Economic feasibility of planting Araucaria orchard for jatropha production

Abstract

The Parana pine (Araucaria angustifolia) is arguably the most important features of mixed ombrophilous forests in Southern Brazil. The species has great economic, ecological and cultural value in the region. Still, due to past overexploitation, only 2% of the original forest cover is left and the species is critically endangered. Hence, policies to recover forest cover and promote planting efforts are urgent. Here we investigate the economic feasibility of seed orchards established via grafted plants of Araucaria angustifolia for pine nut production in the metropolitan area of Curitiba – Brazil as means to incentivize the conservation of the species. We considered three options of establishment costs: 1) Land acquisition, 2) Land renting and 3) No land costs. To evaluate the economic feasibility of the orchards, we computed the internal rate of return (IRR), Net Present Value (NPV) and the Land Expectation Value (LEV) of the investment. The results show that the NPV was positive in 75% of the scenarios with land acquisition (17499 BRL/ha on average), with an 8.6% IRR and target price of 3.16 BRL/kg. For the land renting case, the NPV was positive in 71% of the scenarios, with a NPV of 14996 BRL/ha, IRR of 8.9% and target price of 3.26 BRL/kg. When no land costs were incurred, all NPV scenarios were positive (51025 BRL/ha, on average), the IRR reached 15.8% and the target price was 1.79 BRL/kg. Furthermore, the land renting option showed the highest NPV variability, due to the higher fixed costs incurred. We conclude that the promotion of Para pine orchards provide a suitable option to promote the expansion of forest area and generate extra income in rural areas.