Abstract
The primary motivation for farmers to engage in organic farming as a subsistence business is its potential for profitability, which should provide socio-economic, financial, and environmental benefits. This study aimed to assess the financial feasibility of organic rice farming and compare it to conventional farming over a long-term period of 12 seasons. The study collected primary data from 203 smallholder farmers using structured questionnaires and participatory record-keeping data. A comprehensive mixed-methods approach was used to assess the feasibility of organic farming, including cost structure analysis, profitability analysis, benefit–cost ratio (BCR), internal rate of return (IRR), and net present value (NPV). Inferential statistics were used to determine significant differences in each variable. The results showed that organic rice farming faces several challenges, including declining yields during the conversion period and higher initial investment and cultivation costs compared to conventional rice farming. However, organic rice farming also presents an opportunity to generate high revenue due to the premium price and increasing demand for organic products. The high cost of inputs, especially organic fertilizers and intensive labor, is a significant challenge for organic rice farming, as it is not yet integrated with livestock to provide organic inputs. Labor-intensive cultivation practices, such as fertilizing and pest control, add to the workload. Sensitivity analysis demonstrated that organic rice farming is more resilient to external factors than conventional rice farming. The findings of this study can inform government policies to promote organic farming in other rice-producing countries and accelerate the adoption of organic rice farming.
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Data Availability
The corresponding author can provide the datasets created and/or analyzed during the current work upon reasonable request.
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Acknowledgements
The authors would like to thank Mr. Dedi Mulyadi, A.Md. (National consultant of organic rice production in Indonesia-FAO, and the leader of the Farmer Group Union Bumi Mandiri) and Mr. Uu, the leader of the Farmer Group Union Simpatik, Pagerageung, Salawu Tasikmalaya’s farmer group, Pringkasap, Segalaherang Subang’s farmer group, and INOFICE (organic certification body). Finally, the authors acknowledge the excellent research support received by extension officers from the local government of West Java.
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Partial financial support was provided by the Sustainable Management of Agricultural Research and Technology Dissemination program (SMARTD), a collaboration between the Indonesian Ministry of Agriculture and the World Bank.
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All authors contributed to the study conception and design. Material preparation, data collection, and analysis were performed by Sujianto, Ening Ariningsih, Ashari, Endo Gunawan, Suci Wulandari, and Agus Wahyudi. The first draft of the manuscript was written by Sujianto, and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.
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Sujianto, S., Ariningsih, E., Ashari, A. et al. Investigating the financial challenges and opportunities of organic rice farming: an empirical long-term analysis of smallholder farmers. Org. Agr. (2024). https://doi.org/10.1007/s13165-024-00461-w
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DOI: https://doi.org/10.1007/s13165-024-00461-w