The economics of forest plantations and on-farm planting as a rural income-generating activity Claire 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:

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 Creation Employment per unit of energy in person years Source: Remedio, E Socio-economics of Bioenergy, FAO Person yearsIntensive SH production Intensive inter- cropping Large-scale energy forestry Establishment Weeding Harvesting Transport Chipping13 Administration19 11 Total

Social Issues  Understanding why people grow trees  Keeps land in productive use  Trees may be planted where lack of capital prevents farmers from growing more capital- intensive crops  Diversification of farm production  Provide 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