RESEARCH FOR

ECONOMIC CALCULATION OF SHORT
ROTATION WILLOW PLANTATIONS IN LATVIA
Kristaps Makovskis, Dagnija Lazdiņa, Ligita Bite
Input/output data for the economic model (ecoWillow beta v1.4)
Input/output data Unit Values
Area ha 10
Plantation lifespan Years 22
Rotation length Years 4
Biomass growth rate ODT ha-1 year-1 8
Planting density cutting ha-1 13,000
Planting stock costs LVL per cutting 0.05
Biomass price at the gatesa LVL ODT-1 33
Land costs LVL ha-1 year-1 6
Administration costs LVL ha-1 year-1 5
Financial supportb LVL ha-1 year-1 52
Average row length m 200
Fuel costsc LVL l-1 0.75
Hauling distance km 50
Truck capacity t 35
Establishment costsd LVL ha-1 947
Planting costs LVL ha-1 698
Harvester costse LVL ha-1 153
Truck costse LVL km-1 1.7
Planting speed h ha-1 1.5
Harvester speed km h-1 a Price in the year 2010
6.5
b Direct payments are granted directly to farmers under a support scheme -
the Single Area Payment Scheme (SAPS)
c Fuel price for farmers
d Excluding financial support
e Including labor, fuel and operation costs
Source: authors survey according to EcoWillow inputs.
for ha and ODT. Calculations show optimistic and
pessimistic NPV scenarios. Because of the lack of
time and unpredictable circumstances, NPV might
fluctuate due to changing costs or revenues. Optimistic
scenario predicts 10% increase in revenues and 10%
decrease in costs. The pessimistic scenario predicts
10% decrease in revenues and 10% increase in costs.
results and discussions
Calculations are done for 22 years plantation
lifespan. Soil preparation costs in the beginning
before planting are 108 LVL ha -1 , establishment
costs in the first year excluding the soil preparation
in beginning and including incentive payment are
739 LVL ha -1 . Establishment and management cost till
the first harvest is 794 LVL ha -1 . Starting from 2 nd year,
the annual management costs per year are positive,
because of the incentive payment of 52 LVL ha -1 .
Starting input data are represented in Table 1.
Table 1
The first commercial harvest of 10 ha costs
1,520 LVL, (33 LVL ODT -1 ), transport costs
1,642 LVL, yield from all field 294 ODT. IRR over
the project 22 year lifespan is 17.1% and NPV is
1,099 LVL. According to optimistic scenario NPV is
1,561 LVL but in pessimistic scenario 638 LVL.
The payback in standard scenario is reached
in the 9 th year, after the second harvest. According
to optimistic scenario, which assumes 10% more
revenues and 10% reduction in expenses payback is
reached after the first harvest, in pessimistic scenario,
which assumes 10% less revenues and 10% more
expenses the payback is reached in the 9 th year after
the second harvest (see Fig. 2).
Over the lifespan of willow plantations, the
major part of the costs constitute establishment,
harvesting and transporting, 33%, 26% and 29%,
Respectively. Other costs like land cost and insurance,
administration costs and fertilization together are 12%
from all production costs (see Fig. 3).
226 ReseaRch foR RuRal Development 2012