Agriculture is a source of livelihoods for 1.5 billion smallholders and landless labourers. The vast majority of the farmers in the developing countries (about 85 per cent) are farming with landholdings with less than 2 hectares (ha). Moreover 75 per cent of the rural poor of which 2.1 billion live on less than $ 2 per day and 880 million on less than $1 a day, and most depend on agriculture for their livelihoods (World Bank, 2007). According to the findings of the Intergovernmental Panel for Climate Change (IPCC), climate change is anticipated to have severe effects on food security, environmental sustainability and equity, possibly increasing the number of hungry people from 100 million to 380 million by 2080 (Easterling et al., 2007). The International Assessment of Agricultural Knowledge (IAASTD) report stated that "the way the world grows its food will have to change radically to better serve the poor and hungry if the world is to cope with growing population and climate change while avoiding social breakdown and environmental collapse" (IAASTD, 2008).
There is a need to understand the ground realities and develop an appropriate sustainable farming system which can meet the food and nutrition needs of these vulnerable communities. Organic agriculture endows many options to mitigate the present environmentally destructive agriculture and can ensure food security by increased productivity and improving the livelihood of smallholders.
The fruits of Green Revolution are turning sour due to the stagnation in the crop productivity combined with the deterioration in quality of food and soil health. This is due to the environmental degradation for decades owing to unsustainable agriculture practices. In addition, the modern agriculture has contributed to huge environmental cost by facilitating soil erosion, ground water contamination, loss of soil fertility, loss of agricultural land through salinization and acidification, depletion of ground water tables, loss of biodiversity, increased pest resistance and release of greenhouse gases through massive deforestation.
However the silver lining in cloud is the ingenuity and innovation of farmers, their practical know-how and knowledge that have aided to their success in freeing themselves from the shackles of modern destructive agriculture. The degraded, arid lands have been transformed into fertile oases. The farmers in different parts of the world have demonstrated in concrete ways how, by placing themselves within the symbiotic, circular economy of nature, can they increase productivity while saving on inputs, and allowing nature to thrive and increasing the 'natural capital' on which all life as much as industry depends.
There is a growing awareness amongst the farmers all over the world in organic farming as a viable alternative to the modern chemical agriculture. The practice of organic agriculture is uniquely pro-poor, as it builds on the comparative advantages that poor farmers have, such as the relatively chemical-free land, the abundance of labour and the traditional knowledge of chemical-free production methods. These comparative advantages that the poor farmer posses have allowed cost effectiveness in producing organic food to a large population who are suffering from poverty and malnutrition.
What is organic agriculture?
Organic agriculture is a production system that sustains the health of oils, ecosystems and people. It relies on ecological processes, biodiversity and cycles adapted to local conditions, rather than the use of inputs with adverse effects. Organic agriculture combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved (IFOAM).
Organic agriculture relies on natural nutrient-cycling processes, exclude the use of synthetic agro-chemicals (fertilizers, pesticides, hormones, etc.) and sustain or regenerate soil quality. Farming practices include crop rotation, mixed cropping, intercropping, strip cropping, trap cropping, mulching, tillage operations, cover crops, manure application (composting) and biological pest control. These agro-ecological methods retain more nutrients, organic carbon and moisture in the soil which facilitates the crops to withstand and resist unpredictable weather patterns and climatic stres like drought.
Organic agriculture and food security
Organic farming methods are regenerative because they restore nutrients and carbon to the soil, resulting in higher nutrient density in crops and increased yields. These practices are designed to integrate agro-ecological systems and biological processes. A regenerative system improves the capacity of the farming systems and when properly managed with respect to local conditions, a natural, organic system:
- Increase crop yields.
- mprove adaptability to climate change by improving drought and flood resistance.
- mpower the world's poorest farmers through a sustainable system that does not depend on unaffordable chemical and petroleum-based inputs.
- Increase the carbon content of the soil, thereby improving its quality and capacity.
- Promote human health and well-being through greater access to more nutrient-dense food from a wider variety of crops (Tim et al., 2008).
Productivity in organic agriculture systems
The skeptics of organic agriculture argue that the productivity of crops would decrease and the world would go hungry without the synthetic fertilizers and pesticides as the yields would reduce drastically. However such presumptions have been falsified with the published scientific reports. Organic agriculture offers many options to increase productivity, improve food security and livelihood for smallholder farmers, given that agro-ecological methods are properly and appropriately implemented. Scores of studies reveal that organic agriculture yields are higher than the modern chemical farming.
For instance, in Madhya Pradesh state of central India, average organic cotton yields was 20 per cent higher than on neighbouring conventional farms. A shift from intensive agriculture by the use agrochemicals to composting has seen an increase in yields and in the range of crops in Ethiopia (Nicolas Parrott, 2002). One of the common features in most of the reports is that the developing nations benefit the most when compared to the industrialized nations in organic agriculture. In southern Brazil, maize and wheat yields doubled on farms that changed to green manures and nitrogen fixing leguminous vegetables instead of chemical fertilizers. In Mexico, coffee-growers who chose to move to fully organic production methods saw increases of 50 per cent in the weight of beans they harvested. In fact, in an analysis of more than 286 organic conversions in 57 countries, the average yield increase was found to be an impressive 64 per cent. In the developing world, organic yields vastly surpass yields from conventional agriculture by ratios of nearly 1.6 to 4.00. Worldwide across all foodstuffs, organic ratios outperform conventional agriculture by 1:3 (Gray and Nuri, 2010).
According to the United Nations Environment Programme (UNEP) report, not only can organic agriculture feed the world it may be the only way to solve the growing problem of hunger in developing countries (UNEP, 2008). Some of the conclusions of the UNEP report are:
- Organic practices resulted in per hectare food crop productivity increases.
- Organic production allows farmers access to markets, enabling them to obtain premium prices for their produce, as well as increased access to good quality, organic food for the entire community.
- Organic and near-organic agricultural methods and technologies are ideally suited for many poor, marginalized smallholder farmers in Africa or other developing nations.
- Recent food-price hikes and rising fuel prices have highlighted the importance of making agriculture less energy- and external-input dependent.
- Certified organic production for the export market, with its premium prices, can undoubtedly reduce poverty among farmers.
- Organic agricultural systems are making a significant contribution to the reduction of food insecurity and poverty and improvement in rural livelihoods in areas of Africa.
At present around 10 calories of fossil energy is required to produce one calorie of food energy. Organic agriculture reduces the energy required to produce a crop by 20 to 50 per cent. Reduction or elimination of fossil fuel use in agricultural production will soon be crucial in the fight against hunger in a world where fossil fuels are in short supply (Tim et al., 2008). In organic farms there are different methods of energy conservation wherein the wastes are recycled through a biogas plant to harness methane gas which are then used for cooking, lighting and running agricultural machinery. While the slurry of the biogas can be used for making organic manure that helps in improving the soil fertility and replenish with nutrients.
Adaptation to climate change
The production of ammonium nitrate fertilizer, which is indispensable to conventional farming, produces vast quantities of nitrous oxide - a greenhouse gas with a global warming potential some 320 times greater than that of CO2. In fact, the production of 1 ton of ammonium nitrate creates 6.7 tons of greenhouse gases (Co2e). The techniques used in organic agriculture to enhance soil fertility in turn encourage crops to develop deeper roots, which increase the amount of organic matter in the soil, locking up carbon underground and keeping it out of the atmosphere. The opposite happens in the modern chemical farming, high quantities of artificially supplied nutrients encourage quick growth and shallow roots.
Studies show that cover crops can sequester approximately 1,000 pounds of carbon per acre per year. The addition of compost doubles this amount of sequestered carbon to approximately 2,000 pounds of carbon per acre per year, or the equivalent of over 7,000 lbs of CO2. If these regenerative organic farming practices are applied to all the world's 3.5 billion tillable acres, close to 40 per cent of all global CO2 emissions can be mitigated. Organic systems produce significantly better yields under drought stress and in wet years, and produce comparable yields in years with favourable weather conditions. Drought has a major impact on food production, accounting for 60 per cent of food emergencies (Tim et al., 2008).
No doubt, organic agriculture is an essential step to eradicate extreme hunger and poverty as it is apt for the smallholders. However, there is need to support the smallholders adopting organic agriculture by building embedded mechanisms in response to the emerging needs and the changing dynamics in the commercial environment. It is essential to look into the new approaches and concepts like Inclusive Business Models (IBM's) which brings a paradigm shift from a production led scenario to market led scenario impacting small producers. The IBM's enhances the volume of production, quality, traceability, planning and budgeting, finance, adding value, etc, it also provides an effective mechanism for economizing the operations by optimizing land use and community resources.
Inclusive Business Models
Different pro-poor business models can be used to restructure agriculture investments in developing countries which are predominantly agrarian. A business model is a strategy of a company/producer groups/co-operatives that structures its resources, partnerships or collaborations and customer relationships in order to create wealth. Business models need to be inclusive wherein; they work in close relationship/collaboration with producers (preferably smallholders) or producer organizations, co-operatives, farmer's federations and have an equity sharing relationships. Different business models are:
- Contract farming
- Management or lease contracts
- Tenant farming and sharecropping
- Joint ventures
- Farmer owned business
- Upstream/downstream business links
Contract farming describes the pre-agreed supply agreements between farmers and buyers. A shared responsibility exists between the farmers and buyers based on their strengths. The common practice is that farmers produce a set of agricultural crops of specified quality and quantity based on the requirement of the buyer and delivers it on a specified date. The buyer in turn provides all the inputs required for farming like seeds, manures and technical advice. The charges for the inputs are deducted from the purchasing or buying price of the produce. The prevalent practice is that the buyer pays a price which is agreed upon. In some of the organic agriculture projects which are solely for exports, the buyer provides all the inputs, technical advice and bears the cost of certification. The buying price of the produce is fixed at a premium of 20-30 per cent higher than the prevailing market price.
Management or lease contracts are a variety of arrangements wherein the producers/producer organizations/private company has a lease agreement with the owner of the land for a fixed number of years. The farm/land are managed by the producer organization/private company on behalf of the owner of the land and entail some form of profit-sharing between the two parties.
Tenant farming/sharecropping are similar to management /lease contracts. Here the landless labourers or the smallholders cultivate and manage the agriculture land. This situation is generally noticed wherein the owner of the land is not residing in the village and has migrated to a nearby city, refereed as 'absentee landlordism'. In tenant farming the agreement is a fixed rental fee per unit area of the land. While in sharecropping the land owner and the sharecropper split the agriculture produce on pre-agreed percentage. In certain countries, the final produce is split 50 per cent each amongst the owner and sharecropper, while in certain regions the land owner takes away 60-70 per cent of the produce. The tiller of the land in such situations is pushed further to the brink of poverty.
Joint ventures are agreements wherein the business ventures are jointly owned by two independent actors such as private agribusiness company and farmers organization. It involves sharing of financial risks and benefits. Here both actors individually control the equity. The decision-making authority is based on the proportion of equity share.
Farmer owned businesses are gaining popularity nowadays due to the rising number of co-operatives and producer organizations in the developing countries. They are formally incorporated business structures for farmers to pool their assets and enter into a particular type of business in accordance to their strength like, food processing, marketing, etc.
Upstream and downstream business links is an umbrella expression for a set of business opportunities beyond direct agricultural production that exist for agribusiness, smallholders and small local enterprise. These business activities may supplement agriculture production e.g provision of services to smallholders such as capacity building. Some of the examples of upstream activities include supply of inputs and business services (seeds, manures, micro-credit, insurance and advisory services). The downstream activities are food processing, storage, transport, wholesale and retailing (Vermeulen and Cotula, 2010).
These different business models need to be put into the specific context. In some cases joint ventures may be feasible while in other situations farmer oriented business models may be appropriate. The choice of right business model depends on national policies of the region, culture, gender issues, land ownership, economies of scale, bargaining power of smallholders, local land rights, market trends, risks and uncertainties, legal protection, awareness, people's participation and demographic situations. The role of NGO's or development organizations is very helpful in creating awareness and involve in the entire process of drafting agreement and build capacities of farmer groups in the possible risks, national policies before getting into a business venture.
Support mechanisms for smallholders through labelling and certification
There are different ways through which the Inclusive Business Models can support smallholders. Some of the support mechanisms that are pertinent for organic agriculture are mentioned below.
Fair trade certification
There is a great scope to improve market access with the help of labelling or appropriate certification measures. Over the last decade, inclusion of sustainable production and processing methods and overall fair-trade principles in the supply chain have become extremely popular amongst consumers. Given the growth of 40-50 per cent every year in the sales volume of fair-trade labelled produce, the trend is very clear about the future of the market. Fair-trade adds value for the smallholder by declaring a minimum price, creating transparent mechanism of forward contracts with buyers including arrangement of pre-financing; and assured premium on sale for meeting collective socio-economic and business needs.
One of the prime reasons why the smallholder producers groups in third world countries subscribe to the internationally acclaimed private certifications/labels is because the respective Government in the producer country is either not supportive of the standards or poorly equipped to implement the standards. The normal trend is to use a certification scheme such as Organic, Fair-trade, Forest Stewardship Council (FSC) or comply to a label such as Hand-in-Hand, Ethical Trading Initiative, Wholesome Foods Council, etc. (Ajay, 2010).
The Participatory Guarantee System (PGS)
A new guarantee/ certification system has been evolving in the world, the Participatory Guarantee System, which has had a fairly high success in many countries and has been recognized internationally.
The participatory guarantee system (PGS) has evolved over last ten years. It started in Brazil with farmer co-operatives that were unable to meet the costs and cumbersome paperwork requirement for organic certification. These were mostly the associations of smallholders as compared to formally certified associations of larger farmers in Brazil. The system soon spread to include some richer countries such as New Zealand and USA; as the farmers and consumers both felt the need to reduce unnecessary certification costs and paperwork. The PGS assured products from Brazil have an increasing export market as consumer confidence in the new system is getting stronger. An additional factor for raising the credibility of the PGS worldwide is the support of IFOAM (International Federation of Organic Agriculture Movements). At present PGS is becoming a popular certification system in many countries.
The present global food crisis has had its impact felt in many countries. To mitigate such unforeseen situations in the future, it is important that appropriate strategies like, prioritizing domestic food production, integrating the local food crops with the major cash crops and organic agriculture technologies to utilize the local resources to produce on-farm inputs play a significant role. It is also important that the research and development organizations focus their programmes towards organic agricultural technologies and farming systems. There is a need to combine the latest scientific analysis, case studies on farmer-led research, and farmers' own experiences and innovations that often confound academic scientists wedded to outmoded and obsolete theories. This will help the smallholders to achieve food security and improve their well-being in the era of changing climate.
(The opinions expressed herein are those of the authors and do not necessarily represent the opinion of the Ministry of Agriculture and Forests, Royal Government of Bhutan).