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

Abstract

:

1. Introduction

  • To understand the effect of the organic agriculture in terms of costs, yields and profitability of farmers using the Difference-in-Difference approach in India, as well as rainfed and hilly areas.
  • To assess the economy-wide impacts of organic agriculture using the economic surplus model.
  • To evaluate the project implementation bottlenecks of the organic agriculture scheme in India.

2. Sampling Framework and Methodology

3. Results and Analysis

3.1. Theory of Change

3.2. Implementation Bottlenecks at the Cluster Level

3.3. Procedures for Certification

3.4. Facilities and Infrastructure at the Cluster Level

3.5. Preparation and Use of Bio-Inputs

3.6. Impact Assessment of PKVY at Farm Level

3.7. Impact of PKVY at the Macro Level

3.8. Farmer’s Attitude toward Organic Farming

3.9. Constraints in PKVY Programme Implementation

4. Implementation Bottlenecks and Gaps at Macro-Level

Fund Allocation and Utilization

5. Policy Analysis and Conclusions

Author Contributions

Funding

Institutional Review Board Statement

Informed Consent Statement

Data Availability Statement

Acknowledgments

Conflicts of Interest

Appendix A

Appendix A.1. Difference-in-Difference (DID) Model

Calculation Interpretation
Β0 A Base year outcome control group (year 2014)
Β1 B–A Time trend in control group (conventional agriculture)
Β2 C–A Difference between the two groups in pre-intervention (in year 2014)
Β3 (D–B)–(C–A) Impact of organic agriculture: Difference in change of outcome over time with the adoption of organic agriculture, after discounting initial differences.

Appendix A.2. Economic Surplus Approach

Closed Economy with Parallel Supply Shift

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Criteria State Category Management of RCs All
Cluster Group Developed Less Developed Govt. Non-Govt.
Organic Seed 6.3 19.9 * 6.3 19.9 * 13.8
Green Manure 55.0 76.8 * 52.0 79.3 * 67.0
Compost 37.0 69.7 * 34.0 72.2 * 55.0
Bio-Fertilizer

(other than green manure and compost)

9.0 12.1 7.2 13.6 10.7
Bio-pesticide 8.0 15.3 * 6.5 16.5 * 12.0
Panchamruth 8.8 13.2 * 5.4 15.9 * 11.2
Panchagavya 6.4 21.2 * 4.3 22.8 * 14.5
Beejamruth 5.1 12.2 * 4.5 12.7 * 9.0
Drip Irrigation 2.5 1.0 3.1 0.6 1.7
Wheat Paddy Soybean
Conventional Farmers Organic Farmers Impact of Organic Agriculture

(Double Difference)

Conventional Farmers Organic Farmers Impact of Organic

Agriculture (Double

Difference)

Conventional Farmers Organic Farmers Impact of Organic

Agriculture (Double Difference)

Cost (Rs/ha) Before 40,008 40,059 49,017 48,347 27,874 27,000
After 48,202 42,752 60,742 51,598 33,183 27,468
% change 20.5 6.7 −13.7 23.9 6.7 −17.3 19.0 1.7 −17.4
Gross revenue (Rs/ha) Before 50,796 51,304 59,269 59,861 31,954 32,274
After 61,200 56,228 71,408 64,105 37,771 33,380
% change 20.5 9.6 −10.8 20.5 7.1 −13.3 18.2 3.4 −14.7
Profit

(gross revenue- costs)

(Rs/ha)

Before 10,788 11,245 10,252 11,514 4081 5274
After 12,998 13,476 10,666 12,507 4588 5912
% change 20.5 19.8 0.2 4.0 8.6 5.6 12.4 12.1 3.2
Yield (Rs/ha) Before 35.3 35.3 39.0 39.0 11.8 11.8
After 36.0 31.5 41.0 33.9 12.0 10.1
% change 2.0 −10.7 −12.8 5.1 −13.1 −18.2 2.0 −14.1 −16.2
Manure (quintal/ha) Before 4.0 4.0 12.0 12.0 5.0 5.0
After 4.0 6.0 12.0 15.0 5.0 6.0
% change 0.0 50.0 50.0 0.0 25.0 25.0 0.0 20.0 20.0
Overall Sample Sub Sample of Rainfed, Tribal and Hilly Areas
Wheat Paddy Soybean Wheat Paddy Soybean
Cost (Rs/ha) (Dependent variable)
(Constant) 40,008 49,017 27,874 30,006 36,763 20,905
Time 8194 11,725 5309 7785 9713 5150
Intervention 51 −670 −874 48 −863 −743
Intervention ∗ Time −5501 * −8474 * −4841 * −4291 * −6610 * −3776 *
R2 0.84 0.86 0.78 0.76 0.77 0.67
Profit(Rs/ha) (Dependent variable)
(Constant) 10,788 10,252 4081 8091 7689 3060
Time 2210 414 507 2099 455 492
Intervention 457 1262 1193 474 −18 435
Intervention ∗ Time 21 579 3436 16 451 2680 *
R2 0.81 0.83 0.75 0.73 0.74 0.67
Yield (Quintal/ha) (Dependent variable)
(Constant) 35.3 39.0 11.8 26 29 9
Time 0.7 2.0 0.2 0.8 2.2 0.2
Intervention 0.0 0.0 0.0 0 0 0
Intervention ∗ Time −4.5 −7.1 −0.9 −1.3 * −2.0 * −0.5
R2 0.81 0.83 0.76 0.73 0.75 0.68
Number of sample 1210 1814 337 242 544 202
Crop 10% Area under Organic 30% Area under Organic
Total Production (MT) Value of Production (Rs. Billion) Total Surplus Consumer Surplus Producer Surplus Total Surplus Consumer Surplus Producer Surplus
Change in Rs. billion
Paddy 109.0 1744 −26.6 −17.8 −8.8 −79.5 −53.2 −26.3
Wheat 98.5 1773 −17.5 −10.4 −7.1 −52.5 −31.2 −21.2
Soybean 13.1 408 −4.5 −2.3 −2.3 −13.6 −6.8 −6.8
Change in Rs. billion (shift confined to rainfed, hilly and tribal areas only)
Paddy 43.6 697.6 6.8 4.5 2.2 21.7 14.5 7.2
Wheat 39.4 709.2 6.3 3.7 2.5 20.2 12 8.2
Soybean 7.86 244.8 2.5 1.3 1.3 7.5 3.8 3.7
Zone Clusters (N) Farmers (lakh) Area

(lakh ha)

Net

Cropped Area (%)

Area in All-India (%) Amount

(Rs.lakh)

per Group

Central 10,133 5.07 2.03 0.543 34 3.9
South 7677 3.84 1.54 0.524 26 4.2
North 7223 3.61 1.44 0.460 24 1.8
East 2409 1.20 0.48 0.233 8 6.4
West 2417 1.21 0.48 0.175 8 4.5
Overall India 29,859 14.9 5.97 0.408 100 3.7

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Reddy, A.A.; Melts, I.; Mohan, G.; Rani, C.R.; Pawar, V.; Singh, V.; Choubey, M.; Vashishtha, T.; Suresh, A.; Bhattarai, M. Economic Impact of Organic Agriculture: Evidence from a Pan-India Survey. Sustainability 2022, 14, 15057. https://doi.org/10.3390/su142215057

Reddy AA, Melts I, Mohan G, Rani CR, Pawar V, Singh V, Choubey M, Vashishtha T, Suresh A, Bhattarai M. Economic Impact of Organic Agriculture: Evidence from a Pan-India Survey. Sustainability. 2022; 14(22):15057. https://doi.org/10.3390/su142215057

Chicago/Turabian Style

Reddy, Anugu Amarender, Indrek Melts, Geetha Mohan, Ch Radhika Rani, Vaishnavi Pawar, Vikas Singh, Manesh Choubey, Trupti Vashishtha, A Suresh, and Madhusudan Bhattarai. 2022. “Economic Impact of Organic Agriculture: Evidence from a Pan-India Survey” Sustainability 14, no. 22: 15057. https://doi.org/10.3390/su142215057

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