agrofirestry techniques of forestation how plantation of crops is done along with trees

agroforesxtry

1. DESIGNED AND DEVELOPED UNDER THE AEGIS OF
NAHEP Component-2 Project “Investments In ICAR Leadership In Agricultural Higher Education”
Division of Computer Applications
ICAR-Indian Agricultural Statistics Research Institute

2. Course Details
Course Name
Agroforestry Systems and Management
Lesson.14
Soil fertility improvement & water conservation through agroforestry
and non-wood forest products based agroforestry
1

3. Name Role University
Dr K S Pant Content Creator
Dr.Yaswant Singh Parmar University
of Horticulture & Forestry,
Nauni-Solan
Daulat Bhardwaj Course Reviewer
Dr.Yaswant Singh Parmar
University of Horticulture & Forestry,
Nauni-Solan
Created by
2

4. Economic Analysis
Thesuccessofanagroforestrysystemdependsontheircapacitytoproduce
sustainedandcontinuousprofits.Theeconomicsofsuchsystemaredifferent
fromtheanalysisofagriculturalcropsduetocertainspecialfeature.
•Lifespanoftreesinanagroforestrysystemextendsovermanyannualcrop
generations.
•Onceinvestmentaremadeintreesandresourcesarecommittednoretrievalis
possible.
•Thetimegapbetweenperiodofexpenditureintreesmakesitdifficultto
compareprofitabilitywiththatofannualcrops.

5. Agroforestryisbeingperennialinnaturehavetheircostsandreturnsspread
overafairlylongperiodoftime.Thetotalcostofcultivationcanbecategorized
intoestablishmentcostandmaintenancecost.
Establishmentcostareexpenditureincurredonsuchoperationssuchasfencing,
preparationofland,trenching,planting,bundingetcwhicharecarriedout
onceforallduringtheproductionperiod.
Maintenance:-Thesecostareexpenditurearisingduetosuchoperationslike
manure&fertilizerandmanureapplication,weedsandtheircontrolwhichare
repeatedlydoneduringproductionperiodandarelikelytovaryfromyearto
year.

6. General principles of economic analysis

7. Key point
•Duetotemporaldifferencesininputsandyields,thecostandreturnsneedto
beequatedbyapplyinganadjustmentfactortothefuturecostsandreturns.
•Theadjustmentvalueisderivedfromtheacceptedvalueofmoneyandis
commonlycalleddiscountingtechniques.

8. Affective factors
Factors which affect the economics of Agroforestry system :
1.Land –Man ratio
LandresourceisveryscarceinIndia.Indiahasonly2%landresourcetosupport
about15%ofthehumanand16.5%ofthelivestockpopulationsoftheworld.
Thereforepressureonthelandisveryhigh.Percapitalandareaisoneofthe
lowestintheworld.Land-manratioisverysmall.Mostfarmersandagricultural
workersarepoor.Alargenumberofthemlivebelowthepovertyline.
Agriculturetothemissubsistance.Sotheydonotthinkofdivertinganypieceof
agriculturallandforanyotherpurpose.

9. 2. Shortage of wood and steep price rise
Thepricesofagriculturecommoditiesegrice,wheat,millet,pulses,
oilseeds,etc,haveincreasedby3to5timesoverthepast25years,
whilethepricesoffirewood,timberandcharcoalhaveincreasedby15
to20timesgrowingoftrees,earliernotsoeconomical,becameaquite
remunerativelanduseincomparisontoAgriculturalcrops.

10. 3. Environmental awareness:
•Thereisincreasingawarenessforenvironmentalconservation.
•Becauseofthis,moreandmoretreesarebeingplantedinfarmlandsandother
areas.
4.Wood consumption pattern:
•Therehasbeenagradualincreaseinwoodconsumptionincountry.Thereiswide
gapbetweendemandandsupply.
•Plantationandagroforestryeffortsmightbeabletoeasethedemandforwood
locallyasinotherstates

11. 5.Policies:
•Landusingpolicy,theforestpolicies:HasgotinfluenceonAgro
forestry.
•Insomestatesthetradeinrespectofcertaintreespeciesisunder
thecontrolofgovernment.Teak–Undercontrolofgovernment–
Haryana
6.Marketing:
•Inthecaseoffodder,woodandotherproducesuchprice-control
mechanismdoesnotexist.
•TherelikelytoexploitedbypowerfulIndustries.
7.Timespan:
•Anotherimportantconsiderationisthelongtimespaninvolved
withthespecies.
8.Risks:
•Theriskinagriculturalproductionsystemissometimesgreaterthan
treebasedproductionsystemsastreesarelesssusceptibleto
droughtandfloods.

12. Valuation of output:
IndirectbenefitsfromAgroforestrythevaluationoftheseservicesisbasedonanumberofassumption
whichvaryconsiderablywithsite.
Evaluation criteria
The Agroforestry systems can be evaluated by using following tools:
1.Net present value (NPV)
2.BCR
3.Internal rate of return (IRR)

13. Net Present Value (NPV)
Itisthesurpluspresentvalueofreturnsgeneratedfromthesystemoveritspresent
valueofcost.
Sincethereturnsaregeneratedinfutureyears,thepresentcostofestablishment
cannotbecomparedwithfutureincome.
Allthefuturenetincomearediscountedtoknowthepresentvalueusingan
appropriatediscountvalue

14. Mathematically,
NPV= ∑n = B
t
-C
t
t=1 (1+d)
t
B
t
-Future returns in each year
C
t
-Establishment and future cost in each year
D –discount rate
T –number of years
Asascreenforeconomicviability,anyenterprisethatpossessesanetpresentvaluegreaterthan
zeroistechnicallyacceptable:long-termbenefitsexceedlong-termcosts.

15. Benefit/cost ratio
InthecalculationoftheBCratio,allthesignificanteffectsofaproposedprojectarefirst
identifiedandquantified.
Theseeffectsaresubsequentlycategorizedaseitherbenefitsorcosts,valuedbyyear,
andthendiscountedatthepreselectedrate.
Thetotaldiscountedprojectbenefitsarefinallysummedanddividedbythesumofthe
discountedcoststoobtainaBCratio.
Benefir/CostRatio=TotaldiscountedBenefits/Totaldiscountedcost
Iftheratioisgreaterthanone,theprojectisestimatedtoprovideapositivenet
return.
Theoretically,thegreatertheratioofbenefitstocosts,themoreattractivethe
undertaking.

16. Internal rate of return
Theinternalrateofreturn(IRR)theoreticallycalculatesthemaximumrateofinterestthata
projectcanrepayonloanswhilestillrecoveringallinvestmentandoperatingcosts.
Putinotherwords,theIRRdeterminestheearningpowerofthemoneyinvestedinaparticular
venture.
Inactualcalculation,itisthatdiscountratewhichwillmakethediscountedtotalbenefitsand
costsofanenterpriseequal.
Randall(1987)mathematicallydefinestheIRRas:
E(Bt-Ct/(1+p)'=0,
t=0
where:Barethebenefitsaccruinginyeart,Carethecostsaccruinginyeart,andpistheinternal
rateofreturn.

17. ProjectswithanIRRthatisinexcessoftheopportunitycostofcapitalaretechnicallyviable.
Thegeneralruleforselectingamongalternativeprojectsistoselectthosewiththehighest
IRR.
Althoughusefultoestimatetheinterestonloansthataprojectcancover,thecalculationof
theIRRissomewhatcomplicatedascomparedtothoseofNPVandBC.
Inaddition,theIRRisnotastrictlyvalidevaluationcriterionwhenbasiccostandbenefit
relationschangeradicallyduringthelifeofaprojectasdoesoccurinagroforestry.

18. Economic Analysis at different time
1.Ex ante economic analysis
2.Ex post economic analysis
1. Ex ante :
•ThemainaimofexanteeconomicanalysisofapotentialAFistoanalyzeandescalateprior
knowledgeandideaofitstechnicalfeasibilityandeconomicalviabilityofasystem.
•Itmayalsohelpstoprioritizethevarioustechnologyoptionsavailableandorguide
scientiststoformulatetechnology.

19. 2.Expost:
•ThemainaimoftheExposteconomicanalysisofanAFistodetermine
whetherthesystemshouldbereadjustedtothespecifiedobjectives.
•Thisanalysisisservedasyardstickformeasuringthesystem,whetheritis
progressingonitswayornot.
•TheflawscanberectifiedandpossibletoimposetheefficacyofAFsystem.

20. THANK YOU