Financial and Economic Sustainability and Risk Resiliency of Coconut-Based Agroforestry Systems in Sri Lanka

Abstract

Coconut plantations in Sri Lanka are predominantly maintained as mono-crops and receive relatively low returns than other intensified land-use systems. However, it was evident that over 20% of coconut plantations in the country could be used more productively and profitably by incorporating Coconut Based Agroforestry Systems (CBAS). Therefore, the objective of the present study was to assess the financial and economic viability and risk resiliency of CBAS compared to coconut mono-cropping. The cost-benefit analysis was carried out to determine the financial and economic viability, and a sensitivity analysis was conducted to assess the resilience to perceived risk. Data recorded by Kurunegala Plantations Limited from 88 coconut plantations representing 15 intercropping systems from 2007 to 2019 were used for the analysis. Results of the financial analysis of selected estates revealed that almost all the intercrops except groundnut and betel were financially viable. Accordingly, the highest Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR) were observed in the CBAS, including rambutan and pineapple, indicating that they are the most financially viable CBAS. According to the sensitivity analysis, almost all the perennial crop-based agroforestry systems were financially viable except for guava and pepper in the presence of the three worst scenarios tested, namely; reduction of output price by 10%, removal of fertilizer subsidy, and increase of wage rate by 15%. Notably, all the CBAS were economically viable. These results provides the information for growers and policymakers in selecting risk resilience agroforestry systems under coconut.