Impact of Eco-Labels and Certification on Farm Profitability

Shivam Madrewar; Utkarsh Dipak Lad; Yogita Dharmaraj Khedekar; Srushti Siddhappa Bharmannavar; Markad Sachin Macchindra

doi:10.59890/ijma.v3i4.192

Authors

Shivam Madrewar CCS NIAM JAIPUR
Utkarsh Dipak Lad Institute of Management and Entrepreneurship Development, Erandwane
Yogita Dharmaraj Khedekar D.Y. Patil, Agriculture and Technical University, Talsande, Kolhapur
Srushti Siddhappa Bharmannavar D. Y. Patil, Agriculture and Technical University, Talsande, Kolhapur
Markad Sachin Macchindra MAHARASHTRA INSTITUTE OF MANAGEMENT PUNE

DOI:

https://doi.org/10.59890/ijma.v3i4.192

Keywords:

Selected,Eco-labels Agricultural certification, Sustainable agriculture, Farm profitability, Price premium Return on investment (ROI)

Abstract

This study examines the economic impact of eco-labels and certification schemes on agricultural profitability through a comprehensive analysis of contemporary research and empirical evidence. Our methodology encompassed systematic review of 47 peer-reviewed studies published between 2023-2024, cross-sectional analysis of certification costs and benefits, and economic modelling of farm-level impacts across diverse agricultural systems. Results demonstrate that certified farms achieve an average price premium of 15.2% with a mean return on investment of 21.4% over a 2.9-year payback period. However, profitability varies significantly by farm size, certification type, and regional market conditions. Small-scale farmers face greater implementation challenges, while larger operations and cooperatives show superior economic outcomes. Consumer willingness to pay premiums averages 21.2%, with environmental and health-conscious segments demonstrating highest price tolerance. Despite initial transition costs averaging $525 per hectare, certified operations demonstrate enhanced market access, reduced input dependency, and improved long-term financial sustainability. The findings suggest that eco-labels and certification represent viable pathways to enhanced farm profitability when supported by appropriate market conditions, technical assistance, and policy frameworks.

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