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Economic Impact of Organic Agriculture: Evidence from a Pan-India Survey

Author

Listed:
  • Anugu Amarender Reddy

    (Indian Council of Agricultural Research-Central Research Institute for Dryland Agriculture (ICAR-CRIDA), Hyderabad 500039, India)

  • Indrek Melts

    (Institute of Agricultural and Environmental Sciences, Estonian University of Life Sciences, 51006 Tartu, Estonia)

  • Geetha Mohan

    (Center for Far Eastern Studies (CFES), University of Toyama, Toyama 930-0885, Japan
    Institute for the Advanced Study of Sustainability, United Nations University, Tokyo 150-8925, Japan)

  • Ch Radhika Rani

    (National Institute of Rural Development & Panchayat Raj (NIRD&PR), Hyderabad 500030, India)

  • Vaishnavi Pawar

    (School of Oriental and African Studies, University of London, London WC1H 0XG, UK)

  • Vikas Singh

    (Institute of Economic Growth (IEG), Delhi 110007, India)

  • Manesh Choubey

    (School of Social Sciences, Sikkim University, Gangtok 737102, India)

  • Trupti Vashishtha

    (Malaviya National Institute of Technology, Jaipur 302017, India)

  • A Suresh

    (Indian Council of Agricultural Research-Central Institute of Fisheries Technology (ICAR-CIFT), Cochin 682029, India)

  • Madhusudan Bhattarai

    (Jalsrot Vikas Sanstha (JVS)—Nepal, Kathmandu 700003, Nepal)

Abstract

The demand for organic foods is increasing worldwide due to health and environmental benefits. However, there are several unanswered questions, such as: Do organic farmers generate higher profits? Will the cost of cultivation reduce to compensate for low yields? Can farmers practice as per the organic agriculture protocols and obtain certification? The literature on organic agriculture varies widely in terms of profitability, yields and costs of organic products. A few studies have researched site-specific organic agriculture, but none have compared organic with conventional agriculture at larger scale in India. The Indian government has promoted organic agriculture since 2015 through its pan-India scheme—Paramparagat Krishi Vikas Yojana (PKVY). Under this program, there were 13.9 million certified organic farmers in 29,859 organic clusters, covering 0.59 million hectares (about 0.4% of the cropped area in India). This study assessed the implementation process of PKVY and the impact at the farmer level using the Difference-in-Difference approach. An economic surplus model was employed to observe the macro scale using data from an all-India representative sample from 576 clusters for the crop year 2017. The results identified that organic farmers experienced 14–19 percent less costs and 12–18 percent lower yields than conventional farmers. The net result is a marginal increase in profitability compared to traditional agriculture. The economy-wide economic surplus model indicates that there will be a reduction in producer and consumer surplus due to reduced crop yields. However, if the shift from conventional to organic is confined to rainfed, hilly and tribal areas, there will be an increase in both consumer and producer surplus.

Suggested Citation

  • Anugu Amarender Reddy & Indrek Melts & Geetha Mohan & Ch Radhika Rani & Vaishnavi Pawar & Vikas Singh & Manesh Choubey & Trupti Vashishtha & A Suresh & Madhusudan Bhattarai, 2022. "Economic Impact of Organic Agriculture: Evidence from a Pan-India Survey," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
  • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15057-:d:972259
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    References listed on IDEAS

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    1. Katsuhito Nohara, 2024. "Willingness to pay for pesticide-free vegetables in Hokkaido, Japan: the relationship between appearance and pesticide use," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    2. Guoqun Ma & Minjuan Li & Yuxi Luo & Tuanbiao Jiang, 2023. "Agri-Ecological Policy, Human Capital and Agricultural Green Technology Progress," Agriculture, MDPI, vol. 13(5), pages 1-14, April.
    3. Melecio A. Sy Jr., 2023. "Developing Marketing Strategies in Organic Farming: A Lived Experience of Agri-Entrepreneurs," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(1), pages 496-517, January.

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