Organic Farming as an Alternative in Improving the Economic Viability and Sustainability of Rice Farms (Study case in North Sumatra, Indonesia)
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In 1984 the use of High Yield Varieties (HYV) regarded as success stories in tackling the growing food needs. However, the use of HYV needs to be followed by the use of large amount of chemical fertilizers, which then leads to an increase in fertilizer scarcity and price. Therefore Indonesian Government provides subsidized fertilizer, especially for important commodity such as rice. In 2014 the Indonesian Government spent US$ 1.8 million for the fertilizer subsidy. In such a condition, sustainability and economic viability of conventional rice farming in the future is in question, and organic rice farming is then widely discussed as an alternative. However, many farmers believe that organic farming is less profitable because its productivity is relatively low and production costs are relatively high. To analyze these perceptions, this study was conducted in an organic rice farming center in North Sumatra. Viability and sustainability of organic rice farming is compared with those of the semi-organic and conventional ones. The collected farm level data were calculated by using 2 selling price scenarios namely (1) existing condition selling price and (2) potential selling price, and 3 cost scenarios namely (1) existing condition expenditure, (2) expenditure without fertilizer subsidy and (3) opportunity costs. The results show that, except the cost of fertilizer, all cost components of conventional rice farming similar to that of the organic rice farming. Conventional agricultural fertilizer costs only about 60% of that of the organic farming. In fact, the difference is mainly stemmed from the subsidized fertilizer price enjoyed by conventional rice farmers, which is least provided for the organic ones. The average productivity of organic rice farming is only about 80% of the conventional farming. Although the decrease in productivity is followed by the increase in selling price, it is only about 11% and not enough as compensation. Actually, the organic rice can be sold 2-3 times higher if the rice has been certified. In such a condition, the ratio of the selling price and the cost per kg of the certified organic rice could also reach more than 2 times higher than that of the conventional one, with values of 6.75 and 3.28, respectively. Therefore, it can be concluded that with proper management, organic farming has great potential to improve the sustainability and economic viability of rice farming.