Financial viability of Sandal (Santalum album) based agroforestry practices in Southern India

Abstract

Santalum album L. commonly called as sandalwood tree is one of the most valuable commercial timber species with an estimated market value of more than $1 billion. In recent times, production of sandalwood in India has declined drastically due to depletion of sandal growing stock in natural forests in the major producer states of Karnataka and Tamil Nadu owing to indiscriminate exploitation. Domestication of sandal offers a feasible alternative to augment supplies especially since the species is quite hardy and can thrive in stress conditions making it an ideal agroforestry species even in dry and degraded lands. The present study assesses the viability of domestication of sandal in Karnataka through a financial analysis using indicators like Net Present Value (NPV), Benefit Cost (B/C) ratio, Internal Rate of Return (IRR), Equivalent Annual lncome (EAI) and Land Expectation Value (LEV) at different discount rates (sensitivity analysis). Different sandal based agroforestry models viz, sandal monoculture plantations and sandal intercropped with another perennial Emblica officinalis Gaertn. (amla) and an annual Macrotyloma uniflorum (Lam.) Verdc. (horse gram) are analysed for two different rotation periods (15 and 20 years) to determine the financially optimal model. Results show that all the options discussed are financially viable with Sandal block plantation with 15 years rotation gave the highest NPV (Rs. 2683088 at 10% and Rs. 1252693 at 15%), B/C ratio (4.4 at 10% and 3.3 at 15%), IRR (33%), EAI (Rs. 352756 at 10% and 2142312 at 15%) and LEV (Rs. 3527558 at 10% and 1428212 at 15%). However for the farmer who prefer regular cash flow, the sandal+amla+horsegram in a 15 rotation is advisable. Technical constraints in popularizing sandal based agroforestry and ways to overcome them are also outlined.