ABSTRACT
Sustainable farm management practices are based on minimizing the use of synthetic chemical inputs such as fertilizers and pesticides and represent an environmentally friendly attempt to make the best use of natural resources. The types of environmentally friendly farming practices are classified as a low-pesticide farming with low level of chemical pesticides use (less than 50% of quantity used in conventional farming), no-pesticide farming with no pesticides used, and organic farming with no chemical fertilizers and pesticides.
The acceptability of sustainable farm management practices depends largely on their ability to generate acceptable level of farm incomes. Farmers can be persuaded to switch to practices that are more profitable, and they can be persuaded to adopt practices that are more beneficial to the environment of those practices will not reduce their income too much; however, most will not accept large reduction incomes to grows crops in a more environmentally friendly fashion. However, there is mixed evidence as to whether farmers' incomes are comparable with sustainable and conventional farm management practices. In this note, this study investigates comparison of economic performances between conventional and environmentally friendly farming practices using the survey data.
Information about the productivity of sustainable farming systems comes from several sources such as research plots and case studies using actual farms surveys. A wide ranging, face-to-face survey was made of 198 environmentally friendly farms which consist of 71 rice farms, 29 potato farms, 43 lettuce farms, and 55 grape farms. A series of in-depth interviews were conducted using a questionnaire during the period of November 25 to December 5, 2003. This actual farm survey addressed issues ranging from production costs and revenues of environmentally friendly agricultural products and structure to farm information sources, attitudes to sustainability, the values and views of farmers on a number of sustainable agricultural issues. The data set for conventional farming practices as a baseline was derived from the official statistics in rice sector by Korea National Statistical Office (2003) and in potato, lettuce, and grape sectors by Rural Development Adminstration (2003).
Major findings of this study are summarized as follows:
1) Yield level in farming practice is an important factor of the relative physical productivity performance of sustainable farming systems. The yields of sustainable rice farming practices are 5.26t ha-1 in organic, 5.63t ha-1 in no-pesticide, and 6.11t ha-1 in low-pesticide, about 7 to 20 percent below the conventional average which is amount of 6.54t ha-1. The yields of lettuce farming are 78.5 percent in low-pesticide (35.2t ha-1), 63.5 percent in no-pesticide (28.5t ha-1), and 54.9 percent in organic (24.63t ha-1), compared to 44.86t ha-1 for the conventional. The yields of potato farming are 77.7 percent in low-pesticide (19.63t ha-1), 62.7 percent in no-pesticide (15.82t ha-1), and 53.8 percent in organic (13.59t ha-1), compared to 25.25t ha-1 for the conventional. The yields of grape farming under the field are 77.9 percent in low-pesticide (14.96t ha-1), 65.6 percent in no-pesticide (12.6t ha-1), and 53.3 percent in organic (10.25t ha-1), compared to 19.22t ha-1 for the conventional. The yields of grape farming under the greenhouse are 93.0 percent in low-pesticide (17.87t ha-1), 80.7 percent in no-pesticide (15.5t ha-1), and 66.7 percent in organic (12.82t ha-1), compared to 19.21t ha-1 for the conventional.
2) Generally, lower yields are achieved in organic farming than in conventional agriculture. The lower yields are primarily due to the reduced use of yield-promoting inputs. Through the conscious avoidance of synthetic fertilizers and plant-protection chemicals, it is often not possible for the genetic potential of the crop to be fully exploited. In practice, part of yield variability may be attributable to differences in soil quality and climate, technology, and management ability.
3) Strong market demand for environmentally-friendly agricultural products has led to high premium prices. In particular, certified organic products can achieve prices significantly above the price level for conventional products. The price premiums of rice are 54.8 percent in organic, 29.6 percent in no-pesticide, and 10.2 percent in low-pesticide, respectively. The price premiums of lettuce are 92.7 percent in organic, 62.2 percent in no-pesticide, and 15.3 percent in low-pesticide. The price premiums of potato are 87.2 percent in organic, 57.7 percent in no-pesticide, and 26.2 percent in low-pesticide. The price premiums of grape under the field are 90.2 percent in organic, 56.5 percent in no-pesticide, and 35.8 percent in low-pesticide. The price premium of grape under the greenhouse are 50.1 percent in organic, 25.4 percent in no-pesticide, and 11.1 percent in low-pesticide, respectively.
4) Production costs of environmentally-friendly rice farming are 1.4 times (7,470,000Won ha-1 in low-pesticide) to 1.7 times (9,220,000Won ha-1 in organic) higher than that of amount 5,300,000Won ha-1(equivalent to USD 4,491 ha-1) in conventional farming. The revenues from environmentally-friendly farming are depends are the physical productivity and farm-gate price premiums. The revenues of environmentally-friendly rice farming are 76.5 percent (4,100,000Won ha-1) in low-pesticide, 84.9 percent (4,550,000Won ha-1) in no-pesticide, 97.7 percent (5,240,000Won ha-1), compared to 5,360,000Won ha-1 (equivalent to USD 4,542 ha-1) for the conventional.
5) Production costs of environmentally-friendly lettuce farming are 1.11 times (45,230,000Won ha-1 in low-pesticide rice) to 1.23 times (50,800,000Won ha-1) higher than that of amount 41,110,000Won ha-1(equivalent to USD 34,839 ha-1) in conventional farming. The revenues of environmentally-friendly lettuce farming are 71.5 percent in low-pesticide (28,710,000Won ha-1), 91.0 percent in no-pesticide (26,170,000Won ha-1), and 93.6 percent in organic (26,880,000Won ha-1), compared to 28,710,000Won ha-1 (equivalent to USD 24,331 ha-1) for the conventional.
6) Production costs of environmentally-friendly potato farming are 1.06 times (8,920,000Won ha-1 in low-pesticide) to 1.2 times (10,130,000Won ha-1 in organic) higher than that of amount 8,380,000Won ha-1(equivalent to USD 7,102 ha-1) in conventional farming. The revenues of environmentally-friendly potato farming are 89.9 percent in low-pesticide (4,700,000Won ha-1), 82.7 percent in no-pesticide (4,330,000Won ha-1), and 79.7 percent in organic (4,170,000Won ha-1), compared to 5,230,000Won ha-1 (equivalent to USD 4,432 ha-1) for the conventional.
7) Production costs of environmentally-friendly grape farming under the field are 1.22 times (25,640,000Won ha-1 in low-pesticide) to 1.42 times (29,830,000Won ha-1 in organic) higher than that of amount 21,020,000Won ha-1(equivalent to USD 17,813 ha-1) in conventional farming. The revenues of environmentally-friendly grape farming under the field are 101.0 percent in low-pesticide (22,510,000Won ha-1), 93.8 percent in no-pesticide (20,860,000Won ha-1), and 89.1 percent in organic (19,820,000Won ha-1), compared to 22,230,000Won ha-1 (equivalent to USD 18,839 ha-1) for the conventional.
8) Production costs of environmentally-friendly grape farming under the greenhouse are 1.16 times (55,210,000Won ha-1 in low-pesticide) to 1.33 times (63,530,000Won ha-1 in organic) higher than that of amount 47,680,000Won ha-1(equivalent to USD 40,407 ha-1) in conventional farming. The revenues of environmentally-friendly grape farming under the greenhouse are 102.2 percent in low-pesticide (49,980,000Won ha-1), 95.7 percent in no-pesticide (46,800,000Won ha-1), and 91.8 percent in organic (44,890,000Won ha-1), compared to 48,910,000Won ha-1 (equivalent to USD 41,449 ha-1) for the conventional.
9) The revenue differences between environmentally-friendly and conventional rice farming are gradually decreasing as to sustainable practicing careers. After 4th year in acquiring certified environmentally-friendly rice production, the revenue generated from sustainable farming practices would be higher than that of conventional farming. The analytical result shows that the revenue of sustainable farm management practices after 5th year would be higher than that amount of 389,000Won ha-1 (equivalent to USD 330 ha-1).
10) Farmers have shown rapidly increasing interest in sustainable farm management practices. In recently, many farmers who adopted sustainable farm management practices including organic and no-pesticide farm management practices were motivated by reasons relating to the health and safety of their families and consumers, and by idealistic convictions about soil and land stewardship. The relative economic performance of sustainable and conventional farming practices is sensitive to the ratio of input costs to the value of outputs. Both sustainable and conventional farmers are vulnerable to fluctuations in both input and output prices, but the effect of a given change will differ between the two farming systems.
11) The results of the accounts survey reviewed in this study indicate that factors production receive about the lower remuneration in sustainable farming than conventional counterpart. Substantial price premiums on outputs are essential for the economic viability of sustainable farming. Consumers' lack of willingness to pay significant price premiums on rice seems to be the most important obstacle to the expansion of sustainable farm management practices. Thus, conversion payment for promoting sustainable rice management practices need to compensate for cost increases and/or income reduction during the three to five years within switching periods depending on the realization of farm-gate premium prices.
12) Even within the limit of the data collected for this empirical study, there may be errors. The samples drawn from purposive sampling method may not accurately represent the larger populations of farms from which they drawn as a result of the manner in which they were selected. Errors may arise from reliance on farmer's report of yields, field operations, purchased inputs, and other data used in the calculations. For further research on analysing economic performance of sustainable farm management practices, we need for developing methodology of dynamic green budgeting and for minimizing errors using the accurate farmers' book recording.
Researchers: Kim, Chang-Gil and Tae-Young Kim
E-mail address: changgil@krei.re.kr