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Economic potential for conversion to organic farming: a net present value analysis in the East Mau Catchment, Nakuru, Kenya

Abstract

This paper discusses the economic potential in terms of income changes that may result from conversion to low-external-input agriculture (LEIA) organic farming in a Kenya’s catchment area. A spreadsheet model applying the gross margin and net present value analysis was developed to estimate economic returns to labour and land of alternative smallholder cropping systems in the East Mau Catchment. The income and costs over a 10-year horizon associated with current cropping practices of a typical farm household cultivating 1.12 hectares of maize–bean intercrop, Irish potato, carrots, tomatoes, cabbages and kales mix were characterized based on field work conducted in 2008–2010. An “average” smallholder LEIA organic farm was simulated based on the conventional one, and its income discounted. A comparison was then made of the two farm types. Results indicate annual net present value returns to cropped land average Ksh 21,878/ha ($ 267/ha) and Kshs 22,561/ha (€ 275/ha) in 2010 values for conventional and prototype LEIA organic farming systems, respectively. Net returns are particularly sensitive to crop yields and price and cost of fertilizers and seeds. Further efforts should be made to provide an economic analysis of other LEIA organic farming practices such as composting, double digging and agroforestry in terms of additional labour costs resultant. The model can be extended to build more scenarios on the role of price premiums. Additionally, further research should be done to exploit the socio-demographic factors affecting the adoption of low-external-input systems.

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Acknowledgments

The authors wish to acknowledge the support of Anthony Majanga of Baraka Organic Farm, Molo, for providing most of the data for simulating organic scenarios.

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Correspondence to Eric Kiprotich Bett.

Appendix

Appendix

The technical coefficients for crops under the conventional and organic cropping systems are shown in Tables 5, 6, 7, 8, 9, 10, 11, and an online version of the questionnaire is available at: https://ke.linkedin.com/in/david-ayieko-13398156.

Table 5 Technical coefficients for garden peas under organic and conventional systems
Table 6 Technical coefficients for potatoes under conventional and organic systems
Table 7 Technical coefficients of cabbage under conventional and organic systems
Table 8 Technical coefficient of carrots under conventional and organic systems
Table 9 Technical coefficient of kales under conventional and organic systems
Table 10 Technical coefficient of tomatoes under conventional and organic systems
Table 11 Technical coefficients of maize–bean intercrop under the conventional and organic systems

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Bett, E.K., Ayieko, D.M. Economic potential for conversion to organic farming: a net present value analysis in the East Mau Catchment, Nakuru, Kenya. Environ Dev Sustain 19, 1307–1325 (2017). https://doi.org/10.1007/s10668-016-9800-0

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Keywords

  • Economic potential
  • Organic farming
  • Gross margins
  • Net present value
  • Low-external-input system