Can organic rice agribusiness increase farmers' income? between expectations and reality

Abstract

The shift to organic rice farming is gaining global attention as a sustainable and environmentally friendly alternative to conventional farming. However, the economic viability of organic rice agribusiness, especially its impact on farmers’ income, remains uncertain for farmers in several regions. This study examines whether organic rice agribusiness can effectively increase farmers’ income in the East Priangan region of West Java Province. Using a mixed methods approach, data were collected from 120 rice farmers, including those using organic and conventional systems. The analysis involved comparing production costs, yields, and selling prices, as well as conducting interviews to understand market access and farmers’ perceptions. Although organic rice is generally expected to command a higher selling price due to its quality and environmental benefits, the study’s results reveal a different reality. Since the outbreak of the COVID-19 pandemic, the export market for organic rice has collapsed, leading to a significant decline in international buyer interest. Consequently, organic rice can now only be sold in the domestic market at prices comparable to, or slightly higher than, conventional rice. This situation diminishes farmers’ hopes of increasing their income, despite savings on input costs and contributions to environmental sustainability. In fact, organic rice does not appear to improve farmers’ welfare. Many farmers expressed disappointment over the gap between market expectations and actual market conditions. The study concludes that without stable premium market access, particularly for exports, the financial sustainability of organic rice agribusiness remains fragile. Policy recommendations include market diversification, improvements to the domestic organic certification system, and strengthening institutional support to stabilize demand and prices for organic products.