Financial analysis of a small scale Pinus patula Schiede ex Schltdl. et Cham. plantation

Abstract

There are hundreds of small Pinus patula plantations in the Mexican states of Veracruz, Puebla, Tlaxcala, and Hidalgo, among others. Nonetheless, their financial feasibility is rather unknown to date. By means of the Net Present Value (NPV), Benefit/Cost ratio (B/C), and Internal Rate of Return (IRR) indicators, the financial feasibility of a 3 000 m² P. patula plantation, 17 years old, whose production is to be used for making pulp and sawnwood, was assessed. Both costs, benefits and mensuration data were recorded along the project life, except for the first five and for the last three years. Costs for the initial five years were derived from interviews to the plantation owner. Costs and benefits during the last three years of the project were estimated from the plantation mensuration data and regional prices of the products projected. The NPV, B/C ratio, and IRR for the plantation were MX$ 37 959.00, 2.32 %, and 26.61 %, respectively. The costs and benefits that impacted the most the final financial balance of the project were those occurring at the early stages. Accordingly, the implementation of strategies to decrease costs and increase benefits during the initial stages of the project is advisable. Agroforestry systems, among others, may provide appropriate schemes in this direction.