Profit Efficiency of Rice Farmers in Cambodia The Differences between Organic and Conventional Farming

This article highlights some important issues regarding the relative profit efficiency of organic and conventional farming in selected study areas of Cambodia, by estimating pool and separate profit frontiers of the two groups and accounting for the self-selection problem. We identify the relationship between the efficiency score from each frontier with farmers’ characteristics. The results indicate that farmers cannot manage their rice farming effectively in larger fields and fail to optimize their labor input and costs owing to limited skills and knowledge in rice production. Organic fertilizers can help to increase farmers’ rice income, while chemical fertilizers are less effective in doing so. Interestingly, being an organic farmer had no effect on farmers’ income elasticity when we conducted pool frontier estimation. However, these results were rejected by an LR test that was favorable to the estimation of a separate frontier, which suggested a better efficiency score if farmers adopted organic farming. We found some significant factors influencing the efficiency score, including education, own-tractor, and credit use (negative correlation) and selling, other farming, and number of poultry (positive correlation). Off farm was negatively correlated with the efficiency score in organic farming, but positively correlated in matched conventional.