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Comparing the financial returns from acacia plantations with different plantation densities and rotation ages in Vietnam

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  • Maraseni, Tek Narayan
  • Son, Hoang Lien
  • Cockfield, Geoff
  • Duy, Hung Vu
  • Nghia, Tran Dai

Abstract

In Vietnam, planted forests account for >26% of total forest area, with approximately two-thirds of the plantation area managed by smallholders and 80% of plantation wood used for woodchip production. With increasing demand for timber for the construction and furniture industry, the Vietnam Government is seeking to encourage growers to increase the rotation age of plantations and produce higher quality timber so that it can meet its 2020 furniture export targets. Progress on this goal is however slow, with growers unsure about the financial case for increasing rotation age. Using a case study of the Ben Hai State Forestry Company (SFC), we compare financial returns from acacia plantations by the rotation ages of 5, 6 and 10years. The 5year rotation is for the sole purpose of producing woodchips whilst 6 and 10year rotations produce both timber and woodchips. Results show that all three types of plantation produce positive returns but the return from 10year rotation plantations (in terms of NPV and IRR) is much higher than those of others. By increasing the rotation age by 1year (6years total) and 5years (10years total) from the common practice of 5years, the net present values from the modelled plantations would increase by about 1.57 times and 4.24 times respectively. The reasons why smallholder grower are not responding to these apparent higher present values and policies that would promote long rotation age plantations are discussed.

Suggested Citation

  • Maraseni, Tek Narayan & Son, Hoang Lien & Cockfield, Geoff & Duy, Hung Vu & Nghia, Tran Dai, 2017. "Comparing the financial returns from acacia plantations with different plantation densities and rotation ages in Vietnam," Forest Policy and Economics, Elsevier, vol. 83(C), pages 80-87.
    • Handle: RePEc:eee:forpol:v:83:y:2017:i:c:p:80-87
    DOI: 10.1016/j.forpol.2017.06.010
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    References listed on IDEAS

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    1. Prof. Harry F. Campbell, 1999. "Forestry Economics: Principles and Practice," Discussion Papers Series 265, School of Economics, University of Queensland, Australia.
    2. Baral, Himlal & Guariguata, Manuel R. & Keenan, Rodney J., 2016. "A proposed framework for assessing ecosystem goods and services from planted forests," Ecosystem Services, Elsevier, vol. 22(PB), pages 260-268.
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    Citations

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    Cited by:

    1. Maraseni, Tek Narayan & Phimmavong, Somvang & Keenan, Rodney J. & Vongkhamsao, Vongvilay & Cockfield, Geoff & Smith, Hilary, 2018. "Financial returns for different actors in a teak timber value chain in Paklay District, Lao PDR," Land Use Policy, Elsevier, vol. 75(C), pages 145-154.
    2. Nguyen, Hanh Tien & Ariyawardana, Anoma & Ratnasiri, Shyama, 2020. "Forest plantation owners' willingness to pay for hybrid nursery stock: The case of Acacia hybrids in Central Vietnam," Forest Policy and Economics, Elsevier, vol. 116(C).
    3. Phimmavong, Somvang & Maraseni, Tek Narayan & Keenan, Rodney J. & Cockfield, Geoff, 2019. "Financial returns from collaborative investment models of Eucalyptus agroforestry plantations in Lao PDR," Land Use Policy, Elsevier, vol. 87(C).
    4. Roland Cochard & Bien Thanh Vu & Dung Tri Ngo, 2021. "Acacia Plantation Development and the Configuration of Tree Farmers’ Agricultural Assets and Land Management—A Survey in Central Vietnam," Land, MDPI, vol. 10(12), pages 1-39, November.
    5. Blackburn, David & Huong, Vu Dinh & Mendham, Daniel, 2020. "Returns to Vietnamese smallholder farmers from managing acacia plantations for sawn wood over 4-10 year rotations," Forest Policy and Economics, Elsevier, vol. 121(C).
    6. Tham, La Thi & Darr, Dietrich & Pretzsch, Jürgen, 2021. "Analysis of Acacia hybrid timber value chains: A case study of woodchip and furniture production in central Vietnam," Forest Policy and Economics, Elsevier, vol. 125(C).
    7. Ronja Herzberg & Tung Gia Pham & Martin Kappas & Daniel Wyss & Chau Thi Minh Tran, 2019. "Multi-Criteria Decision Analysis for the Land Evaluation of Potential Agricultural Land Use Types in a Hilly Area of Central Vietnam," Land, MDPI, vol. 8(6), pages 1-25, June.
    8. Maraseni, Tek Narayan & Son, Hoang Lien & Cockfield, Geoff & Duy, Hung Vu & Nghia, Tran Dai, 2017. "The financial benefits of forest certification: Case studies of acacia growers and a furniture company in Central Vietnam," Land Use Policy, Elsevier, vol. 69(C), pages 56-63.
    9. Cochard, Roland & Nguyen, Van Hai Thi & Ngo, Dung Tri & Kull, Christian A., 2020. "Vietnam’s forest cover changes 2005–2016: Veering from transition to (yet more) transaction?," World Development, Elsevier, vol. 135(C).
    10. Cubbage, Frederick & Kanieski, Bruno & Rubilar, Rafael & Bussoni, Adriana & Olmos, Virginia Morales & Balmelli, Gustavo & Donagh, Patricio Mac & Lord, Roger & Hernández, Carmelo & Zhang, Pu & Huang, J, 2020. "Global timber investments, 2005 to 2017," Forest Policy and Economics, Elsevier, vol. 112(C).
    11. Charlton, Ryan A. & Naghizadeh, Zahra & Ham, Cori & Wessels, C. Brand, 2020. "A value chain comparison of Pinus patula sawlog management regimes based on different initial planting densities and effect on wood quality," Forest Policy and Economics, Elsevier, vol. 111(C).

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