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Profitability of Organic Agriculture in a Transition Economy: the Case of Organic Contract Rice Farming in Lao PDR

Setboonsarng, Sununtar; Stefan, Adam; Leung, PingSun and Cai, Junning (2008) Profitability of Organic Agriculture in a Transition Economy: the Case of Organic Contract Rice Farming in Lao PDR. Poster at: Cultivating the Future Based on Science: 2nd Conference of the International Society of Organic Agriculture Research ISOFAR, Modena, Italy, June 18-20, 2008.

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Summary

Poverty is prevalent among smallholder farmers in transition economies where market failures prevail and where the capacity of the public sector is limited. This study assesses the potential of organic contract farming as a private sector institutional arrangement to reduce rural poverty. Contract farming appears to facilitate market linkages for smallholder farmers to produce organic rice for export markets while providing necessary technical supports. Using an endogenous switching regression model to assess the profitability of organic contract farms and conventional farms in Lao PDR, it was found that organic farmers under contract earn significantly higher profit than conventional farms. The findings also showed that organic contract farming tends to provide the greatest increase in income to farmers with below average performance. These findings suggest that contract farming can be an effective mechanism to facilitate the development of organic agriculture and an effective tool to improve the profitability and raise incomes of small farmers, thereby reducing poverty in rural areas with limited market development.


EPrint Type:Conference paper, poster, etc.
Type of presentation:Poster
Keywords:Laos, rice, contract farming, switching regression, profitability
Subjects: Food systems > Markets and trade
Farming Systems > Farm economics
Research affiliation: International Conferences > 2008: IFOAM OWC: Research Track / ISOFAR > 1.3 Multifunctionality - Livelihood - Rural Development
Deposited By: Setboonsarng, Sununtar
ID Code:11583
Deposited On:02 Oct 2008
Last Modified:12 Apr 2010 07:35
Document Language:English
Status:Published
Refereed:Peer-reviewed and accepted
Additional Publishing Information:This paper is published in the conference proceedings:
Neuhoff, Daniel; Halberg, Niels; Alfldi, Thomas; Lockeretz, William; Thommen, Andreas; Rasmussen, Ilse A.; Hermansen, John; Vaarst, Mette; Lck, Lorna; Carporali, Fabio; Jensen, Henning Hgh; Migliorini, Paola and Willer, Helga, Eds. (2008) .Cultivating the Future Based on Science. Proceedings of the Second Scientific Conference of the International Society of Organic Agriculture Research (ISOFAR), held at the 16th IFOAM Organic World Congress in Cooperation with the International Federation of Organic Agriculture Movements (IFOAM) and the Consorzio ModenaBio, 18 . 20 June 2008 in Modena, Italy.. International Society of Organic Agriculture Research (ISOFAR), c/o IOL, DE-Bonn, Research Institute of Organic Agriculture FiBL, CH-Frick. http://orgprints.org/13672 and http://orgprints.org/13674

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