small-scale organic farms typically face input shortages when they are trained in organic methods, especially when some animals are introduced to the system. A few of the cases registered the difficulty of some farmers occasionally producing sufficient on-farm inputs (Yunnan Tea, Anhui Kiwi, Hubei Tea) even with livestock, but all of them were otherwise able to procure sufficient low-cost local materials to meet their needs. For farmers in upland or more remote areas that need external fertilization sources, the cost difference for fertilizers can be substantial if they are not locally available. The Anhui Tea case notes that the difference can be as much as three times more. Surprisingly, a number of cases did not prioritize the on-farm production of inputs. These cases (Northern India, Jianxi) preferred to rely on local markets for inputs and put modest emphasis on improving farmers' own composting or natural pest management abilities. Although local organic fertilizer was readily available, it was sometimes substantially more costly on the market (Uttaranchal).
In many cases, pest control methods such as the bio-pesticides were also readily available. One distinct advantage of organics' localized approaches is the production of such aids at the local level thereby creating new sources of non-farm rural enterprise. Farmers were able to profit by selling their excess compost and other self-made inputs i.e. vermi-wash, biodynamic preparations, natural pesticides, etc. to other farmers. Such local enterprises can take advantage of traditional indigenous knowledge and have immediate feedback from their clients. These small enterprises tend to be effective at providing a necessary service otherwise their local client base quickly evaporates.
Since small organic farms typically do not face input shortages, one proposed plan under India’s former government to subsidize fertilizer manufacturers to produce "organic fertilizer" would therefore appear to offer only modest tangible benefits to the majority of Indian farmers who are small-scale. It is not clear whether large-scale farmers would find that having sufficient inputs would be a constraint. The plantation-style operations (i.e. tea) that were studied did not register this as a problem nor did the intensive operations around the Shandong area. Intensive horticultural projects typically require the most fertilization and would do well to assess local input availability.
The recycling of farm nutrients is a primary feature of organic agriculture and is well demonstrated to significantly reduce input costs. This cost reduction is partly offset by an increase in labour to produce the inputs. Avoiding pre-season cash outlays for inputs is recognized as important to small farmers in several of the cases and is a particularly important feature of several projects (Maharashtra, Karnataka, Kerala).
Even for nutrient-intensive crops such as cotton, organic inputs are not only sufficient but can actually improve output. The evidence in such cases is that good organic management can also significantly reduce costs. For example, both of the cotton projects (Maharashtra and Madhya Pradesh), even under different conditions, noted lower production costs and higher yields once the organic systems had been established. These effects were significantly more pronounced in the Maharashtra case studying poorer farmers. See Table 3.1 below. Irrigation requirements in Madhya Pradesh were reduced because of the increased moisture retaining capacity of the soil after intensive cropping systems were converted to organic.
Table 3.1. Cost and yield comparisons for three production systems of resource-poor farmers (ha)
| Crop | Year |
Traditional cost | Organic cost | Intensive cost | Traditional yields | Organic yields | Intensive yields |
Cotton |
2002 |
3 085 | 3 500 | 7 575 | 450 kg | 650 kg | 800 kg |
2003 |
3 355 | 3 805 | 8 235 | 450 kg | 650 kg | 800 kg |
Note: costs consider all inputs and labour
Source: Maharashtra case
Soil fertility and plant health issues
Only one of the 14 cases noted a fertility decline; and it was temporary as farmers learned. The cotton study (Madhya Pradesh) used the most sophisticated measures and recorded that after several years, organic soils required half the application of nitrogen to produce similar or better yields than conventional soils. For most cases, there was no evidence of formal soil testing so the studies based their assessment on farmer observations and yield changes. Most of the cases noted very significant improvements in soil conditions and fertility although some of these only measured a few years. One case literally resuscitated barren land into what is now productive farming area (Maharashtra). Other cases (Karnataka, Madhya Pradesh) recorded that just a few years after starting organic practices, farmers' fields no longer became waterlogged during heavy rains. The Karnataka case notes a reduction in irrigation requirements while getting higher yields. Their improvement of soil tilth and organic content has increased the soil's water holding capacity such that requirements for irrigation water have dropped by approximately 25%.
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In two cases, already certified organic farmers admitted to occasionally, although rarely, using chemical pesticides as a shortcut. Both cases were modified forms of contract farming where the farmers' only incentive was a simple contract to deliver the agreed-upon crops to the contracting enterprise. There was no farmer organization or peer trust group. These farmers received only minimal training and supervision and were certified but neither managed nor owned the certification. They demonstrate the potential danger of working only with a price incentive. One of the Scientific Committee reviewing this work (de Janvry) notes that “shocks due to pest attacks could be managed through temporary use of synthetic chemicals. Because vulnerability is such an important aspect of poverty, the relation between organic production and risk would require further analysis.”
The introduction of methods such as interplanting with different varieties rather than monocropping, have helped farmers in Yunnan, China to reduce the spread of disease and nearly double their yields. By interplanting different varieties they were able to overcome serious problems with rice blast that did not respond to conventional agro-chemical methods (Zhu et al. 2000). The intensive cotton production case (Madhya Pradesh) requires less expense and about half the time for pest management compared to conventional cotton farming in the region. And yet they maintain similar or even higher yields when compared to the conventional systems. The occurrence of difficulties with pests or disease caused some farmers concern. Yet in all of the cases the incidence was more or less as manageable as conventional methods after farmers were taught organic control methods.
Livestock components: fertility and risk management
Livestock play an important role in the socio-economic life of India and China (see Appendix II) and they also play a vital role in providing farms with necessary balanced nutrients. Organic systems work particularly well with livestock components. This is especially true in less fertile areas (Shiva 1996). Models of integrated agriculture, based on the principles of animal integration have always existed in Asian traditional agriculture. Livestock is part of a self-sustaining system of production of organic manure that is needed for organic cultivation ranging from fertilizing crops to fish ponds. It also provides valuable proteins to the rural poor. Livestock provides a number of higher value products such as milk and eggs, yogurt, and cheeses and also by-products (i.e. skins, fats) that guarantee cash income to farm families, offer employment not only to producers in the rural areas but also to large numbers of people engaged in secondary and tertiary enterprises related to the livestock business.
Organic livestock development promotes the diversification of production and hence diversification of incomes sources among small poor farmers especially in remote or marginal farmlands (see Appendix II). For smallholders, the most likely possibility for organic rearing is with ruminants, due to the high cost of organic cereal feeds for monogastric species (Harris, Browne, Barrett and Gandiya 2003). The organic production of small ruminants and their by-products (e.g. wool) has great potential to create livelihood improvement among small-scale farmers. Women are extensively involved in livestock rearing. It is an important occupation and a source of family income also for women in the villages (Bhagirath 2000). They collect fodder, feed, clean sheds for these animals, and handle animal health.
Organic or integrated farming systems can be very efficient. For example, pigs are reared for five basic purposes: (i) as garbage disposers to eat everything that humans do not want; (ii) as a power station providing biogas energy which is easily converted into electricity; (iii) as a fertilizer factory to supply nutrients to for fish culture and soil; (iv) as a feed mill, as the crop and processing residues are used as livestock feeds; and (v) as a meat producer.
In India, two thirds and more of the power requirements of villages are met by the 80 million work animals (Shiva 1996). Indian cattle excrete 700 million tons of recoverable manure, according to the same source half of this is used as fuel, saving 27 million tons of kerosene or 68 million tons of wood annually.
One-half of all the world’s pigs are born and die in China according to the Food and Agriculture Organization (FAO) figures (2002). In China, rearing pigs and chickens is common in farm households and the FAO notes that currently only 20% of Chinese animal agriculture uses intensive technology and the remaining 80% is produced on small family-owned farms.
Although organic livestock production can offer useful fertility and risk management benefits for small farmers, it also presents other opportunities. Organic production on large-scale commercial farms can increase rural employment opportunities and can thus increase incomes for the resource poor. Typically, large-scale commercial farms undertake most organic livestock production for exports (Harris, Browne, Barrett and Gandiya 2003). Both China and India have potential for exporting (Inner Mongolia Lambs) at least throughout Asia. Trade in organic livestock products however is likely to be a risky business for most producers because of the increasing sanitary regulations and the difficulty of gaining access to an assured marketing chain. Although Japan has no regulations yet for organic livestock, both the USA and the EU regulations for organic livestock constitute a considerable barrier to entry in those markets. Although domestic markets are presently underdeveloped, these too show signs of potential given that livestock products already fit into the same higher value food category. In India, organic dairy products are already gaining acceptance (Karnataka) and prominent examples such as New Delhi's Mothers Dairy chain exist in several cities.
There is evidence that organic livestock methods in developed countries produce relatively less food and at a higher cost than industrial style intensive methods (see Appendix II). However, the food safety aspects of organic livestock production (when systematically managed) may offer viable economic alternatives to intensive factory farming. This is primarily because organics emphasize a proactive health management programme to address environmental factors that can reduce stress and prevent diseases such as Avian Flu7 that are becoming increasingly threatening to some rural and even national economies (FAO 2002) (and see Appendix II).
Does organic use more labour
The case studies clearly demonstrate that in many — but not all — cases, organic agriculture does require more labour. Madhya Pradesh cotton represents one of the more sophisticated adoptions of organics and by using less labour than before is a notable exception. A typical average, as in the Jianxi Rice example is 30% more. Some of the extra labour estimates, especially those at the high end of the range, can be misleading. Often, a significant portion of that labour difference is due to initial adaptation work and for newer and more demanding methods of cultivation and harvesting that are specifically necessary in order to meet the required standards of the organic buyer that is paying a considerable premium for that higher quality. For example, the Karnataka example shows 40% more labour and this includes labour for increased harvests while the Hubei Tea data shows the conventional labour comparison to be 63% less than organic mostly due to the new quality requirements of the harvest. Similarly, an independent study in 2002 (Bao) found that more than 90% of conventional farms that convert to organic increase their labour input.
In most rural areas labour availability is not a limiting factor. But in areas where this is a constraint, organic methods can be at a disadvantage since most farm households have labour opportunity costs. Even in nations with much higher labour costs and very limited labour availability such as the USA and Europe, small organic farmers are profitable. However, if organic agriculture ceases to be more remunerative, farmers can easily adopt conventional methods or return to traditional agriculture without complications. Some of organic farmers have come to perceive the labour component as a way of adding value at the local level to a crop, rather than using purchased inputs for the job that accrue value elsewhere. Several of the cases mentioned that the increased labour provided women with more earning opportunities. In Jianxi China some of the women interviewed claimed that this provided them, for the first time, with a feeling of great worth for their contribution. See Chapter VI, Section 6, on women and organics for more on this topic.
Since organics tends to at least initially require more labour, it also creates labour opportunities for the landless population who are often the poorest. In areas where there is not sufficient work for farmers to earn a living, there is a tendency toward emigration to urban centers. Therefore, organics can contribute to rural stability.
The issue of organic soils and yield stability
Because many organic projects are relatively new, there was insufficient temporal data to make a decisive conclusion on whether organically managed soils can actually help minimize long-term yield volatility due to adverse climactic occurrences i.e. droughts, torrential rains, windstorms, etc. There are however some reasonable indications. The Jianxi ginger example offers some evidence of this and longer-term observations in Madhya Pradesh's cotton case indicate that this holds true for them. When marginal soils are organically managed, they tend to more noticeably respond in this fashion as noted most prominently in Maharashtra and Madhya Pradesh.
According to the records of a former revenue inspector in Karnataka, during the 2001-02 drought, rice farmers using high-yielding varieties and chemical fertilizers saw their crops reduced by more than 50% whereas the region’s organic farmers lost less than 20%. Similarly, sugarcane losses were 58% compared to 1% respectively. These developments got the attention of other farmers who began to adopt organic methods and convert the following year.
Comparison of production costs and yields
Because organic agriculture involves polycultures and crop rotations that often alter the farm economics, it is difficult to measure and compare these in terms of simple economic indicators against conventional agriculture that is more likely to be monocrop focused. Even comparisons with traditional agriculture can be difficult since shifts to organic practices like soil fertility management, water resource management, and other environmental undertakings involve complex and multidimensional concepts that are not easy to measure on a cardinal scale (Pender 2004).
Although it can be difficult to specifically predict whether production will increase or decrease after conversion to organic methods, some general lessons can be drawn from the case studies. Yield reductions are more likely when conversion is from intensive agricultural methods that rely heavily on external agrochemical inputs. These yield reductions are greater in the first years of conversion as soils and crops adjust and farm management adapts its skills. After the first years, in some cases they rebound to the conversion levels or occasionally supersede them (Madhya Pradesh; Dankers and Liu 2003 p. 50) and in other cases they remain somewhat below those levels. The single most important reason for these differences appears to be the farmers' level of understanding and application of organic methods. At the other end of the spectrum, conversion from traditional or rustic methods of agriculture in rain-fed areas to organic agriculture will tend to raise the yields. See table 3.4.
Bao's (2002) look at conversion from conventional farms practicing intensive agriculture found that nearly two-thirds of conversions to organics consequently increased their production cost by 18%. Only 46% decreased their income during conversion. Most of these (nearly 80%) recovered to increase their income after conversion while less than 20% did not and suffered a decrease.
In some cases organic costs can be significantly higher than conventional costs even when organic yields are markedly less. The Hubei Tea and Mushroom case is the most dramatic example of this. A comparison of yields showed that the organic system's yields were nearly 30% less. Its production costs, due primarily to labour, were double those of conventional production (109%). Although organic inputs were less expensive, the conventional farm used 63% less labour by substituting chemical fertilizers, herbicides, and less selective picking. For the organic farm, the higher costs were in part due to the increased care and selective harvesting (60% higher cost for harvesting) necessary to improve the quality for a premium organic market. Nevertheless, in this case the organic farm was three times more profitable since the market price it received was nearly 400% higher.
The reverse is true for costs in Karnataka where the costs of production were significantly reduced for a number of crops as a result of conversion to organic. Rice production costs were reduced by an average of 16% by the 4th year of conversion. Converting their sugarcane to organic management reduced total production costs by 15%. Bananas showed an even more significant reduction of approximately 33% after conversion was completed.
It is likely that — to a significant extent at least — the shift in production costs may depend on the producers' ability to fully adopt and take advantage of the management techniques of organic farming. There is a correlation between those cases where farmers and their support structure (i.e. NGOs) can access and develop the technology of organic farming, and their success in achieving soil fertility, pest management, low costs, and high productivity. Accordingly, in cases where there appeared to be little education or incentives to fully adopt organic methods, and little support with technology and methods, yield declined or showed only modest improvement and costs tended to be higher. The following analogy comes to mind; a student that is given resources, support and a collegial team environment to learn a new subject vs. a student that is left to his own devices and told that he would pass just so long as no one caught him using any chemicals. Both may "pass" to sell their products but will end up with rather different results.
In some cases part of the productivity increases may be due to nothing more than improved cultivation methods and care when a crop's value increases significantly. For the traditional kidney bean farmers in Yunnan, yields improved 15% while input costs went down primarily because of improved seeds and cultivation methods since little else changed in their traditional system. Much of this change was driven by premiums of up to 50% for their organic beans. But as Rundgren (2002) notes, organic agriculture can increase productivity through a number of mechanisms. The case studies have noted these:
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Developing the biodiversity in the farming system through crop rotation, intercropping and polyculture tends to lower the risk of heavy pest and disease-related losses while improving fertility. Intercropping and appropriate cover crops can reduce erosion, improve moisture levels, and also reduce the need for weeding as well as providing fodder and additional sources of income.
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Effectively optimizing resources such as forest area, livestock, and water (micro-catchments and retention) and recycling on-farm nutrients by composting serve to improve the soil's fertility and tilth and can also reduce both costs and a farmer's vulnerability.
Table 3.2 shows a typical example of key comparisons points between three different production systems: a) traditional or rustic; b) certified organic; and c) conventional agriculture. Three of the crops (rice, ginger, soy) are grown in highland areas of China and for contrast, the bananas, plains rice, and sugarcane are cultivated in a dry central Indian valley. These examples adapted from the Jianxi and Karnataka cases illustrate not only two different agro-ecological environments but also two different levels of institutional support and farmer training in organics. The Karnataka case has developed a broad institutional support system that includes on-farm research and ongoing programs of farmer training. As a result, it has managed to actually reduce the costs of production while elevating yields to levels that are even superior to those of local conventional farmers.
The table notes how costs of production have risen modestly for all three types of cultivation in China in part due to rising labour costs. Costs typically increased for both the traditional and the conventional systems in India as well although the cost of production for organic banana, sugarcane, and valley rice gradually declined. Yields are remarkably stable for both of the established systems of traditional and conventional production. Organic yields have steadily improved in all cases as both soil tilth and farmer experience have progressed. As noted in the table below, the Indian organic yields have clearly surpassed those of conventional and traditional systems. Prices for organics also tend to be higher but in some cases, such as Chinese rice where production is for local markets, there is little or no price differentiation for being organic, and pricing is at par for all three systems. Other case study examples (Uttaranchal, Anhui tea) show results — at least in their early phases — that are more like the Chinese example where intensive systems yield considerably more than organics. In these cases, farmer training and local institutional support are still quite modest and the lack of organic technology and modest application of organic methods may be a determining factor.
Table 3.2. Comparison of cost and yield of traditional, organic, and intensive farming systems (kg, ha, USD)
INSERT TABLE 3.2
Source: adapted from the Jianxi, China and Karnataka,
India cases
Notes: (1) The yields are an average. Rice yields are similar among fields,
but ginger and soybean yields vary considerably. (2) The production cost
includes seed, fertilizer, pesticide and labour. For organic production,
it includes an estimate of the actual cost of any subsidized fertilizer
and pesticide but not the cost for training and organic certification.
Ginger is a relatively new market crop and in Jianxi was not produced in the traditional manner. It was introduced for its marketability and typically produced only by either conventional or organic methods. Organic production costs are marginally higher by about 10% and yields are significantly lower. In average years overall organic yields were 15%-23% lower. Year 2003 was a difficult one when production suffered dramatic losses. Organic systems appeared to be marginally more resilient to the climactic stress. Even with cost and yield disadvantages, the market prices for this cash crop dramatically tip the economics in favour of organic ginger.
Soy is another significant cash crop. In this case, organic input management is half as much as conventional methods and the yields parallel that. Once again, where the market is available, the economics tip strongly in favour of organic production with prices two to three times higher than those for conventional soy.
In the semiarid settings where valley rice, sugarcane, and bananas are cultivated, years of conventional monocrop management have reportedly resulted in progressively higher input costs in order to manage pests and maintain yields. Adapting these soils to organic management at first caused very significant drops in the yields for all three products (average 20-30% loss). By the third year the reductions stabilized and then climbed to surpass the output of the conventional systems.
In some cases, further distinctions were made when these were significant. Affluent farmers' use of labour and inputs can also shift the production economics. For example the Anhui Tea case notes differences between farmers in hill areas and those in the plains.
There were significant cost and yield distinctions between wealthier farmers and poor farmers. Poor or remote farmers use fewer updated methods and technologies. For example, a distinction was noted in their tea harvesting skills in Anhui and this was exacerbated by their financial inability to contract necessary harvest labour thereby suffering both reduced quality and reduced yields.
Similarly, some poor farmers lack farm animals for fertilization and do not have sufficient resources to procure external inputs, resulting in lower yields (Madhya Pradesh cotton). The Anhui Tea case also found that farmers had limited alternatives. For example, if the farmers own labour costs are accounted for, then the organic villages (because of higher prices) enjoyed positive net income while three traditional non-organic villages experienced a negative real net income.
Outcomes of converting small farmers to organic
While it is impossible to distill the diverse experiences of farmers into a simple graphic, there are nevertheless some typical characteristics of conversion to organics that are often shared. The tables below characterize key developments after organic adoption in order to better understand farmers' experience over a period of time.
Converting from conventional to organic agriculture
Generally speaking, small conventional farmers with more resources, have a slightly greater tendency to convert their entire cropping area due to a greater tolerance for risk and a better understanding of the potential rewards. In most cases the farmers' income improved considerably. Table 3.3 illustrates one of the common results that were found in the case studies where conventional farmers converted. Cost of production went up considerably (about 30%) since, despite some cost savings in farm inputs, labour costs were higher. It can be misleading to compare these with previous costs because a significant portion of the new costs result from process changes in quality control and harvesting that can be considered as new investments in order to meet the standards of a new and higher paying market. Costs for conventional systems also increased, but only slightly. Organic yields often showed a considerable early decline of more than 30% but climbed back up as soils improved and the farmer adapted to the cultivation practices. The better practices enabled a return to previous yields by the fourth year while conventional yields did not change significantly. Prices began to climb almost immediately as the buyers responded to the better quality that was evident as a result of better care and improved harvesting techniques (more labour) and the farmer received the certified price after the second year. Conventional tea prices went up across the same time frame but only marginally. The strong market demand for a higher quality crop made a considerable difference. Although sales volumes initially declined as production yields fell, these volumes quickly recovered as the improved quality became evident and buyers responded to its organic cultivation. In this case, the farmer was encouraged to use more labour and increase harvest quantities. The non-farm costs for processing were greater than for conventional but mostly due to larger quantities and the demand for improved quality as well as the segregation from conventional tea that required farmers to perform their own early stage processing that adds value and is a separate profit making stage for them. As a result of the community's success with conversion, their Tea Farmers Association began to take on their marketing thereby relieving them of that burden and helping to ensure higher prices with communal marketing.
Table 3.3. Temporal effects of small farmer conversion from conventional to organic methods
| Conventional to Organic Tea (Huoshan Huangya) | |||||
Pre-conversion |
Conversion era |
Certification era |
|||
| Yr 1 | Yr 2 | Yr 3 | Yr 1 | ||
| Farm cropping area (in mu) | 1 |
1 |
1 |
1 |
1 |
| Costs of production* (USD per mu) | 37.3 |
Slightly less than certification
era as labour needed is lower because harvest is smaller during
transition |
48.3 |
||
| Yields (kg per mu) |
20 |
13-14 |
14-15 |
14-17 |
15-20 |
| Prices to farmer (USD/kg) | 7.2-9.6 |
8.4-9.6 |
16.9-24.1 |
24.1 |
24.1-28.9 |
| Sales volumes (USD/mu) | 145-193 |
110-135 |
219-337 |
313-337 |
337-578 |
| Type of market/buyer: consumer, trader, wholesaler, retailer (lg. or sm.) exporter | Consumers, retailers, wholesalers | Consumers retailers, wholesalers | Consumers retailers, wholesalers | Consumers retailers, wholesalers | Tea Farmers’ Association and consumers |
15 mu = 1 ha
* Includes inputs, labour (both farmer and hired workers), and services
Source: interviews with farmers in Qingtangou Village, Huoshan County,
Anhui Province, China, June 2004
A number of factors influence the outcomes of farmers’ conversion. Thus, some situations are better while others are worse than the example given above. In order to have a better picture of the overall experience for the cases studied, Figure 3.1 represents the average experience across the different projects when small farmers converted from conventional input use to organic systems.
As the Figure shows, costs tend to initially be slightly higher as farmers invest (mostly labour) to adjust their fields to organic standards. This can include field contouring/water retention works, new planting to expand diversity or reduce erosion, and setting up composting or vermiculture. For farmers practicing more intensive agriculture, yields have tended to suffer by about one-third immediately after conversion as both farmer and soils adapt. Projects that are technically better managed have much lower reductions while the cases with poor technical support have initially suffered even greater yield reductions. After the first year of conversion, yields climbed steadily and tend to approach the baseline yields of the previous system after the third year. Although several technically well-managed cases can match or even exceed previous yields, most did not. Initially, the selling price tends not the change since organically managed crops can always be sold as conventional. Price may initially suffer for some high value crops for which aesthetic appearance is important in the marketplace (fruits and vegetables) as pest and disease control measures are learned. By the third and fourth years, when certification occurs farmers have received an average 20%-30% higher prices.
INSERT PHOTO HERE
Converting from traditional to organic
Farmers converting from traditional to organic methods tend to
be poorer than conventional farmers. In most cases incomes improve from
a combination of improved yields, and similar or reduced costs. Those
with access to organic markets, particularly exports, experienced further
considerable improvements in their income (Karnataka, Yunnan tea, Maharashtra,
Uttaranchal). In the data below (Table 3.4) for a sugarcane farmer, the
risk aversion is evident in the amount of land initially shifted to organic
methods. As clear evidence of success emerged after the first year, the
remaining area was also converted. The costs of conversion are primarily
for increased labour and this levels out somewhat as efficiencies develop
and initial works are established (establishing new varieties, green manure,
soil and water conservation measures). The additional labour resulted
in immediate yield improvements that gradually climbed as soil fertility
improved and organic management methods were refined. Conversely, traditional
and conventional farmers in this area showed an overall reduction in yields
during the same time period. The higher prices received for the crop reflect
both strong market demand and willingness of the accompanying NGO to help
ensure that premiums were received even during the conversion stages prior
to certification. The combination of improved yields and higher prices
have resulted in dramatic improvements in income (net profit) that are
only partially mitigated by the understanding that these do not reflect
some of the external costs borne by the facilitating NGO, i.e. extension,
certification, and marketing. The market options have also opened up after
conversion and while the option to sell to the local sugar mill still
exists, the improved incomes have permitted outside marketing and investment
in some primary processing facilities to add value. Prices for non-organic
sugar increased modestly across the same time period. Apart from the initial
learning curve and the potential costs of certification (if required),
there is no evidence that conversion has any detrimental effects whatsoever.
The impacts in terms of costs, yields, risks, and earnings noted in all
of the applicable cases were positive. In many of these cases, there was
notable mention of positive externalities although these were not usually
measured. See Chapter IV for further elaboration of this.
Figure 3.1. Converting from Traditional to
Organic Agriculture / Average Expected Effects of Small Farmer Conversion
from Conventional to Organic
INSERT FIGURE 3.1
Source: extrapolation from case studies and related materials
Table 3.4. Temporal Effects of Small Farmer Conversion from Traditional to Organic Methods
| Sugarcane | |||||
Pre- conversion |
Conversion era |
Certification era |
|||
Yr 1 |
Yr 2 |
Yr 3 |
Yr 1 |
||
| Farm (cropping area) size in ha | 1.20 |
1.20 |
1.50 |
1.50 |
1.60 |
| Costs of production1 (USD per ha) | 690 |
855 |
845 |
835 |
810 |
| Yields (per ha)2 | 83 |
91 |
112 |
120 |
128 |
| Prices to farmer (USD /metric ton) |
12.5 |
13 |
13.25 |
19 |
25 |
| Prices to farmer (USD /ha) |
996 |
1 183 |
1 484 |
2 280 |
3 200 |
| Sales volumes (tons marketed successfully) | 100 |
109 |
168 |
180 |
205 |
| Net profit (USD/ha) | 316 |
298 |
639 |
1 445 |
2 390 |
| Type of market/buyer: consumer, trader, wholesaler, retailer (lg. or sm.) exporter | Sugar mill |
Sugar mill | Sugar mill | Own processing and marketing | Own processing and marketing |
1/ Includes inputs and labour. Costs for
non-converters also increased but only marginally during the same period
(<7%).
2/ Yields for non-converters actually decreased slightly
in this period by about 10%.
7/ Example of this is the Swine Fever
in November 1999 in Andhra Pradesh, India, where tons of pigs were slaughtered
to combat an outbreak of Japanese encephalitis that killed more then two
thousand children. Intensive chicken production leaded to the largely
spread Avian Flu in Asia (2003-2004). There are also risks from emerging
diseases such as BSE/vCJD.