TEAK PLANTATIONS IN NILAMBUR - Kerala Forest Research Institute

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Internal Rate of Return (IRR) is that discount rate for which NPV=0 i.e. IRR = i such that n B t - C t Σ = 0 t=0 (l+i) t For a project to be profitable, the NPV should be greater than zero. The criterion for finding a project to be profitable on the basis of IRR is that IRR should exceed the consumption rate of interest (World Bank, 1976). However, a discount rate is usually selected arbitrarily taking into account time preference and inflation. Price (1989) suggests that the real discount rate can be calculated on the basis of money interest rate and inflation rate. To account for fluctuations in both the rates, in this study, four discount rates from 6 to 18% were considered for the financial analysis so that the sensitivity of the results to different rates can be observed. As government teak plantations are raised in reserved forest land, no land rent is payable. As the forest policy of Government of India do not permit the conversion of forest land to other uses, other land use options do not exist. There is certainly an opportunity cost of converting natural forest into teak plantations as bio-diversity, wilderness and aesthetic values are reduced when natural mixed forest are converted to monoculture teak plantations. Conversion of natural forests to teak plantations are not permitted under the current forest policy. Only the existing plantations continue to be managed as plantations. Therefore in this study the opportunity cost is not considered as no conversions take place now. Forest land leased out to public sector corporations such as Plantation Corporation of Kerala, State Farming Corporation of Kerala etc. are charged 14
a lease rent of Rs.1300 ha-1. This rate has been fixed a few years back and it may shortly be revised. Therefore, in the profitability analysis three options of land rent are considered, 1) without land rent, 2) with a land rent of Rs.l300ha -1 and 3) with a land rent of Rs.2500 ha-1 to examine the effect on profitability. Besides these, the maximum surplus that can be generated was calculated and shown as the maximum land rent possible Apart from NPV and IRK, benefit cost ratio (B/C ratio) was also computed. B/C ratio is the ratio of the discounted total benefits to discounted total costs. The B/C ratio should exceed 1 for considering a project as profitable. The NPV and B/C ratio were calculated for different discount rates and profitability analysis was done. Using discount rates of 6, 9, 12 and 18% , the NPV and B/C ratio was calculated to find the profitability of teak plantations.
Page 1 and 2: KFRI Research Report 144 TEAK PLANT
Page 3 and 4: ' LIST OF TABLES I IRR of teak plan
Page 5 and 6: L Table : 5.6 NPV and B/C ratio at
Page 7 and 8: 1. INTRODUCTION 1.1 Background Teak
Page 9 and 10: on top height alone need not give a
Page 11 and 12: productivity status of teak plantat
Page 13 and 14: in thinning and final felling at a
Page 15 and 16: collected from Chaliyam, Nedumkavam
Page 17 and 18: to compare the actual timber yield/
Page 19: The percentage distribution was use
Page 23 and 24: The total number of plantations (op
Page 25 and 26: During the period 1967 to 1981, the
Page 27 and 28: identified. Site quality class I is
Page 29 and 30: Age 20 Table : 3.6 Total yield and
Page 31 and 32: ~~~ Table : 3.7 Availability of inf
Page 33 and 34: Table : 3.10 Distribution of area o
Page 35 and 36: Plng. Year 1934 1934 1934 1938 1939
Page 37 and 38: 4. PROFITABILITY OF TEAK PLANTATION
Page 39 and 40: from younger plantations have a low
Page 41 and 42: Table : 4.2 Cashflow from teak plan
Page 43 and 44: flow from teak plantations in Nilam
Page 45 and 46: ha -1 year -1 is considered, the pr
Page 47 and 48: Table : 5.1 Percentage distribution
Page 49 and 50: Table : 5.2 Percentage distribution
Page 51 and 52: Table : 5.5 Sensitivity analysis of
Page 53 and 54: average profitability of teak plant
Page 55 and 56: KFRI., 1977. Productivity of teak a
Page 57 and 58: Division &. Range Nilambur Nilambur
Page 59 and 60: Division & Range Nilambur Nilambur
Page 61 and 62: Division & Range Karulai Karulai Ka
Page 63 and 64: Appendix : 2 Division-wise distribu
Page 65 and 66: Appendix : 5 Expected yields from t
Page 67 and 68: ~ Appendix : 7 List of plantations
Page 69 and 70: Appendix : 8 Number of teak poles e
Page 71 and 72:
Appendix : 10 Percentage distributi
Page 73 and 74:
Type of work 4 Silvi. thinning Lora
Page 75:
Type of work 4 Silvi. thinning Lora
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TEAK PLANTATIONS IN NILAMBUR - Kerala Forest Research Institute

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