An Economic Assessment of Sandalwood Cultivation in Karnataka

Abstract

Sandalwood tree has significant commercial and cultural value. The robust depletion newlineof this resource in its natural habitat and consistent demand, caused huge demand-supply gap newlinefor sandalwood globally. The domestication of sandalwood tree on the farm fields through newlinevarious silvicultural practices could increase sandalwood supply in the future. The newlineliberalization of policies by providing legal provisions enabled the farmers to cultivate newlinesandalwood on their farm since two decades in Karnataka. The primary data were collected newlinefrom 200 sandalwood farmers in Karnataka using an exponential non-discriminative snowball newlinesampling method. The study focused on the socio-economic characteristics, identification of newlinesandalwood based agroforestry models, their financial feasibility, resource use efficiency, newlineadoption of farm technologies and the constraints involved in sandalwood cultivation and newlinemarketing. The average age of the sample farmers was 53.25 years and all were literates. The newlineaverage annual family income was ` 24,95,500 per annum and the average landholding size newlinewas 5.13 hectares. The landholding size, age of the farmer, family income, government newlinesupport and subsidies and huge market demand were the major determinants for sandalwood newlinecultivation. The study identified 24 different sandalwood based agroforestry models in the newlinestudy area while, among them major six AFMs were considered for the financial feasibility newlineanalysis. Among the major agroforestry models, the highest returns per rupee invested (6.14) newlinewas obtained from AFM-IV (Sandalwood-Mulberry-Mango) with net returns of ` 1.95 crores newlineper hectare. But in terms of feasibility, AFM-II (Sandalwood-Red gram-Mango) was the most newlinefinancially feasible model with the highest NPV of ` 25,56,803 per hectare at 12 per cent newlinediscount rate. AFM-II had a BCR of 2.27 and an IRR of 23.57 per cent indicating higher newlinefinancial feasibility compared to other models. The equivalent annual income (` 3,75,401 /ha) newlineand land expectation value (` 31,28,339 /ha) from AFM-II was the highest compar