Organic produce is a fast growing (US$ 27 billion) segment of the food industry and is increasingly drawing the attention of farmers, governments and development agencies. As a systematized and certifiable approach to agriculture, organic farming is a relatively new phenomenon, and it is no surprise that its adoption faces some challenges among both farmers and the public sector.

The term itself refers to a farm management system that is in harmony with the local environment, using practices to achieve productivity as well as nurture ecosystems, with a very minimal use of synthetic chemicals. Some of the approaches include soil conservation, crop rotation and the use of green manure.

As a system that concentrates on low-cost technology, local resources and traditional knowledge, can organic agriculture promise a way out of poverty for many small farmers in developing countries? If so, under what conditions should this alternative be considered?

IFAD's Office of Evaluation conducted two thematic evaluations of organic agriculture and poverty reduction: one covering Latin America and the Caribbean (2001-2002), and the other covering Asia (primarily China and India, 2004). The evaluations looked at the practice of organic methods and their relation to poverty reduction, food security and trade. They also analysed small-farmer groups that have been successful in adopting organic technologies and in marketing their organic products. The results of the evaluations were very encouraging.

The potential is there

In almost all of the countries where the evaluations were carried out, small farmers needed only marginal improvements to their technologies to make the shift to organic production. Thus, it was relatively inexpensive. Women, in particular, are able to make the shift easily since the production methods they adopt are much more in line with their own knowledge.

In addition, in many cases yields increased rapidly and revenues grew because foods produced organically secured higher prices in the marketplace. For example, in 2001, organic cacao producers in Costa Rica received payments that were 150 percent higher than those that conventional producers received. Moreover, the demand for organic products is on the rise, and thus organic farming has vast growth potential. In China, the value of organic exports grew from less than US$ 1 million in the mid-1990s to about US$ 142 million in 2003.

So are the constraints

Unfortunately, there is a paradox: the farmers already producing for export are the ones benefitting most from this booming sector. Small farmers often have to surmount a number of constraints before they can become certified producers of organic products, such as lack of technical knowledge, inadequate market information, limited storage and processing facilities and complex certification processes. Many smallholder farmers are excluded from the government support systems for overcoming these constraints, especially the certification and marketing processes.

In addition, shifting from conventional to organic farming takes two to three years. During the transition period, small farmers are at their most financially vulnerable and may need financial backing, especially for certification costs and training. Secure land tenure is another critical factor. Farmers are unwilling to invest time and effort in conservation measures that only bring long-term returns if their tenure is insecure and short term. On their side, landowners are often fearful that they will be unable to evict tenants if they have improved the quality of the land.

Helping to make organic agriculture a viable alternative for small farmers

Overall, organic food production does hold the promise of lifting many small farmers in developing countries out of poverty. However, not all small farmers will possess the conditions to convert successfully to organic projection. What are some of the essential conditions?

• Farmers' organizations. Farmers' organizations will make or break the success of organic agriculture (see box below).
• Farmer motivation. The feasibility of organic agriculture will be much greater if farmers are highly motivated, especially by health or environmental concerns, and not solely by economic advantages.
• Soil characteristics. Fertile soils will make it easier for farmers because it will be easier and less costly to maintain fertility with available organic technologies.
• Previously applied productions systems and technologies. Farmers using production systems approximating organic ones will find it easier to meet the requirements of organic certification.
• Land tenure. Those who have more stable, secure land tenure will have much greater incentive to make the required investments in land-conservation measures.
• Availability of family labour. Those who have more family labour available will find it easier to face the higher demand for labour associated with organic methods of production.

The importance of farmers' organizations Farmers' organizations will make or break the success of small organic farmers. They allow farmers to take advantage of economies of scale through collective marketing; buyers are far more willing to deal with associations rather than a plethora of individual farmers. They provide training in the basics of organic productions. They help monitor compliance with international standards. They reduce certification costs for individual members and certification agencies that only have to carry out sample inspections rather than inspections of all farmers.

The state has many potential roles to play. Among them are: establishing policies that favour diversification, improving enforcement of commercial contracts, reducing market distortions, and simplifying laws that hinder the establishment or management of farmer organizations. Public institutions could also provide funding for organic agriculture research and training and contribute to costs associated with the transition period.

Importing countries should work to harmonize organic certification standards and reduce subsidies to their own farmers. They could also promote consumer awareness and help developing-country farmers establish linkages in order to take advantage of new market opportunities.

International agencies, NGOs and other organizations could support developing-nation governments in creating enabling environments for organic agriculture, building capacity among farmers, and promoting the establishment of farmers' organizations.

Clearly, organic agriculture should not be considered as a panacea for reducing poverty in any environment at any time. However, in areas where conditions favour the adoption of organic agriculture by small farmers, it can provide a long-term solution to poverty, while reducing migration, and improving the health conditions and the environment for entire communities.

Source: IFAD