Profitability of Organic Versus Conventional Rice Production: An Evidence from South Asia

Abstract

Rice, a staple and cash crop in South Asia, is vital for small-scale farmers, but concerns about the profitability of organic farming challenge its adoption despite its environmental benefits. The present study was conducted in the Rice-Wheat zone of three South Asian countries to make a comparison of profit efficiency in rice production under organic and conventional farming systems and to examine factors affecting profit efficiency. A multistage sampling technique was employed to collect cross-sectional data. Profit efficiency was determined by employing Cobb Douglas's functional form of stochastic profit frontier. Results show that the mean profit efficiency of organic rice growers is 0.89 less than conventional rice growers (0.910) in Pakistan. The mean profit efficiencies of organic growers are higher than conventional growers in Nepal and Bangladesh. Education and the role of the extension department are important factors in increasing the efficiency of organic and conventional farming while access to credit and experience in rice farming are significant in reducing inefficiencies in conventional rice farming. The study concludes that the education of farmers, the role of extension services, and easy credit access are key policy variables to improve profit efficiency.