Assessment of Profitability of Land Use Systems in Tanjung Jabung Barat District, Jambi Province, Indonesia

Muhammad Sofiyuddin,S Suyanto,Arief Rahmanulloh

doi:10.4236/ojf.2012.24031

Abstract

The purpose of the research was to compare the profitability of existing land uses in Tanjung Jabung Barat, Jambi province, Indonesia, for formulating a strategy to reduce emissions from deforestation and de-gradation (REDD). Net Present Value was used for comparing profits of different types of investment (e.g. different type of land use). Rapid Rural Appraisal was used to gather information on farm budget data for each land use, including prices, production, labor and other input. The results of the profitability analysis showed that all land uses, both on mineral soil and peat land, were profitable. Oil palm, both in large plantations and smallholder gardens, was the most profitable land-use system. However, the profitability of smallholder oil palm on peatland was lower than on mineral soils yet oil palm was still more competitive than rubber on mineral soils. The competitiveness of mixed gardens with oil palm was higher on peatland and the threat of converting other land uses to oil palm was higher on mineral soil than on peat. For crop systems, irrigated paddy had the highest profitability.

Highlights

The purpose of the research was to compare the profitability of existing land uses in Tanjung Jabung Barat, Jambi province, Indonesia, for formulating a strategy to reduce emissions from deforestation and degradation (REDD)
The results of the profitability analysis, when combined with an understanding of the carbon contents of different land uses, were crucial for assessing the trade-offs involved in different land uses
If we compare smallholders’ land-use systems on mineral and peat, the results show that mineral soil is more profitable than on peat

Summary

Introduction

The purpose of the research was to compare the profitability of existing land uses in Tanjung Jabung Barat, Jambi province, Indonesia, for formulating a strategy to reduce emissions from deforestation and degradation (REDD). Net Present Value (NPV) was used for comparing the profits of different types of investments (e.g. different type of land use). The annual cash flows are the net benefits (revenues minus costs) generated from the investment during its lifetime. These cash flows are discounted or adjusted by incorporating the uncertainty and time value of money (Gittinger, 1982). The study site was Tanjung Jabung Barat district in Jambi province on the island of Sumatra in Indonesia (Figure 1). About 48%, or 240,000 ha, of the district is classified as “forest area”. The proportion of “non-forest area” in this district was very high, dominated by coconut agroforestry, rubber agroforestry, rubber monoculture and, most recently, oil palm. Transmigrants were the major source of labor for oil-palm companies

Methodology

Result of the Assessment

14 Tidal paddy

Findings

12 Dry land paddy