Investment Analysis of Medium Scale Private Forest Plantation Development in Oyo State
Asian Journal of Research in Agriculture and Forestry · pp. 1–9 · Published 17 Jun 2019
10.9734/ajraf/2019/v3i330040Abstract
Forest and non-forest products are becoming scarce in Nigeria due to insatiable want of the resources by the people. The performance of public sector forest plantation development in Nigeria has fallen short of expectation of various stakeholders, hence, the need for investment in Private Forest Plantation Development (PFPD), fostered towards increasing wood supply and reducing the pressure on natural forest. In this study, investment analysis of medium scale PFPD was investigated to show its feasibility. Measures such as Net Present Value (NPV), Benefit Cost Ratio (BCR), Internal Rate of Return (IRR), Annual Equivalent Value (AEV), Land Expected Value (LEV), Return on Investment (ROI) and Discounted Payback Period (DPBP) were used to analyse the cash flow statement of the investment. The study showed that medium scale of Tectona grandis, Gmelina arborea, with few Terminalia spp. plantation of 20ha with 18 year rotation had NPV of ₦1,504,841.70, BCR of 1.35, IRR of 24.03%, AEV of ₦316,016.76ha-1, LEV of ₦2,186,997.89ha-1, ROI of 35% and DPBP of 17.7years. The results showed that the investment is feasible based on economic returns indices. It is recommended that PFPD should incorporate multiple land use systems and apply appropriate silvicultural techniques in order to maximize the net return.
References (8)
- 1 Forest Resource Economics and Finance [DOI]
- 2 The World Bank Annual Report 2006 [DOI]
- 3 Net Present Value and Internal Rate of Return as indicators for assessment of cost-efficiency of poplar plantations: a Serbian case study [DOI]
- 4 Basic Concepts in Forest Valuation and Investment Analysis
- 5 An analysis of potential investment returns and their determinants of poplar plantations in state-owned forest enterprises of China [DOI]
- 6 Management of indigenous medicinal plants in Nigeria using phenological information [DOI]
- 7 Introduction to forestry investment analysis: Part I. Basic investment characteristics and financial criteria
- 8 Global timber investments and trends, 2005-2011 [DOI]
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