Financial evaluation of smallholder timber-based agroforestry systems in Claveria, Northern Mindanao, the Philippines

Abstract

In the Philippines, timber production on small farms has become profitable as a result of reduced supplies due to extensive deforestation and increasing demand. In the early 1990s, when the price of timber was high, farmers were promised huge returns from tree farming. However, widespread planting of few species has led to oversupply and a sharp decline in the price of farm-grown timber. Moreover, low intercrop yields as a result of competition from fast-growing trees and low timber yields due to poor tree management, further reduce net economic returns. In spite of this, interest in tree farming remains high. This paper examines the private profitability of two tree-maize systems, namely trees in blocks and trees in hedgerows, compared with the alternative of maize monocropping. The analysis reveals that maize monocropping provides higher returns to land at the current timber price, but considerably lower returns to labour, than the maize-tree systems tested. This suggests that tree farming is a more attractive option for labour and capital-constrained households or those with off-farm opportunities that compete for their labour. These farmers may raise productivity and income by planting trees on the excess land that cannot be devoted to annual crops. The analysis also indicates that wide-spaced tree hedgerows are superior to tree blocks, due to lower establishment and management costs, longer periods of viable intercropping and more rapid tree growth.