Economic opportunities for smallholders to combine pulpwood trees and food crops

Input/output data from tree growing experiments in Southeast Asia were analysed within the framework of a model of a smallholder farm. Data on cropping were obtained from surveys of farmers. Prior to formulating a whole farm model, this input/output data were modified in two ways: (a) a yield penalty was imposed upon a continuous cropping regime to reflect the impact of land degradation; (b) an agroforestry (intercropping) activity was synthesised by reference to an existing agroforestry bioeconomic model. The modelling framework was conventional linear programming. The interplay of land area availability, land and labour productivity, and interest rates lead to a relatively complex picture, even for the simplified farming systems that were examined. Model results showed a clear indication of the potential role of trees, but this potential role decreased with increasing interest rates. The analysis suggested that smaller farms will be less inclined towards tree growing. A mixture of trees and crops appears attractive, on purely economic grounds, over a wide range of interest rates and land areas. Consideration of factors outside the model, such as risk aversion objectives of smallholders, and their limited opportunities to borrow for investments in tree planting, reinforce the tendency to combine trees and crops.