Organic farming is fast gaining the attention of agronomists, policy makers, farmers, and economists as a viable alternative to chemical farming practised in the Green Revolution Era, as the negative side-effects (externalities) of chemical farming are now well-known. As an economist, and belonging to India, where agriculture still determines the livelihood of a majority of the population, I thought that the study of the economic viability of an alternative technique like organic farming would be the apt subject for my PhD research.

It is through agriculture, that the economy and the natural environment are connected, and hence, all the three, have a far-reaching effect on each other. The need of having an alternative to chemical agriculture is well established, considering its environmental consequences, like degradation of the soil, and natural resources, residues in food, its impact on human and animal health, and the general disruption of the ecological balance. What is generally overlooked, is the fact that these environmental consequences have economic implications as well, in the form of diminishing marginal returns in agriculture. Hence, the belief that chemical agriculture is environmentally harmful, but economically viable, is a misnomer, although in the short-run, it might show increasing returns.

The economic aspect, however, is highly dependent on the definition of viability. It is also dependent upon whether the consideration is in micro or macro terms, as well as the time period taken into account. If viability is defined in narrow terms, as meaning only monetary costs and benefits, it may lead to misleading conclusions, as often is the case. Chemical farming was deemed to be viable, as short run analyses were made, taking into account only the private costs and benefits, as against a holistic view of imputing social and environmental costs, (often clubbed together as external costs). Had these external costs been taken into account, chemical farming would not have been considered viable even in the short run; this, notwithstanding the fact, that heavy government support was required to reduce the private costs in the first place. Other economic implications like too much dependence of farmers on markets, and an increasing disparity between the rich and the poor farmers also resulted from the Green Revolution. The current cost-price squeeze in agriculture has also led to lesser profitability for the farmers.

This article in no way intends to make an attack on chemical farming or the Green Revolution. The period, in which the Green Revolution was introduced, was plagued with the problems of food shortages, population growth, famines, and a great dependence on food imports. At that point, increasing food production in the shortest possible time, and dispensing with the need for food imports was the only objective of the agricultural policy. In such circumstances, the Green Revolution gave immediate and demonstrable results, and helped in stepping up food grains output in a short period of time.

However, this increase was at a considerable social and environmental cost, finally borne to an extent, by the farmer himself. It is obvious that this system is not sustainable, and a more suitable system has to be developed to maintain agricultural output in the years to come. Hence, our concern for the present and the future, calls for a re-look at the agricultural policy and the need to direct research towards achieving not just a green, but an ever-green revolution in agriculture, which does not eat into the core natural capital of the farming business, i.e. land, and is capable of self-sustained growth in the future.

The problem that is most relevant from the point of view of agricultural policy is that of the economic viability. Is organic farming economically viable, so that it can be promoted as a policy decision, and if it is not, can it be made economically viable with the help of policy initiatives and economic tools?

The answer to this question is complex and calls for an all-embracive outlook. During the course of my research and the different other projects on which I worked, I came across a plethora of literature, of experimental work, conducted by different farmers, researchers, and research institutions, confirming that yield from organic systems can be highly comparable to conventional systems. Although comparative studies of the yield under organic and chemical systems are common, one has to note the fact, that such a comparison is a highly unequal one, considering the amount of research and government support that has gone into the chemical system for the past five decades, in contrast to a negligible effort to develop the organic system. Even then, a host of organic farmers and researchers have proved by example that yield can be as high as their conventional counterparts. Costs, on the other hand, are very low, making the organic system financially viable for the farmers. My own agricultural experimental work and interviews with farmers tend to confirm these findings.

The yield under organic farming also is at times lower (even by 30-50%), but the cash outlays being almost negligible, it seen as a highly viable proposition by farmers. As an economist, I tried to reason with the farmers about the principle of opportunity cost (the unseen cost of preparing compost, manure, etc, in terms of the time spent, or an opportunity forgone) saying that it might be high under organic farming, than under chemical farming, as organic inputs mostly have to be prepared by the farmer himself. However, all of the farmers (more than 250 so far) believed that saving of cash outlays is more important to them and hence, did not mind a greater opportunity cost. For them, the margin between cost and price increases due to a downward movement in cost, and hence they find it financially viable. Add to it the other benefits like better quality of produce and soil, utilization of farm waste, a chance of earning premium prices, as also export opportunities.

There have been instances of failure as well, when farmers try to switch over to organic farming without appropriate knowledge, and simply stop applying fertilizers suddenly, leading to disastrous results. Such instances spread wrong notions about the success rate of organic farming. The philosophy is not of reducing all inputs, but of reducing (or completely excluding) chemical inputs in particular. Organic farming is greatly knowledge-intensive, and hence, proper scientific knowledge is a must for anybody planning to switch over. It is also an important area where the government and NGOs can help by conducting research and training programmes.

Policy initiatives should be directed towards tapping the vast body of indigenous knowledge of farmers and developing it further through research bodies. More research should go into the development of organic manures, compost, intercropping, pesticides and repellents. Research should be localized, as there is no one technique, which can be adopted in all areas and agro-climatic conditions.

On the macro-level, however, a complete or a sudden shift to organic farming could spell disaster, considering the persistent problem of food security. The aim of the government policy should hence be to reduce chemicals in a phased manner, relying more on organic manures. It has been proved that up to 20-40% of the nutrition needs of plants can be fulfilled through organic manures, without lowering yield levels. Similarly, areas, which are organic by default, should be reserved for organic farming.

There exists a vast scope for the government in supporting organic farming in the initial stages. Policy initiatives should aim at providing easy access to organic inputs, scientific knowledge and incentives to farmers intending to switch over, and high quality and low cost certification. Development of a marketing and distribution channel for organic produce, and using the media for educating the people about organic farming is also essential. The faulty subsidy structure for chemical fertilizers, leading to a skewed NPK ratio, should also be rationalized. Farmers as well as consumers should be protected from cheating in the form of spurious products being sold as ‘organic’.

In the wake of the current socio-agro-economic situation, it can be inferred that organic farming is going to be a sunrise sector in the years to come. There is a pressing need of developing the system further, and providing it the necessary support and infrastructure. However, it is essential to re-iterate that any drastic change could be disastrous and hence should be avoided. A gradual phasing out of chemicals, along with the development of organic techniques is the only way to the future. It would be apt to conclude this paper by a quote by David R. Brower: “The more we pour the big machines, the fuel, the pesticides, the herbicides, and chemicals into farming, the more we knock out the mechanism that made it all work in the first place.”

This article was written for a publication by the Maharashtra Organic Farming Federation in October 2007