The economics of forest plantations and on-farm planting as a rural

income-generating activityClaire Coote

Issues for the Sustainable Use of Biomass Resources for Energy, Colombo, August 2005

Compare UK & Sri Lanka Situation Both islands, net energy importers, forestry sector not

a major industry but important in certain regions Both recent converts to need for biomass generation In UK driven by need to reduce carbon emissions,

plus interest to support rural areas In Sri Lanka driven by need to reduce fuel imports and

extend power supply to more people, plus interest in improving rural livelihoods

Sri Lanka: Considerable experience in biomass production & use

Knowledge of species and seed selection for fast growth rates, calorific value

Woodfuel management techniques to maximise efficiency

Smallholder expertise should not be overlooked

Need to consider possible association with low efficiency and drudgery

UK: Short Coppice Rotation Despite Energy Crops Scheme subsidy farmers

been slow to invest Unused to crops without annual payment Key is establishment of end users Need for more research to increase yields &

provide better idea of costs and returns Support to producer groups appears successful Some concerns about visual impact

The TV Bioenergy Coppice Contract Growers decides no. of hectare (3 ha min) Grower controls crop husbandry and management TVBC guarantees index-linked min price £36/odt Grower can become shareholder in group TVBC assist with planting, harvesting & transport TVBC contract for 10 years (3 harvests) TVBC provides technical and support services Grower must be located in certain region Grower pays small annual membership fee

Source: www.tvbioenergy.co.uk

UK: SRC Costs & Returns Need to compare costs and returns of

alternative farm enterprises: gross margin GM usually based on one year’s figures SRC income not received each year so

equivalent annual value (EAV) calculated EAV estimate £203 - £287 Lower than GMs for arable crops Comparable GM with upland sheep farming

UK SRC: other considerations Price paid per oven dried tonne: £30-40 Farmers have to pay for chip drying &

haulage Conflict of interest between growers &

power generators Generators able to pay £25 – 35/tonne Growers need £30 – 60/tonne

Sri Lanka: Gliricidia SRC Grown in two farming

systems Coconut intercrop on

plantations Intermittent planting on

smallholdings Estimated revenue of Rs.9

per tree per annum

Sri Lanka: Gliricidia SRC Need more information on

costs of production, including opportunity cost of labour Particularly for women

Must consider pest control including goats and cattle

Need to value additional benefits

Economic Costs & Benefits Societal viewpoint Employment creation Import substitution of fossil fuel Local economic development

Bioenergy Employment CreationEmployment per unit of energy in person years

Source: Remedio, E Socio-economics of Bioenergy, FAO

Person years Intensive SH production

Intensive inter-cropping

Large-scale energy forestry

Establishment 112 71 34

Weeding 338 196 59

Harvesting 248 251 85

Transport 70 71 51

Chipping 13 13 13

Administration 19 19 11

Total 800 612 253

Social Issues Understanding why people grow trees

Keeps land in productive useTrees may be planted where lack of capital prevents

farmers from growing more capital-intensive cropsDiversification of farm productionProvide products and income in between crop

harvests Concerns over growing trees as cash crop –

fears of land being withdrawn from essential food production

Social Issues 2 Land tenure and security of tenure

Lack of secure tenure has been assumed to inhibit tree growing

Evidence from other countries that this is less critical than other factors – credit, markets

Sri Lanka experience with poor establishment of farmer woodlots due to lack of lease agreements with Forestry Dept.?

Social Issues 3 Existing uses of so-called scrub/waste

land Need to investigate if this land is used e.g.

for grazing Animal herders may resent trees planted

and set fire to them

Thank you for your attention