Abstract
<p>Smallholder farmers in many areas of the semiarid tropics are planting exotic tree species that provide alternative income sources, fuel, and building materials. While providing other benefits, these trees often occupy land that could produce annual food crops. This study uses a polyperiod, linear programming model, to explore the opportunity cost of planting <em>Eucalyptus grandis</em> and <em>Grevillea robusta</em> trees compared to crops in the Nyando watershed of western Kenya. Results of the ten-year period wealth maximization model suggest that a representative farmer’s decisions on farm resource allocation are sensitive to changes in the relative prices of short rotation tree products and annual crops. The model also suggests that there are economic tradeoffs between planting trees and crops, as well as between planting different tree species. Timber production is not likely to replace food crops for two main reasons: (1) the high cost of meeting household subsistence requirements from marketed grains, (2) household cash flow needs met by annual crops. Farmers plant eucalyptus for commercial purposes because they can obtain timber products within four years; however if the prices of these short rotation products go down, farmers will prefer to grow timber from high yield grevillea.</p>
Highlights
Smallholder farmers in many areas of the semiarid tropics are planting exotic tree species that provide alternative income sources, as well as fuel and building materials
In Sudan, comparisons of profitability of Eucalyptus, Acacia and bananas found that the net present value (NPV) of investments was higher for eucalyptus compared to the other two choices (Sharawi, 2006)
In Tanzania, financial and economic evaluations determined that eucalyptus could be grown profitably in woodlots, with a financial internal rate of return (IRR) that ranges between 14% and 23.5%, above the real interest rate of 7%, and an economic IRR between 25% and 38%, way above the shadow interest rate of 9% (Kihiyo, 1996)
Summary
Smallholder farmers in many areas of the semiarid tropics are planting exotic tree species that provide alternative income sources, as well as fuel and building materials. “Between 1980 and 2000 the extent of forest plantations increased seven fold in developing countries, smallholders in Africa created woodlots behind their houses, corporations have planted extensive tree farms in South America, villages in mainland Southeast Asia have planted trees in nearby uplands and state agencies have planted trees on degraded lands in South Asia.”. Exotic tree species such as Eucalyptus spp grow fast, so planting them can reward farmers with a rapid income flow from their investment.
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