From risk to resilience: profitability gains from diversification and community-supported agriculture in small-scale horticulture

Abstract

Crop diversification plays a central role in agricultural sustainability transitions, which require not only ecological innovation but also economic viability at the farm level. Despite robust evidence of ecological benefits, the socioeconomic implications of diversification remain insufficiently examined. This study analyzes the economic performance of crop diversification and community-supported agriculture (CSA) schemes in small-scale horticultural systems in Northern Patagonia, Argentina. Drawing on detailed production and marketing data from three farms and using a participatory action research (PAR) approach, we simulated farm performance with the Profit Impact Simulator for Horticultural Farms, a framework that calculates profitability based on the temporal dynamics of cash flow.

We modeled three crop portfolio scenarios—a highly diversified system (BES1, 35 crops), a moderately diversified system (BES2, 6 crops), and a low-diversity system (BES3, 3 crops)—and identified a systematic diversification gradient: profit rates decline from 409% (BES1) to 347% (BES2) to 239% (BES3). This gradient is driven not by differences in end-of-cycle revenues but by the temporal structure of cash flows each portfolio generates: in highly diversified systems, short-cycle crops generate early income that offsets the financing needs of longer-cycle crops, reducing committed capital and increasing capital efficiency.

CSA participation further improved financial viability, reducing committed capital by 24% and raising the profit rate from 409% to 519%. These findings suggest that diversification and consumer-based financing are complementary strategies that enhance liquidity stability and reduce dependence on external credit, with important implications for smallholder economic sustainability and sustainable food system transitions.