Economic potential for conversion to organic farming: a net present value analysis in the East Mau Catchment, Nakuru, Kenya

Abstract

This paper discusses the economic potential in terms of income changes that may result from conversion to low-external-input agriculture (LEIA) organic farming in a Kenya's catchment area. A spreadsheet model applying the gross margin and net present value analysis was developed to estimate economic returns to labour and land of alternative smallholder cropping systems in the East Mau Catchment. The income and costs over a 10-year horizon associated with current cropping practices of a typical farm household cultivating 1.12 hectares of maize-bean intercrop, Irish potato, carrots, tomatoes, cabbages and kales mix were characterized based on field work conducted in 2008-2010. An ''average'' smallholder LEIA organic farm was simulated based on the conventional one, and its income discounted. A comparison was then made of the two farm types. Results indicate annual net present value returns to cropped land average Ksh 21,878/ha ($ 267/ha) and Kshs 22,561/ha (€ 275/ha) in 2010 values for conventional and prototype LEIA organic farming systems, respectively. Net returns are particularly sensitive to crop yields and price and cost of fertilizers and seeds. Further efforts should be made to provide an economic analysis of other LEIA organic farming practices such as composting, double digging and agroforestry in terms of additional labour costs resultant. The model can be extended to build more scenarios on the role of price premiums. Additionally, further research should be done to exploit the socio-demographic factors affecting the adoption of low-external-input systems.

Organic versus Conventional Cropping Sustainability: A Comparative System Analysis

“…Bett and Ayieko, 2016 [106] NPV was greater for low-input organic farming compared to conventional systems in Kenya, Kenyan Shilling (KSh) 22,561 ha −1 (€275 ha −1 ) and KSh 21,878 ha −1 (€267 ha −1 ), respectively. …”

Performance of organic farming in developing countries: a case of organic tomato value chain in Lebanon

“…Apparently, many of the economic benefits of organic farming come from the price premium. For example, Adamtey et al (2016) and Bett and Ayieko (2017) in Kenya, and Yadava and Komaraiah (2020), Eyhorn et al (2018) and Mariappan and Zhou (2019) in India, documented the profitability of organic farming on rice, wheat and maize. In Indonesia, Adiprasetyo et al (2015), Fachrista et al (2019) and Widhiningsih (2020) reported similar evidence about organic vegetables.…”

Could the Production of Green Agricultural Products Increase Farmer Household Income? - An Empirical Analysis on Farmer Households in Inner Mongolia Autonomous Region

“…Through case analysis, Vasile et al [14] concluded that the production of organic APs creates slightly higher economic benefits than that of ordinary Aps. Based on the survey of farmer households in Nakuru, Bett et al [15] constructed a spreadsheet model to analyze the effect of green APs production on farmer household income, and found that organic farmer households achieved higher benefits of net present value than others. Qiao et al [16] conducted a questionnaire survey among organic farmer households in Wanzai County, Jiangxi Province, China, and discussed the impact of organic APs production on farmer household income through variance analysis and multiple comparisons, revealing that organic APs production pushes up the income of small farmer households.…”