Economic Analysis of Sengon (Paraserianthes Falcataria)

Economic analysis of sengon (Paraserianthes falcataria) community forest plantation, a fast growing species in East Java, Indonesia

Ulfah J. Siregara, , , A. Rachmib, , M.Y. Massijayaa, , N. Ishibashic, and K. Andoc,

aFaculty of Forestry, Bogor Agricultural University, Kampus IPB Darmaga, P.O. Box 168, Bogor 16001, Indonesia

bMalang State Polytechnic, Jl Veteran, P.O. Box 04, Malang 65145, Indonesia

cCarbon Fixing Forest Management Project (CFFMP) FORDA-JICA, Jl Gunung Batu no.5, P.O. Box 165, Bogor 16001, Indonesia

Received 8 July 2005;

accepted 10 March 2006.

Available online 10 October 2006.

Abstract

Despite strong efforts to rehabilitate degraded forests and lands in Indonesia, successful cases of reforestation are rare. A previously identified problem was unclear land tenure in certain forest areas creating conflict between local communities and other forestry stakeholders. Although communities claim to be interested in forestry, encouraging them to conduct reforestation or establish forest plantations has proven to be very difficult because it is regarded as non-profitable. In Kediri, East Java, sengon (Paraserianthes falcataria) mixed plantations are usually found because they are profitable and give more routine income to communities. Sengon is mixed mostly with pineapple, and planted with a density of 800 trees/ha. Pineapple is planted only once, and then harvested every year for 4 years. Within the 8 year rotation age of sengon, a farmer can harvest pineapple 4 times before cutting the trees. To analyze whether mixed plantations give more income to communities than planting pure sengon, the Net Present Value (NPV) and Benefit–cost Ratio (BCR) of mixed plantations were calculated. Using an interest rate of 17.53% as a Minimum Acceptable Rate of Return (MARR), the result showed that mixed plantations are profitable, however community decisions were influenced by the amount of land owned, the cost of mixed plantations, the timber price and the...