Incentive Redesign to Enhance the Capacity of Farmers Practicing Sustainable, Environmentally Friendly Rice Farming in Ngawi Regency, Indonesia

Agricultural systems continue to evolve in response to changing societal needs, technological advancements, and increasing demands for high-quality food products. The agricultural sector serves as the backbone for producing sufficient quantities of high-quality food and is expected to ensure the sustainability of natural resources (Puji et al., 2022). Demand for sustainably produced food continues to rise as consumers pay increasing attention to health, food safety, and environmental concerns (Timpanaro & Cascone, 2022).

Ngawi Regency is one of the main rice-producing centers in East Java Province, with an estimated production of 772,571 metric tons in 2025 (Badan Pusat Statistik Provinsi Jawa Timur, 2025). The Ngawi Regency government has launched the Ngawi Go Organic 2030 program (Irianto et al., 2024) to drive the transition toward a more sustainable production system by developing Sustainable Environmentally Friendly Agriculture (Pertanian Ramah Lingkungan Berkelanjutan, PRLB). PRLB is an environmentally friendly farming system that encourages increased use of organic fertilizers and a gradual reduction in the use of inorganic fertilizers. The development of PRLB in Ngawi Regency has not yet yielded optimal results. Of the total rice paddy area of 49,622 hectares, 18,381 hectares (approximately 37%) were under PRLB implementation in 2024 (Ministry of Agriculture of the Republic of Indonesia (2025).

The low adoption rate of sustainable agriculture indicates the presence of barriers to PRLB development that extend beyond technical cultivation aspects (Widiyanti et al., 2024). Farmers still face various challenges, such as uncertainty regarding crop yields during the transition from conventional to environmentally friendly agriculture (Jahantab et al., 2023), limited market access for environmentally friendly products, poor access to information (Walaela et al., 2025), reluctance to adopt complex innovations, and stricter cultivation standards compared to conventional systems (Rizzo et al., 2024). Further, the economic benefits received by farmers are often not commensurate with the risks and investment costs incurred in adopting sustainable agriculture (Varyvoda et al., 2025). These conditions result in a relatively low willingness to switch to environmentally friendly farming systems.

Incentives are a key tool for encouraging changes in farmers’ behaviour. Several studies indicate that economic incentives, institutional support, access to financing, technical assistance, and market access can increase the adoption of sustainable agricultural practices (Barbosa, 2024; Dzakiroh et al., 2021; Mapanje et al., 2023). Sustainable agriculture programs generally combine financial and non-financial incentives as a strategy to accelerate the adoption of innovations while strengthening farmers' capacity to implement more environmentally friendly farming practices (van Asseldonk et al., 2023).

The PRLB program is supported through various government interventions and incentive mechanisms, including the implementation of clear technical standards, adequate financial assistance and budget allocations, facilitation of organic certification, and agricultural extension services. The government of Ngawi Regency has implemented various incentive and support programs, yet the adoption rate remains low (Irianto et al., 2025). The effectiveness of incentives depends heavily on their alignment with farmers’ needs and the characteristics of sustainable agriculture adoption from economic, social, institutional, and environmental perspectives. Economic incentives, extension services, and institutional support are essential drivers of farmers' adoption of sustainable agricultural practices (Piñeiro et al., 2020). The success of sustainable agriculture adoption is largely determined by farmers’ internal characteristics, including digital literacy, individual values, and regional geographic conditions (Ohashi et al., 2024). A one-size-fits-all policy intervention will not be effective across all regions. Most of these studies still focus on identifying factors that influence the adoption of sustainable agriculture in general, while research on redesigning incentives to meet farmers’ needs at the regional level remains relatively limited. Therefore, this study was conducted to formulate a redesign of incentives that better align with farmers’ needs and regional characteristics to increase the adoption rate of sustainable agriculture.

This study employed a qualitative method using the Participatory Rural Appraisal (PRA) approach and in-depth interviews. The PRA approach was used to explore the conditions under which activities were implemented in a participatory manner (Fleming et al., 2021), while in-depth interviews were used to obtain detailed information from stakeholders involved in the development of the PRLB in Ngawi Regency (Sarib & Rasak, 2022). The interviews were conducted using a semi-structured interview guide with open-ended questions, enabling informants to explain their experiences, views, and suggestions in greater depth. The topics explored included the implementation of the PRLB program, the types of incentives received, implementation challenges, market conditions, farmers’ capacity, development needs, and recommendations for improving the incentive system. Each interview lasted 2–2.5 hours, allowing for an in-depth exploration of information from each informant.

The research was conducted in Ngawi Regency, East Java Province, from March to June 2026. The research location was selected purposively in Ngawi Regency, East Java Province, because it is one of the major rice-producing centers currently developing the Ngawi Go Organic 2030 program through PRLB implementation (Widiyanti et al., 2024). Despite the program implementation, the area adopting PRLB has not increased significantly. Data collection was carried out through participatory observation of PRLB cultivation practices, field notes, a review of program documents, and discussions with stakeholders as part of the PRA process. The results of these observations and discussions strengthened understanding of the actual conditions of PRLB implementation in the field.

Informants were selected using purposive sampling, taking into account their direct involvement in the planning, implementation, facilitation, certification, institutional framework, and marketing of PRLB. This approach was used to obtain accurate and in-depth information (Triyono et al., 2025). A total of 48 key informants were involved, as shown in Table 1. This diversity of informants enabled the study to obtain perspectives from all the key actors involved in the development of PRLB in Ngawi Regency.

During the interview process, the researcher first took field notes on key information, the informants’ responses, and findings deemed relevant to the research objectives. To ensure data completeness, the entire interview process was recorded using an audio recorder after obtaining the informants’ consent. The audio recordings were used as backup data to ensure that no important information was left out during the field note-taking process. The interview recordings were then transcribed manually by listening to the recordings repeatedly whilst typing out the entire conversation from start to finish. Once the transcription process was complete, the transcripts were cross-checked against the audio recordings and field notes to ensure the accuracy, completeness and consistency of the data obtained.

The data were analysed qualitatively using a thematic analysis approach. The analysis process began with all researchers reading the interview transcripts repeatedly to gain a comprehensive understanding of the information provided by the informants. Coding was carried out manually using pre-defined categories based on the interview guidelines, covering the implementation of the PRLB, the forms of incentives received, implementation constraints, marketing conditions, farmers’ capacity, development needs, and recommendations for improving the incentive system.

Subsequently, informants’ statements sharing similar meanings or information were grouped under the same code. Related codes were then grouped into broader themes or findings. For example, statements regarding difficulties in finding buyers, limited market information, and dependence on middlemen were grouped as findings concerning limited market access. The results of this grouping were then compared across stakeholder groups to identify similarities, differences and emerging patterns of information.

The coding and interpretation of data were carried out manually by all researchers without the use of qualitative data analysis software. Where there were differences in the coding or interpretation of informants’ information, these were discussed by all researchers until a consensus was reached. The final themes were used as the basis for compiling the empirical findings and identifying gaps in the existing PRLB incentive system.

Data validity was assessed through source triangulation and methodological triangulation by comparing information obtained from different stakeholder groups and across interviews, field observations, field notes, and supporting documents, thereby enhancing the credibility and reliability of the findings (Arias Valencia, 2022). Data collection was carried out until data saturation was reached, that is, when the information obtained began to show consistent patterns, no new themes or substantive information were found, and the answers provided by informants tended to be repetitive.

The research findings indicate that the Ngawi Regency Government has provided various forms of incentives to support the development of PRLB. These incentives include farmer mentoring and capacity building, assistance with production inputs, provision of agricultural tools and machinery, agricultural insurance, access to finance through the People’s Business Credit (Kredit Usaha Rakyat, KUR) scheme, and support through village funds. These forms of incentives not only demonstrate the government’s support for the technical aspects of farming but also cover financing and the strengthening of agricultural activities at the village level. A summary of the findings regarding the forms of government incentives, together with statements from the informants, is presented in Table 2.

Table 2 shows that one form of government support experienced by farmers is capacity building through extension activities and field schools. Extension programs and field schools are among the most common forms of incentives for farmers. Extension activities and field schools serve not only as a medium for technology transfer but also as a means of providing guidance in implementing sustainable, environmentally friendly farming practices (Jabbar et al., 2022). Through these activities, farmers gain knowledge regarding the use of organic fertilizers, soil fertility management, integrated pest management, and the application of PRLB operational standards.

The findings in Table 2 also indicate that the government provides direct support for production inputs. In each planting season, the government provides inorganic fertilizer subsidies to farmers based on the size of their rice-farming land holdings. The purchase of these subsidized fertilizers is made using a farmer’s card at agricultural kiosks designated as official distributors (Wahyudi et al., 2021). The government also provides organic fertilizer assistance in the form of Petroganik, though the amount is lower than that for inorganic fertilizers. These fertilizer subsidies are expected to increase production and reduce production costs (Pauw, 2022).

Government support is also provided in the form of agricultural tools and machinery, as stated by the informants in Table 2. The availability of farming tools and machinery is deemed capable of improving farming efficiency and reducing crop yield losses (Rusmono et al., 2026). However, the interview findings also indicate that the agricultural tools and machinery provided do not yet fully meet farmers’ equipment needs. The farmers still need to purchase supporting equipment such as water pumps independently. Water pumps are generally used during the planting season, at the beginning of the dry season, and throughout the dry season to ensure irrigation water is available.

The government also provides support in the form of access to finance through the KUR scheme. According to the Head of the Department in Table 2, the KUR program provides access to finance for individuals with limited capital, including those engaged in agricultural activities. This financial support complements the provision of production inputs by offering farmers an alternative source of capital for running their farming businesses.

Another form of support identified in the study is protection against farming risks through an agricultural insurance program. The premium that farmers pay is currently IDR36,000 per hectare due to the subsidy. Without the subsidy, the premium to be paid is approximately IDR180,000 per hectare per growing season. The premium payment system is voluntary, as farmers can decide for themselves whether to participate based on the level of risk they face (Brouwer et al., 2025). If farmers perceive the upcoming growing season to be high-risk, they typically enrol in the insurance program; however, if the risk is deemed low, they do not pay the insurance premium. Thus, premium payments can be activated or suspended as needed.

As shown in the statements from the Head of the Department and the Field Extension Officer in Table 2, the development of PRLB is also supported by village fund allocations. According to the research findings, village governments in Ngawi Regency allocate approximately IDR25–30 million annually to support PRLB activities. These village funds are used to train farmer groups in the production of organic fertilizers or biological pesticides and to conduct demonstration plots for their application (Irianto et al., 2024). The expected outcomes of these activities are to accelerate the transformation toward sustainable, environmentally friendly agriculture (Irianto et al., 2024). Although there are currently budget adjustments due to the “Merah Putih” village cooperative program, the regency government continues to instruct villages to allocate funds for PRLB activities.

These findings indicate that the Ngawi Regency Government has provided various forms of incentives, including capacity building, assistance with production facilities, financing, and institutional support. These diverse incentives provide a crucial foundation for promoting PRLB development in Ngawi Regency.

The research findings indicate that the bargaining position of PRLB farmers in the marketing of agricultural produce remains relatively weak. This situation is evident from limited access to markets and the absorption of produce, farmer organisations that remain more focused on cultivation activities, dependence on middlemen and local markets, and the lack of strong marketing partnerships with business actors. These findings suggest that the marketing challenges faced by PRLB farmers are not only related to market availability, but also to the capacity of farmers and farmers’ organisations to set prices, manage harvests, and build more sustainable marketing relationships. A summary of the interview findings regarding the bargaining power of PRLB farmers is presented in Table 3.

Table 3 shows that limited market access and the uptake of produce are among the factors weakening the bargaining position of PRLB farmers. Market access remains a challenge for PRLB farmers. Farmers have limited ability to set selling prices and still depend on middlemen or local buyers. Market access is one of the factors that influence the economic benefits farmers receive from a farming system (Aku et al., 2018). Regional companies responsible for purchasing rice from organic or PRLB farmers have not been able to absorb the entire production and offer competitive prices. This has led farmers to be reluctant to adopt PRLB farming because the selling price of paddy or rice is not significantly different from that of conventional farming (Widiyanti et al., 2024). Work in PRLB farming is far more complex than in conventional farming, thus requiring more resources (Irianto et al., 2024). Market constraints not only affect farmers’ ability to sell their produce, but may also reduce the economic incentives to maintain or expand the adoption of PRLB. This finding is also supported by Meemken (2020)’s research, which revealed that while some farmers achieved good economic returns, others saw their incomes decline because institutions were unable to absorb the entire harvest, compounded by rising production costs.

The findings in Table 3 also indicate that farmers’ organisations still perform more functions related to cultivation than to marketing. Farmer institutions serve as a means of coordination, information dissemination, and the implementation of PRLB programs. Farmer groups also play a crucial role in implementing various agricultural development programs at the field level (Komariyati et al., 2026). However, the functions of these institutions remain more focused on technical aspects of cultivation than on the marketing of produce. This finding was also confirmed by a study by Kartika et al. (2026) in Tasikmalaya Regency, where the role of these organisations in marketing remains very weak, particularly in organic rice farming. The abundance of middlemen means farmers have no difficulty selling their paddy, yet they remain merely price takers. Only a small fraction of farmer groups can manage their members’ harvests, enabling them to earn higher incomes than members of other farmer groups (Raya, 2014). Farmer groups with an agent of change are better able to manage and optimize their roles (Triyono et al., 2025).

These limitations in bargaining power are further highlighted by the lack of strong marketing partnerships identified in the study. As shown in Table 3, farmers still market their produce individually or through established local marketing networks. Although there have been efforts to establish relationships with companies or supermarkets, requirements deemed onerous and the absence of written agreements have prevented these relationships from developing into long-term partnerships. PRLB farmer groups still face marketing barriers (Widiyanti et al., 2024), as business partnerships between PRLB farmers and business actors or marketing institutions remain relatively limited. PRLB farmers still market their products individually or through existing local marketing networks (Irianto et al., 2023). These conditions indicate that the marketing relationships that have formed remain informal and are not yet supported by long-term cooperation. Consequently, farmers continue to face market and price uncertainties when marketing their harvests. These findings are also consistent with those of Ningrum & Subroto (2020) who demonstrated that market interventions in organic agriculture in Indonesia have not yet significantly strengthened farmers’ autonomy.

Research findings indicate that PRLB products have the potential to command higher selling prices than conventional products; however, these benefits have not yet been felt equally by all farmers. Differences in access to price information, markets that offer added value, and the ability to meet certification requirements are some of the factors influencing farmers’ ability to secure premium prices. Consequently, the existence of premium prices does not automatically provide the same economic benefits to all PRLB farmers. A summary of the interview findings regarding farmers’ access to PRLB premium prices is presented in Table 4.

Based on Table 4, not all farmers are yet able to benefit equally from the premium price for PRLB products. Market prices are one of the factors influencing farmers’ interest in adopting PRLB. Research findings indicate that PRLB paddy or rice has the potential to command a higher selling price than conventional rice, although this benefit has not yet been felt equally by all farmers. Differences in the selling price of environmentally friendly products are generally influenced by market access; farmers can command higher prices when they have access to suitable markets (Zhang et al., 2024). Not all farmers or farmer groups can access these markets due to limitations in information, networking, and communication skills during negotiations. In line with Meemken (2020), farmers still face limited access to price information, restricted marketing networks that leave them dependent on a single buyer, and inadequate skills, all of which ultimately hinder their ability to secure premium prices.

The ability to secure a premium price is also linked to market developments for products with health and environmental benefits. Healthier, more environmentally friendly food products are beginning to offer growing market opportunities. However, the market for PRLB rice in Ngawi Regency remains limited, so not all of the farmers’ production can be absorbed by market segments that offer value-added benefits. Increasing consumer awareness of health and environmental issues is one factor driving the development of markets for sustainable products (Sun & Yoon, 2022). The findings in Table 4 also indicate that certification is one of the factors influencing the ability of PRLB products to enter specific markets and achieve added value. This situation is also linked to market recognition of product quality. In practice, certified products generally find it easier to gain consumer trust and gain acceptance in specific market segments (Zhang et al., 2024). Although the government has facilitated certification, the number of certified farmers remains limited, so the resulting economic benefits have not yet been widely felt. These limitations relate not only to the certification process, but also to farmers’ ability to meet the stipulated requirements. This finding is consistent with Alexandre et al. (2021), who showed that organic farming can command a premium price, but these economic benefits are not felt evenly due to differences in farmers’ ability to access markets and meet organic standards.

The research findings indicate that, although various forms of government support have been provided to facilitate the implementation of PRLB, there are still several farmers’ needs that have not been fully accommodated. These needs relate not only to production aspects but also encompass access to market information, economic incentives, protection against risks during the implementation of PRLB, the availability of environmentally friendly inputs, and farmers’ managerial capabilities. Findings from interviews regarding these needs and support gaps are presented in Table 5.

According to Table 5, farmers’ primary need is for information and guidance in accessing markets. Most PRLB farmers still market their produce through the same channels as conventional products, so the value added they receive is not yet optimal. Market access is one of the factors influencing the economic benefits farmers receive (Aku et al., 2018). This situation highlights the first gap: support for marketing aspects is still not as strong as support for production aspects. This has also been observed in Poland, where organic farmers identify market, marketing, and institutional barriers as the main impediments to the development of organic agriculture, even though production support is available (Łuczka & Kalinowski, 2020).

The second need highlighted in Table 5 is the need for economic incentives. Opportunities to secure premium prices do exist, but they are not yet accessible to all farmers because they remain dependent on marketing networks and access to specific markets. In addition, farmers need capital support to cover the costs of certification, which may be a prerequisite for gaining access to premium markets. These findings point to a second gap, namely the lack of adequate capital support to help farmers gain equitable access to premium markets. This finding aligns with research conducted across 97 developing countries in Asia, Africa, and Latin America, which showed that the economic benefits of organic and sustainable agricultural standards tend to vary and are not equally enjoyed by all farmers (Meemken, 2020).

Table 5 also shows that farmers need more appropriate risk protection during the implementation of PRLB. The government has provided agricultural insurance subsidies. The insurance provided focuses on crop failure in general and does not yet specifically address the risks associated with the transition from conventional to organic farming. Agricultural insurance is provided if the rate of crop failure or crop damage exceeds 75%. If the damage rate is less than 75%, insurance is not provided. Farmers’ decisions to participate in insurance are often influenced by their perceptions of farming risks (Jin et al., 2016). This situation highlights the third gap: that risk management for farming operations during the transition period is not yet fully protected. This finding aligns with Bhatt & John (Bhatt & John, 2023), who noted that during the transition to organic farming, farmers face the risk of reduced yields and income, yet support to protect them from these risks remains limited.

The fourth need relates to support for the use of inputs that are more in line with PRLB principles, particularly organic fertilizers. Subsidies for the use of production inputs are still allocated more heavily to inorganic fertilizers than to organic ones, even though the PRLB encourages reducing the use of chemical inputs. Incentive policies can influence farmers’ decisions regarding the use of production inputs (Pan et al., 2022). Farmers still use inorganic fertilizers at recommended doses and combine them with organic fertilizers. This indicates a fourth gap between the PRLB’s objectives and the available forms of support. This finding aligns with Kishore et al. (2021), who note that government support for organic fertilizers still faces budget allocation constraints, while fertilizer subsidy policies remain predominantly oriented toward inorganic fertilizers to support increased food production.

The fifth need highlighted in Table 5 is capacity building for farmers’ managerial skills. Extension services and field schools have helped improve farmers’ understanding of environmentally friendly farming practices; however, the materials provided still focus primarily on technical cultivation aspects. Farmers’ capacity is determined not only by technical skills but also by managerial capabilities and strategies for expanding market access (Permadi & Winarti, 2025). These findings point to the fifth gap in farmer capacity building. Farmers’ capacity to build market networks or partnership networks remains weak. This finding aligns with Meekaew & Chamaratana (2024), who notes that organic farming training programs generally still focus on the technical aspects of cultivation, while the development of farmers’ entrepreneurial competencies, business planning, financial literacy, and managerial skills remains relatively limited.

In general, the available incentives have supported the implementation of PRLB, but they remain more focused on increasing production. Meanwhile, in the field, farmers’ current needs also include capacity building in marketing, economic benefits, risk management, the use of environmentally friendly inputs, and business. Aligning incentive design with farmers’ needs is crucial in enhancing the effectiveness of sustainable agriculture programs.

Based on the various gaps identified, adjustments to the incentive design are required so that government support is not only oriented towards increasing production, but is also capable of providing economic benefits and risk protection for farmers during the implementation of PRLB. Recommendations for the redesign of incentives based on field findings are presented in Table 6.

One way in which incentives could be adjusted is by gradually shifting the composition of fertilizer subsidies from inorganic to organic fertilizers. The effectiveness of incentives is greatly influenced by their alignment with the desired behavioural change (Piñeiro et al., 2020). This policy aims to encourage the use of more environmentally friendly inputs while improving soil quality. This approach could involve gradually reducing inorganic fertilizer subsidies while increasing support for organic fertilizers to promote organic farming during the transition period (Liao et al., 2025). Inorganic fertilizer subsidies could be reduced, with the savings redirected to an equivalent increase in organic fertilizer subsidies. The gradual adoption of organic fertilizers can improve soil structure and organic matter content (Liu et al., 2024).

Farmers’ capital needs can be addressed by developing a green credit scheme for PRLB farmers. Limited capital is often a barrier to the adoption of innovations and investments in the agricultural sector (Liao et al., 2025). This scheme can be channeled through low-interest financing with more flexible terms for farmers who adopt environmentally friendly farming practices. Support through green credit is expected to accelerate technology adoption and the development of sustainable farming enterprises (Li et al., 2024). In addition to capital, farmers also need to derive clearer economic benefits from implementing PRLB. This green credit scheme could also be made available to farmer groups applying for new organic certification or certification renewal. Organic certification is essential for organic products marketed in premium markets or for export (Boys et al., 2022).

Economic benefits can also be enhanced through a premium pricing mechanism for products produced using environmentally friendly agricultural practices. The price difference between organic and conventional products can serve as an incentive for producers to maintain these production systems (Pawlewicz, 2020). This mechanism can be implemented through collaboration between farmers, cooperatives, and marketing agencies that offer a price premium above market rates for PRLB products. In addition to generating economic value, implementing PRLB also provides environmental benefits that deserve recognition. Marketing agencies under local government management must be strengthened through capacity-building to compete effectively in marketing PRLB paddy or rice.

The implementation of PRLB generates environmental benefits that can form the basis for providing economic incentives through Payment for Environmental Services (PES) and carbon incentives. Improved soil quality, reduced chemical residues, and enhanced agricultural ecosystems are benefits resulting from implementing PRLB. Recognition of environmental services is increasingly being used as an instrument to promote sustainable resource management (Ibrahim et al., 2024). Therefore, the PES scheme and carbon incentives can be implemented as forms of compensation for the environmental benefits generated by farmers. The PES approach is considered effective for protecting agroforestry systems while providing additional benefits to smallholder farmers (Ibrahim et al., 2024). The implementation of PES is expected to succeed in PRLB, although the success of PRLB implementation remains influenced by farmers’ ability to cope with various agricultural business risks (Ibrahim et al., 2024).

From a risk management perspective, existing agricultural insurance subsidies can be developed into green insurance that specifically supports PRLB farmers. A green insurance scheme could be implemented through larger premium subsidies for PRLB farmers or by providing coverage during the transition period toward an environmentally friendly farming system. Such a green insurance scheme could provide significant benefits to farmers during the transition from conventional to environmentally friendly agriculture (Hou & Wang, 2023).

PRLB development also requires non-financial incentives that can strengthen farmers’ capacity and support their access to markets. Research findings indicate that farmers still face limitations in market information and marketing networks and require capacity building not only in technical aspects of cultivation but also in managerial and business development skills. Recommendations for the redesign of non-financial incentives based on field findings are presented in Table 7.

Based on Table 7, one form of non-financial incentive that needs to be strengthened is capacity building for farmers. The development of environmentally friendly agriculture also requires non-financial incentives to build farmers’ capacity (Yanfika et al., 2024). Ongoing technical assistance needs to be strengthened to ensure that farmers receive support throughout the implementation of sustainable agriculture. Technical assistance can be provided through collaboration among extension workers, universities, and farmer groups, covering topics such as crop cultivation, business management, marketing, and risk management. This capacity-building effort must be followed by recognition of the competencies that farmers have acquired.

One way of recognizing such capacity building is through the certification of farmers’ competencies. Competency certification can serve as recognition of farmers’ ability to apply environmentally friendly cultivation standards. Such recognition can enhance stakeholders’ trust in the quality of the production processes being implemented (Leitner & Vogl, 2020). Certification is granted based on training and competency evaluations, thereby serving as proof of farmers’ ability to apply PRLB principles. In addition to providing formal recognition, farmers’ motivation must also be continuously strengthened.

Farmers’ motivation can be strengthened by awarding prizes or recognition for the successful implementation of PRLB. Awarding recognition to farmers, farmer groups, or villages that have successfully and consistently implemented PRLB can serve as a form of appreciation for their achievements. Social recognition is often used to increase participation and commitment in the implementation of a development program (Jütersonke & Groß, 2023). Awards can be given through special incentive programs for high-performing participants (McDonagh, 2022). These efforts need to be supported by adequate access to information so that the benefits obtained can be more widely disseminated.

Strengthening farmers’ capacity must be accompanied by the provision of market information that is easily accessible and regularly updated. The availability of information regarding prices, demand, marketing opportunities, and consumer preferences is a critical factor in agricultural decision-making. Access to relevant information can help reduce uncertainty in economic activities (Nagar et al., 2019). Information can be provided through digital platforms or market information systems that farmers can access regularly. The available information will be more effective if supported by a strong collaborative network.

To ensure that market information translates into broader market access, partnership networks among farmers, cooperatives, business actors, marketing institutions, and the processing industry should be strengthened as part of the PRLB development strategy. Collaboration among actors in the agricultural value chain can create more stable and mutually beneficial business relationships (Zhao et al., 2023). Partnerships can be established through marketing cooperation agreements, the procurement of agricultural produce, or the development of specialised markets for PRLB products, thereby better ensuring the sustainability of farming operations.

The farmer capacity-building framework proposed in this study consists of four main dimensions: technical, managerial, institutional, and digital capacity. These four dimensions complement one another in supporting the sustainable implementation of PRLB. Farmer capacity building is a critical factor in accelerating the adoption of innovations and strengthening farm performance (Rana et al., 2025).

Technical capacity focuses on farmers’ ability to implement environmentally friendly farming practices, integrated pest management, and soil and water conservation. Mastery of technical aspects serves as the foundation for reducing dependence on chemical inputs and maintaining sustainable land productivity (Bhujel & Joshi, 2024). Adequate technical capacity is essential for the successful implementation of sustainable agricultural technologies and practices (Coulibaly et al., 2021).

Farmers need managerial support that enables more efficient management of their farming operations. Managerial skills include business planning, risk management, and farm record-keeping as a basis for decision-making (Taramuel-Taramuel et al., 2023). Managerial skills play a role in improving business efficiency and farmers’ resilience to various agricultural risks (Taramuel-Taramuel et al., 2023).

The successful implementation of PRLB also requires strong institutional support. The roles of farmer groups, cooperatives, and business partnerships are crucial in expanding access to resources, strengthening bargaining power, and improving market access. Farmer institutions enhance access to information, markets, and various agricultural support services (Abebaw & Haile, 2013).

Technological advancements have also positioned digital capacity as a key component in PRLB development. The use of smart farming technologies, market information systems, and digital marketing is expected to improve business efficiency while expanding market reach (Gyamfi et al., 2024). Digital transformation offers opportunities to enhance productivity and competitiveness in the agricultural sector by enabling faster, more accurate access to information.

The integration of these four dimensions demonstrates that the development of PRLB requires not only incentive support but also the enhancement of farmers’ capabilities to manage their businesses, build networks, and utilize technology. Synergy between the redesign of incentives and capacity building is expected to accelerate the achievement of the Ngawi Go Organic 2030 program.

The proposed capacity-building for farmers and the redesign of incentives are expected to encourage wider adoption of PRLB practices. However, this study does not empirically measure changes in adoption rates resulting from the proposed redesign of incentives. This adoption is an important indicator because it reflects a shift in farmers’ behavior toward more sustainable farming systems. The rate of innovation adoption is one measure of the success of agricultural development programs (Mutolib et al., 2026). The expected changes are reflected in reduced use of synthetic fertilizers and pesticides, and increased use of organic fertilizers, biofertilizers, and botanical pesticides in farming activities. These potential changes would represent an initial step toward a more environmentally friendly production system.

The implementation of PRLB is also reflected in increased resource-conservation practices, particularly in soil and water management. These efforts are crucial for maintaining land productivity while reducing pressure on the agricultural environment. Resource conservation is a key component in ensuring the long-term sustainability of agricultural production systems (Sharma et al., 2023). Ultimately, these various changes are expected to lead to the establishment of a sustainable production system, one capable of maintaining a balance between productivity, environmental conservation, and farmer well-being. Sustainable production emphasizes a balance among economic, social, and environmental aspects in agricultural activities (Sargani et al., 2020). Thus, the adoption of PRLB practices is the ultimate desired outcome of integrating the redesign of financial incentives, the redesign of non-financial incentives, and capacity building for farmers. The higher the adoption rate, the greater the likelihood of achieving a sustainable and competitive agricultural system.

The redesign of financial and non-financial incentives, supported by capacity-building for farmers, is expected to accelerate the adoption of PRLB practices. However, this acceleration in adoption is a potential impact of the proposed recommendations and was not empirically measured in this study. The combination of incentives, capacity building, and institutional support is known to play a crucial role in promoting the adoption of sustainable agriculture (Rizzo et al., 2024). Enhanced farmer capacity, supported by institutional strengthening and business partnerships, will improve access to markets and marketing information (Permadi & Winarti, 2025). This could provide farmers with greater opportunities to secure higher market prices through the development of specialised markets, product certification, and more organized marketing collaborations. Market access, certification, and strong institutional frameworks contribute to increased value added in agricultural products (Zhang et al., 2024).

This higher value added is expected to provide more tangible economic benefits for farmers. In addition to increased product sales value, economic benefits can be strengthened through more efficient use of inputs and reduced farming risks. The economic benefits experienced by farmers are a key factor in ensuring the sustainable adoption of an agricultural innovation (Hanani AR et al., 2024). This situation is expected to encourage farmers to maintain and expand the application of PRLB practices.

The continued implementation of PRLB will further strengthen farmers’ ability to produce products that meet market demands, which are increasingly focused on quality, food safety, and sustainability. Enhancing farmers’ capacity, improving the quality of certified products, and strengthening institutional frameworks through expanded market access provide significant economic benefits and ensure the sustainability of the agroindustry (Yusuf et al., 2025). The increasingly widespread adoption of environmentally friendly practices will boost market confidence in the products produced, thereby opening up greater opportunities for business development (Lin et al., 2025).

In the long term, increased PRLB adoption not only provides economic benefits but also supports the environmental sustainability of agriculture. Reducing synthetic chemical inputs, increasing the use of organic materials, and implementing natural resource conservation are expected to sustainably preserve soil, water, and agroecosystem quality (Panwar et al., 2022). Overall, the redesign of incentives, supported by capacity-building for farmers, is expected to create a more sustainable PRLB system by simultaneously increasing economic benefits, strengthening product competitiveness, and improving environmental quality. These conditions are expected to support the achievement of the Ngawi Go Organic 2030 program and strengthen the development of environmentally friendly rice farming in Ngawi Regency. However, these impacts were not empirically tested in this study and should therefore be considered potential outcomes of the proposed incentive redesign.

This study formulates an incentive design to enhance the capacity of farmers practicing PRLB in Ngawi Regency, emphasizing the integration of redesigned financial and non-financial incentives and capacity-building for farmers. The results show that, while the government has provided various incentives, gaps remain in marketing, economic benefits, risk management, the use of environmentally friendly inputs, and the development of farmers’ business capacity. The proposed framework indicates that the redesign of financial incentives can be achieved through the development of organic fertilizer subsidies, green credit, price premiums, PES, and green insurance. Meanwhile, the redesign of non-financial incentives can be carried out through ongoing mentoring, competency certification, awards, the provision of market information, and the strengthening of partnerships. Capacity building for farmers focuses on strengthening technical, managerial, institutional, and digital capacities to support the wider adoption of PRLB practices. Overall, this framework provides a strategic framework to increase PRLB adoption, strengthen farmers’ competitiveness and well-being, and support environmental sustainability in realizing the Ngawi Go Organic 2030 program.