Economic Analysis of Organic Wheat Production in Pakistan: Adoption and Return on Investment

Abstract

The rising concern of conventional farming emphasized the need of organic farming which utilizes environment-friendly and economically-viable production methods. Pakistan has great potential but organic farming is not in practice. This study examined the constraints in adopting organic wheat and its impact on return on investment by employing farm level data of 300 wheat growers. We employ endogenous switching regression (ESR) approach that accounts for selection bias. The results show that organic wheat has significant and positive impact on the returns but adoption is slow due to number of limiting factors. Illiteracy, lack of information, liquidity constraint, complicated and costly certification process, absence of organic market and small land holdings are the major limiting factors for the adoption. Policy makers should focus to overcome the constraints of organic farming by providing easy, timely and adequate credit. Awareness and motivation of farmers should be done through education, training and extension services.