Abstract:
This study analysed the economics of small holder organic farmers in Muleba
district. Specifically the study was conducted to identify the costs associated with
organic and conventional coffee production, to assess profitability of the two
farming system and to determine the effect of premium price in compensation of
yield in organic coffee. The study also addressed the coffee organic standard
demanded by importers. Multistage, purposive and simple random sampling
procedures were employed for the selection of 100 respondents among which 50
farmers were organic coffee producers and 50 farmers were conventional coffee
producers. The results showed that there was no statistically significant difference in
costs associated with production of organic coffee and conventional coffee,
especially as it was observed in labour costs and fixed costs. However there was
statistically significant difference in average variable costs of the two farming
system which was attributed by high marketing costs for organic coffee of about
58% higher than that of conventional coffee. Farm enterprise budget indicated that
profit obtained from hulled conventional coffee exceeded those obtained from hulled
organic coffee. Organic conversion in Muleba district was associated with increases
rather than reductions in yield which relates to the low input characteristics of
conventional farming in the district. With the premium price of 1 800 Tsh/kg offered
to organic farmers and increase in yield, organic farmers were expected to be
profitable, but due to high total variable costs observed organic farmers obtained
less profit. From these findings it is recommended that deliberate efforts should be
made to assist farmers to access training and extension services in order for them to
correctly appraise their investments. If this is done and they are enabled to access
credits and farm implements loans it will help them to realise higher net returns.
