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Organic Crops or Energy Crops? Options for Rural Development in Cambodia and the Lao People's Democratic Republic

More than two billion people in the world depend on agriculture for their livelihood. In Asia, where poverty is largely a rural phenomenon, governments are in a constant search for effective strategies to develop agriculture. Two important recent developments have emerged: organic crops and energy crops (biofuels). Because both developments are taking place largely in marginal areas where the majority of the poor reside, poverty and environmental implications from these two activities appear to be significant. A recent discussion paper by Anil Markandya and Sununtar Setboonsarng, titled “Organic Crops or Energy Crops? Options for Rural Development in Cambodia and the Lao People’s Democratic Republic,” examines the prospects of the two strategies.

Pros and Cons of Organic Agriculture

The growth of organic agriculture has been driven by increased concerns regarding food safety and the negative environmental consequences of high external input agriculture. The organic agriculture sector has been growing rapidly in recent years (see Figure).

Besides price premiums, organic agriculture offers advantages including improved soil fertility, enhanced biodiversity, improved health from the absence of chemical pesticides, and reduced greenhouse gas emissions, and can even reduce atmospheric carbon by absorbing carbon and keeping it in the soil.

Although critics of organic agriculture worry that it could lead to lower yields, recent research showed that in marginal areas, organic practice led to increased yields.

Pros and Cons of Biofuel

The growth of biofuel has been driven by increased energy demands and concerns over climate change. Proponents of biofuels argue that they can replace gasoline and diesel, generate rural employment, provide energy security, and reduce greenhouse gas emissions.

A major concern is that energy crops compete for the land available for food production, thus hiking up food prices. Intensive agriculture and deforestation to produce more energy crops would also be harmful. In addition, the ability of biofuels to reduce greenhouse gas emissions is unclear.

Development Implications

Assessment of the poverty impacts of organic rice and energy crops such as jatropha and cassava revealed that both types of crops would lead to income improvement for poor farmers. Since the areas in which the two are grown do not overlap, both could be simultaneously promoted in marginal areas although much research is still required for energy crops. Promoting organic farming of rice would lead to more significant poverty reduction than promoting energy crops. In addition, promoting energy crops under smallholder programs could have higher poverty impact than under concessionaire programs.

Since the present agricultural environment in both countries studied is generally regarded as “clean” with a low level of chemical inputs, producing safe food for a high-value market may be better than intensifying agriculture through conventional methods and attempting to compete with more developed countries. Assistance from external organizations will be critical for the successful expansion of either organic agriculture or biofuels.

Download Discussion Paper No. 101 for free.