Financial potential of rubber plantations considering rubberwood production: Wood and crop production nexus

Abstract

Globalization and urbanization have significantly increased the food and non-food commodity demand for the last century, and it is vital to consider a business strategy with economical and ecological sustainability. The objective of this study was to project the contribution of wood to the financial performance of rubber plantations. We adopted cost and revenue data of rubber plantations in Cambodia and utilized land expectation value (LEV) as the criterion for profitability analysis. Among the top-ten rubber-producing countries in pan-tropics, the areas of rubber plantation were equivalent to from 1% to 90% of forest plantations and 0.3%–10.2% of total forest areas. Rubberwood revenue accounts for about 4%–10% of the 30th year LEV in rubber plantations at discount rates of 2% y−1–10% y−1, and this was sufficient to cover the cost of re-establishing the plantations. The proportion of the 30th year LEV contributed by wood revenue increased under conditions normally associated with a more difficult business environment, i.e., at higher wage costs, and lower latex revenue. We found that the wood revenue can improve the profitability of rubber plantations by up to 40% depending on the price of the rubberwood. We assert that timber from wood producing commodity plantations should be encouragingly utilized as industrial timber by linking the wood production in the management strategy of the plantations.