Evaluation of industrial promoted agroforestry in Andhra Pradesh and Madhya Pradesh, India

In many parts of the world, pulp and paper companies are becoming heavily dependent on private agroforestry schemes. With growing demand for wood fiber and limited commercial land to grow it on, the forest industry is continually turning to private farmers and individuals to contract timber. In order to alleviate this problem, many companies have turned to out-grower schemes to supply wood to the mills. Local farmers now have the opportunity to benefit from company extension and supplies, and in return, the company can guarantee its supply of raw materials.;A recent trend in agriculture is adding trees to farmers? traditional croplands or agroforestry, in which farmers typically select fast growing tree species that can be harvested after only a few years. However, careful consideration of the economics of such conversion is important to farmers in order to make informed decisions to convert their farms to forestry use. Since this is a new practice in many regions of the world, there is little data available, especially to farmers, on the financial feasibility of these agroforestry systems.;This study investigates commercially promoted agroforestry schemes in two states in India. Specifically, this study evaluates the financial feasibility of agroforestry techniques employed by farmers in Andhra Pradesh and Madhya Pradesh, India and examines factors affecting the financial feasibility of agroforestry schemes in these regions.;The data for this study were collected by personal interviews of 47 farmers, in the summer of 2009. To examine the economic feasibility of converting traditional agricultural lands to agroforestry or farm forestry, standard financial criteria were calculated such as Net Present Value (NPV), Benefit-Cost Ratio (BCR), Internal Rate of Return (IRR), Equivalent Annual Income (EAI), and Land Equivalency Value (LEV). Results show that the agroforestry systems adopted by farmers in both regions are profitable at all discount rates applied.;Regression analysis was carried out to understand how NPV is influenced by farmer characteristics (education, gender), costs of farming practices (plowing cost, fertilizer cost, planting cost, etc.), revenues from both forestry and agricultural products (eucalyptus revenue, intercrop revenue), agroforestry practices (spacing, trees per acre, number of intercrops, type of intercrops), and farm characteristics (size, location). Results show that region, the starting year of agroforesty establishment, plowing cost, irrigation cost, spacing, trees per acre, number of intercrops used, type of intercrops used, intercrop cost, intercrop revenues, and eucalyptus plantation revenues are influential factors in determining the financial feasibility of converting traditional croplands into agroforestry systems