A comparative analysis of profitability : certified organic vs. non-certified organic tea farming systems in Phongsaly District, Lao PDR : a thesis presented in partial fulfilment of the requirements for the degree of Master of Agribusiness in Agribusiness at Massey University, Palmerston North, New Zealand

Abstract

Demand for organic tea is rising in both domestic and international markets, emphasising the need for sustainable, certified organic farming practices to meet environmental goals and capture higher prices. The shift toward certified organic farming aligns with regional efforts to meet global demand backed by standards, creating new opportunities for smallholder producers. With limited land availability, improving productivity and profitability on current tea farms is the most feasible approach. This study examines factors affecting profitability for certified organic (CO) and non-certified organic (NCO) tea producers, and factors influencing producers’ decisions to participate in CO farming system in Phongsaly district, Phongsaly province, Lao PDR. The study used a survey technique complemented by an interview technique for in-depth data collection. Data were collected through a structured questionnaire survey of 304 tea producers (122 CO and 182 NCO producers) and a semi-structured questionnaire for face-to-face interviews with eight key informants representing producer organisations, tea processors, and government officials. Multiple linear regression was used to identify factors affecting profitability in CO and NCO farming systems, while binary logistic regression analysed factors influencing CO participation decisions. The multiple linear regression demonstrated that farm size, production costs, extension support, and financial support significantly affected profitability, whereas education, farming experience, and labour availability were not that significant. Binary logistic regression revealed that farm size, market support, and financial support were the most substantial positive factors in CO participation, with smartphone ownership as a negative factor. Although age, education, tea farming experience, and extension support positively influenced CO adoption, they were not statistically significant. To enhance profitability and encourage certified organic adoption, the study recommends equipping tea producers with targeted training and cost-analysis tools through effective extension services and market and financial support.