The High Costs of Organic Farming

Sri Lanka and India tried mandating it. The results were disastrous.

Not too long ago, Sri Lanka was one of Asia’s major success stories. After over three decades of bloody civil war, by 2019 the tiny island nation had a growing middle class and had reached upper-middle-income status. All that progress, though, was short-lived. Now, just three years later, the country has one of the world’s worst-performing currencies. It faces a crippling economic and humanitarian crisis that could soon trigger political upheaval as protests mount calling for the resignation of President Gotabaya Rajapaksa, and his brother, Mahinda, who stepped down as prime minister.

As an explanation for Sri Lanka’s woes, observers have pointed to the pandemic, Russia’s invasion of Ukraine, and longer-term issues like the mishandling of debt and the related foreign currency squeeze. All those played a role, but they aren’t unique to Sri Lanka. What is different is that, in 2021, the government implemented a disastrous ban on the import and use of synthetic fertilizers and pesticides, with little regard for the welfare of Sri Lankan farmers and consumers. Crop yields have fallen by 30–50%, many farmers have abandoned their lands, food prices have risen severalfold and grocery stores have begun rationing food products. The country, once self-sufficient in rice, has been forced to import hundreds of millions of dollars’ worth of the staple, and its $1.3 billion tea industry has suffered losses of at least $425 million.

In turn, Sri Lankans face routine food shortages and farmers say their livelihoods are threatened for the first time in its modern history. With widespread food shortages, India is supplying wheat, sugar and rice. Prices are soaring, the government can no longer afford food imports and a senior politician warned of imminent starvation.

The particulars of Sri Lanka’s tragedy are unique, of course, but its story does point to a larger problem in world agricultural politics. Around the world, feel-good idealism around eliminating agrochemicals is pervasive. In the United States, wealthy consumers prize organic produce. In developing countries, too, going organic might seem like a pathway to growth and prosperity. And although organic agriculture can be lucrative for some farmers, and can offer some environmental benefits, its widespread adoption—especially in low- and middle-income countries—could be an environmental and humanitarian disaster in the making. This is something Sri Lanka knows all too well.

What Happened When India Went Organic?

Although Sri Lanka is the only country to have gone as far as implementing an immediate, complete ban on agrochemicals, it is not the only South Asian country or state that has pursued a transition to organic farming. India has the largest number of organic producers in the world, and a couple of its states have transitioned or plan to transition their farmers entirely to organic farming.

In 2016, Sikkim—a small Himalayan state bordering Tibet—was declared the first fully organic state in the world. Starting in 2003, its government phased out chemical fertilizers and pesticides, and the import and use of agrochemicals were eventually strictly banned. Today, all 75,000 of its hectares of farmland are organic. India counts the experiment as a success. Agriculture and tourism are key drivers of GDP growth in Sikkim, and organic farming has the co-benefit of boosting “eco-tourism” and attracting visitors who want to enjoy the state’s natural beauty, according to the government. In fact, NGO officials claim that the organic farming initiative drew in as much as 50% more tourists from 2014 to 2017.

Elsewhere in India, Andhra Pradesh is following in Sikkim’s footsteps. In 2016, the state government launched an initiative to convert the country’s 6 million farmers and 8 million hectares of land to “natural” or organic farming by 2027. To implement its scheme, the government is deploying farmers to train each other in natural farming practices. Pesticide use has declined by 40% from 2015 to 2020, although half of the farmers enrolled in the natural farming program still rely on pesticides. Fertilizer use also declined by 26% from 2015 to 2017.

Sri Lanka’s tragedy is unique, but its story does point to a larger problem in world agricultural politics.

India’s states see their organic programs as a route toward poverty reduction. Subhash Palekar, the founder of “Zero Budget Natural Farming” (ZBNF), argues that the rising cost of inputs was the leading cause of indebtedness and agrarian distress amongst Indian farmers. ZBNF urges farmers to “go back to the basics” and abandon fertilizer and pesticides in favor of manure, crop residues, natural pest management and mulching—all readily available inputs, the logic goes, that will reduce expenses. It is true that more than half of India’s farmers are in debt, and they are finding themselves even deeper in the hole due to the rising costs of inputs and seeds. Farmer suicide rates are high in India due to the crushing levels of debt. By discouraging the use of agrochemicals, ZBNF promises to cut the cost of agriculture and end the debt cycle.

At the national level, too, Prime Minister Narendra Modi has advocated for ZBNF as a way to double farmer incomes—the same promise he made a few years ago when trying to pass failed agricultural reforms. In 2020, the Modi government had attempted to pass three agricultural laws meant to open the country’s agriculture sector to greater private sector investment. It led to massive protests from farmers who said that the laws would, in fact, reduce their bargaining power and compromise their financial security. Then earlier this year, following Modi’s announcement in December of 2021, the finance minister proposed promoting chemical-free farming in the 2022–2023 budget and in curricula at India’s agricultural universities.

In such efforts at encouraging organic and traditional agriculture, India has plenty of international supporters on its side. Sikkim was given a top award from the U.N. Food and Agriculture Organization, The World Future Council and IFOAM-Organics International for having the “world's best laws” on promoting organic agriculture. Andhra Pradesh has significant financial backing from international institutions like the U.N. Environment Program (UNEP), the World Agroforestry Center, and BNP Paribas, a French multinational bank, to sponsor its $150 billion rupee ($2.3 billion USD) natural farming initiative. Conventional agriculture is associated with negative effects like water pollution and soil degradation, and international backers perceive natural farming as providing more positive benefits like improved soil carbon and fertility, climate change resilience, and social and economic well-being. A UNEP coordinator claims that natural farming is aligned with the organization’s initiative to steer farming’s focus away from “per hectare productivity,” but toward a “holistic approach” that values human, social and environmental benefits.

According to supporters, natural farming can even help achieve the U.N.’s Sustainable Development Goals (SDGs). BNP Paribas has entered agreements with the UNEP to mobilize financing for similar projects in other emerging countries, citing its commitment to the SDGs. Similarly, officials in Sikkim and influential Indian environmental policy groups, like the Council on Energy, Environment, and Water, and the Centre for Science and Environment, see natural farming as a way for India to achieve SDGs.

In Sri Lanka and India, the health benefits of organic and natural farming have significant capture. Chronic Kidney Disease (CKD) is prevalent in rural agricultural areas of Sri Lanka and is a major burden on the country’s healthcare system, costing up to 5% of the annual health budget. The type of CKD that afflicts Sri Lankans is called CKDu by researchers because its causes are unknown. There is belief in public and political discourse, however, that use of agrochemicals is responsible. Similarly, in Andhra Pradesh, chemical use in farming has been linked to health problems, and some farmers report that organic farming has been associated with an improvement in health. Modi and the Sikkim government have also said that shifting to ZBNF or organic farming will increase access to safer, healthier foods.

To proponents in South Asia and beyond, organic or natural farming is a clear and obvious solution to the environmental, economic and social problems posed by conventional agriculture. But the truth is far murkier. Smallholder debt and environmental degradation are real, but trying to fix them through organic-only farming could leave farmers and the states and countries they come from worse off.

Does Organic Agriculture Help Farmers?

A universal organic agriculture policy that bans vital farming tools has environmental consequences, and, as the Sri Lankan case demonstrates, it can spell economic disaster for farmers, consumers, and their governments.

To understand the economic trade-offs of organic farming when it is scaled up, consider that there are two broad classes of farmers: One group farms rice, fruits. and vegetables on small plots of land to support their own and their country’s food security; the other farms primarily for export income that supports the national economy.

Smallholder farmers in India, Sri Lanka and elsewhere typically operate on less than two hectares of land, and they face many challenges towards operating profitably enough to escape poverty. They face production risks from weather and the lack of assured irrigation and proper storage infrastructure. Greater barriers to accessing markets, poor bargaining power, greater vulnerability to price fluctuations, and a lack of access to financial services to buffer against shocks also lead to low or less stable incomes.

In India, organic advocates will point to agricultural inputs as the source of debt, but it is actually high-interest-rate credit that is trapping farmers. To be sure, loans are important; they allow farmers to adopt technologies and inputs that improve the productivity and profitability of farming. But who is giving those loans matters. In India, following the 1991 economic crisis and subsequent banking reforms, many newly privatized banks withdrew from less profitable rural agricultural lending, leaving a vacuum for non-institutional lenders to offer credit with high interest rates. Farmers using credit for productivity-enhancing inputs like fertilizers found themselves more likely to default under such high debt burdens. ZBNF may offer a respite from high input costs, but it does little to address the real need for financial and institutional reform that allows smallholders to escape poverty.

In fact, the organic transition is incredibly costly for smallholders. Organic agriculture on average has yields that are 19–25% lower than conventional farming, without pesticides to protect against weeds and synthetic fertilizers to bolster productivity. To earn Andhra Pradesh’s organic label, studies show, farmers must endure 3 to 5 years of lower yields and lower profits from having fewer crops to sell. In Sikkim, the lack of adequate infrastructure was a barrier to commercializing organic products, leaving farmers less likely to reap the benefits of organic farming.

A transition to organic agriculture is incredibly costly for smallholders.

Organic farming is also not a blueprint for smallholders selling to a mass market of lower- and middle-income domestic consumers in India, Sri Lanka and elsewhere. Even if small farmers are able to certify their crops as organic and sell them at premium prices, they would likely find relatively small domestic markets for organic foods in their countries. In 2020, annual per capita income in Sikkim was about $5,445 USD and only $2,300 USD in Andhra Pradesh, and yet organic foods cost 10–40% more than conventional counterparts. If all farmers go organic, local consumers will most certainly face higher food prices, just as Sri Lankans did in the aftermath of the agrochemical ban.

There are farmers, of course, who can sell their organic produce to wealthier consumers in other countries, where more people are able to afford organic produce. A small segment of farmers, cultivating organic tea in Sri Lanka, or organic produce in the Indian state of Madhya Pradesh, will be able to meet standards for organic certifications in the United States, Europe, Canada and elsewhere, and they will reap the rewards.

However, at a large scale, converting all national exports to organic is untenable. Organic products made up 4.6% of India’s agriculture export income for 2020–2021. Cereals like rice and wheat made up approximately half of India’s agricultural export income. With lower yields from organic farming, the total exports of staples like wheat and rice could fall. Since India is the world’s largest rice exporter and second-largest wheat producer, countries that import its rice and wheat would be impacted, like Bangladesh, Nepal, and others in Asia and the Middle East.

It is, after all, modern technologies and inputs that have allowed countries in Asia to become food self-sufficient to the point where they even have a surplus to export. If Sri Lanka is not evidence enough of what happens when farmers abandon those, consider Sikkim. After its organic farming transition, Sikkim became food deficient and had to import food from neighboring states and countries to feed its own population. Perhaps greater incomes from tourism allowed Sikkim’s government to afford those imports, but the state is now more vulnerable to international food price fluctuations.

Then there’s the issue of the environment. Overuse of fertilizers, organic or synthetic, and pesticides certainly lead to water or air pollution. However, if scaled up, organic farming’s lower yields mean that the land footprint of agriculture would increase. To produce as much rice crop as Sri Lanka did in 2020, 25% more land would be needed. Proponents of organic farming claim that it will build up soil organic matter and carbon. But converting additional land to agriculture would most certainly lead to more soil disruption and carbon loss.

Organic farming is not inherently safer or more likely to produce more nutritious foods. Farmers applying agrochemicals in developing countries may lack personal protective equipment (PPE) leading to greater chemical exposure. PPE may well be expensive and impractical in India or Sri Lanka’s hot and humid climate, but health risks could be minimized by regulation, safety training, and new technologies, like the topical gel that protects farm workers from pesticides. Contamination of the water supply from agrochemicals is likewise a problem, but it points more to the need for better water treatment systems in developing countries than it does to the need to spread more manure on agricultural land.

How to Really Help Smallholder Farmers

Bolstering developing countries’ agriculture sectors requires both technological solutions and innovative initiatives. Organic practices can have benefits, but poverty alleviation and climate change require more.

Smarter fertilizer and pesticides use is possible. According to the environmental “Kuznets Curve,” with technological improvements and better incentive structures, economic development and yields can continue to increase while fertilizer use and management become more efficient. India today uses more fertilizers than the United States, where fertilizer use has peaked while yields continue to rise.

One way to improve input management is to adopt precision agriculture (PA) technologies. As I have written previously, PA allows farmers to “more closely monitor their fields, animals, and weather conditions to more efficiently and effectively apply their inputs, while maximizing crop yields, cutting costs, and increasing revenues.” Such technologies include sensors, variable-rate fertilizer applicators and GPS-based yield mapping that allows farmers to target and apply the right amount of inputs or generate valuable data to inform decisions to maximize profitability and sustainability. These farming technologies could reduce chemical application by up to 80% and water usage by 20–50%.

Bolstering developing countries’ agriculture sectors requires both technological solutions and innovative initiatives.

To be fair, these technologies are expensive for farmers in low- and middle-income countries. There are initiatives in India led by the public and private sectors aimed at increasing the adoption of variable-rate applicators amongst farmers, but they need to be scaled up. The Indian government can invest in large-scale mapping projects to understand nutrient needs for a particular crop across the country and share this information with local extension centers informing farmers about how much fertilizer or pesticides to use.

Cooperatives can also facilitate technology adoption amongst farmers, allowing them to share capital and technology. A study in the Sichuan province of China found that cooperative membership significantly increased farmers’ adoption of post-harvest technologies. India already has a model to look to for inspiration. Amul is India’s most recognizable dairy brand and is responsible for turning India into the world’s largest milk producer. It is more than a brand, however. It is owned by a state government farming cooperative with 3.6 million members. The cooperative has deployed new technologies across dairy farms, provided market and extension services to farmers, and increased farmers’ incomes four-fold from 2010 to 2017.

It is solutions like these that can provide the food, health, and environmental benefits we all need.