RESEARCH WORK

 

 

 

Economic feasibility of the corn-pasture association in the establishment of a silvopastoral system in the plain foothills of Colombia1

 

 

 

V. Sánchez1, G. Delreal 2, C. Plazas1 and G. Pérez3

1Grupo de Investigación en Agroforestería, Universidad de los Llanos, km 12 vía a Puerto López, Villavicencio, Meta, Colombia. Correo electrónico: vladimirsanchez@unillanos.edu.co
2Universidad de los Llanos, Colombia
3Servicio Nacional de Aprendizaje (SENA), Centro Agroindustrial del Meta El Hachón, Villavicencio, Colombia

 

 

 


ABSTRACT

The objective of the study was to financially evaluate an alternative for the establishment of a shade silvopastoral system (SPS-S) with native tree legumes, along with the production of corn silage and the renovation of degraded grasslands. For such purpose, trees were planted in rows and corn was sown between them, which was harvested to be ensiled. Three native species adapted to the conditions of soil acidity (4,6) were selected for this work and a factorial arrangement was used in randomized blocks with four treatments, constituted by the three tree species to be evaluated and the control: T1: Piptadenia flava, T2: Cassia moschata, T3: Mimosa trianae and TO: control, with five repetitions per treatment, for a total of 20 experimental units. Afterwards, corn was sown again, in association with pasture, and the corn was harvested to be ensiled; therefore, the grassland was renovated and incomes were obtained for the silage. These incomes for the silage sale amortized the costs of the establishment stage and generated profits that made the project economically viable during such stage, by achieving a net profit per hectare of USD 714, a net present value (NPV) of USD 407 and an internal return rate (IRR) of 31,63 %. In another type of SPS the establishment cost can be more than USD 2 500 per hectare and the return of the investment can take more than four years.

Key words: Agroforestry, financial analysis, trees, silage.


 

 

INTRODUCTION

The low cost-effectiveness of conventional livestock production systems leads to the formulation of an alternative that allows to renovate degraded grasslands, establish a shade silvopastoral system (SPS-S) without leaving unproductive areas, and, finally, evaluate the economic and environmental benefits during the establishment stage (one year).

Under tropical conditions, the lack of shade in the paddocks generates a heat stress in ruminants which does not allow them to express their productive potential, because a part of the energy is spent by them in dissipating heat, which increases their heart and respiratory rate to regulate their temperature and implies a higher energy expense that could be used in producing milk or increasing weight (Ferreira et al., 2011; Ramírez et al., 2012). On the other hand, the reproduction of the cow is affected by the high environmental temperatures (Góngora and Hernández, 2010).

Trees generate a nutrient recycling that benefits the soil and improves the grassland, and also produce environmental services (Gonçalves et al., 2012) such as: shade, firewood, timber, food, carbon sequestration, etc., which prepare the farmer to face the challenges of the climate change and the globalization of markets (Nieuwenhyse, 2010; Abril, 2011; Iglesias et al., 2011).

Silvopastoral systems (SPS) stimulate the beneficial soil micro-, meso- and macrofauna, which rapidly degrade manure with the subsequent decrease of parasite incidence (Soca et al., 2005), loosen and ameliorate the soil and pastures, and help in carbon sequestration (Montagnini, 2010; Pagano and Cabello, 2011). The shade of trees in the paddocks can improve the milk and meat production in 15-20 % (Ibrahim et al., 2007).

The information related to the SPS-S for the lowland foothills is scarce and the studies that compare the performance of native tree legume species among themselves within this type of arrangement are few, for which three native species adapted to the conditions of soil acidity (4,6) were selected for this work: Piptadenia flava, Mimosa trianae and Cassia moschata. One of the main difficulties to introduce trees for shade in the paddocks has been the need to protect them, during at least one year, from the predator behavior of livestock, for which generally these areas that are to be turned into SSP remain unproductive for some time; in addition, the investment is high and often the livestock farmer does not adopt this technology because the investment return is usually at long term.

Considering the above-explained facts, the objective of this study was to evaluate the financial feasibility of an alternative to introduce trees in the paddocks and renovate the grasslands, without leaving unproductive areas.

 

MATERIALS AND METHODS

Location. The work was conducted at the Agroindustrial Center of the Meta El Hachón, of the National Learning Service (SENA), located in Villavicencio (Colombia), at 350 m.a.s.l.; the characteristics of the locality are the following: plain topography, average temperature of 28 ºC, relative humidity of 79 % and mean annual rainfall of 2 876 mm (Peña and Orduz, 2010).

Experimental design. A factorial arrangement was used in randomized blocks with four treatments, constituted by the three tree species to be evaluated and the control: T1: P. flava, T2: C. moschata, T3: M. trianae and TO: control, with five repetitions per treatment, for a total of 20 experimental units.

Experimental procedure. A land of 5,7 ha was delimited which comprised (according to the internal distribution) the paddocks no. 3, 4 and 5, where the experimental areas were placed, and the control lot which belonged to paddock no. 2 in which no trees were planted. The soil was prepared with a vibratory chisel plow (one time) and harrow (two times); 1,5 t of compost, 150 kg of calfos, 200 kg of dolomite lime, 100 kg of diammonium phosphate (DAP), 50 kg of KCl, 60 kg of urea and 20 kg of a mixture of minor elements, were applied per hectare. By the time of the first corn sowing, after the last weed control, the trees were planted in rows, using 40-cm high seedlings. The planting distance of P. flava, M. trianae and C. moschata was 7 x 7 m (density of 204 trees/ha), in order to allow the passage of machinery for later harvests and corn sowing, which also favored the solar illumination between rows as they were oriented from East to West.

After the first corn harvest for silage it was sown for the second time, but mixed with sexual seed of Panicum maximum cv. Mombasa, which was chosen for its adaptability to moderate shade. The land preparation and the application of amendments to the soil were similar to those of the first sowing. Once the corn was harvested for silage the grassland remained already established, with a total land utilization to achieve higher productivity and cost-effectiveness. The establishment stage of the SPS lasted one year and an economic analysis was made.

Financial analysis. The economic information was subject to descriptive statistics in Microsoft Excel® to calculate measures of central trend and financial indicators, such as the internal return rate (IRR) and the net present value (NPV), as well as to perform a financial viability analysis of the project and of the investment recovery period. The NPV and the IRR are two highly used indicators to calculate the viability of a project, which are based on the discount rate as a key factor and the estimation of the cash flows of the enterprise.

 

RESULTS AND DISCUSSION

Table 1 shows the general establishment costs of the system (5,7 ha), which totaled USD12 604. On the other hand, table 2 shows the flow of incomes for the sale of the produced silage (USD16 675) and the investment or expenditure (USD12 604) during the establishment of the SPS in the first year.

To facilitate a better understanding and standardization of the data, the costs and incomes in the establishment stage of the SPS were calculated for one hectare. Table 3 shows the required investment over time, of which the income and expenditure flows and the profitability for one hectare are detailed.

Table 4 shows the results of the financial analysis of the project, associated to the IRR, the opportunity interest rate (OIR) and the NPV. For a project to be financially viable the IRR should be higher than the discount rate; in addition, the NPV should be higher than zero (0). The IRR determines the profitability of the project and based on the NPV it is known whether this profitability is really generating richness or destroying it, because if it is below zero it means that it would be unviable to initiate the project; on the contrary, if the NPV is positive it is a great tool for the decision-making by the investor (Meza, 2010; Mankiw, 2012).

The silvopastoral system became established with a fast return of the investment. There was a low yield in the harvest of corn to be ensiled (12,7 t/ha, as average of the two harvests), mainly due to climate factors (scarce rain); however, the system is economically viable, with an IRR of 31,63 % and a NPV of USD 407/ha.

The IRR was higher than the discount rate of 10 % and the NPV higher than zero, which proved that the financial indexes were viable and excellent for the project. The immediate return of the investment, with a high profit when the corn silage was commercialized, generated a large cash flow during the establishment. This allowed, with a low initial investment per hectare (USD 1 165), to continue the establishment of the system in a sustainable way from the economic point of view. The results of the study showed a high financial viability of the project, which turns it into an opportunity to establish SPS with low cost and an initial investment, bringing about a high financial return rate.

The cultivation of corn has great potential for forage production in the plain foothill and in the high plains; its harvest is performed between 75 and 85 days after sowing, with yields from 25 to 35 t/ha of green forage in the high plains (Colina, 2009) and more than 40 t/ha in the foothill, where it is possible to obtain two harvests per year (Pérez, 2008; Rincón and Ligareto, 2008). The corn-pasture association is a strategy to loosen soils, renovate degraded grasslands and introduce trees to establish the silvopastoral system, with a low investment with regards to other models and a fast return of the investment.

In spite of the low yield in the two corn harvests (12,7 t/ha), the results indicate that the profitability of the system can be increased by increasing the crop yields, which would make the project even more viable. The results of the financial analysis grant it high viability, because the investment is recovered in the first year with a remarkable profitability.

The costs to establish a SPS are usually too high and the investment return can take many years, until the timber or the firewood can be utilized or the benefits of the SPS are reverted into profits for the increase of livestock production, which is not often appreciated by the farmer as an option. In the eastern plains of Colombia, Bueno (2012) determined that the establishment of one hectare of trees, at a distance of 5 x 5 m, has a cost of USD 4 209; on the other hand, Lotero (cited by Murgueitio, 2007) indicated that the benefit-cost ratio (B/C) in livestock production is 1,20 and the NPV of USD 186,7/ha/year, while the reforestation with native species has a B/C ratio of 1,05 and a NPV of USD 46,34. For such reason no livestock farmer would be willing to leave his/her activity for a less cost-effective one (Murgueitio, 2007).

However, silvopastoral systems through the use of plant succession can generate a B/C ratio of 1,31 and a NPV of USD 213,48/ha/year, if an incentive is offered in the first two years equivalent to the land opportunity cost, while the trees are growing. This alternative, which seems to be the most interesting, has the inconvenience of showing a negative flow in the first six years, when incomes for wood products begin to be obtained (beams and posts), for which special medium-term credit lines are required. All the options were calculated with a 10 % discount rate. According to Londoño (cited by Murgueitio, 2007), in the forestry plantations of low lands grazing contributes with the payment of half the costs, controls the invasion of pastures and leaves additional profits.

The high initial costs involved in the establishment of most SPS question the traditional opinion that tropical livestock production is an activity of low investments. Although the investments can be recovered after a relatively short period (3-4 years), most of the farmers, technicians and bankers have not assimilated yet this new statement of livestock production. The mean cost of application of a SPS in the dry region of Colombia is USD 2 500 and one fourth of this quantity (USD 625) corresponds to labor costs (Solarte et al., cited by Murgueitio et al., 2012).

The average income per hectare derived from extensive livestock production increased from USD 237 to USD 888 in Colombia, Costa Rica and Nicaragua, as a consequence of the adoption of silvopastoral practices. With the implantation of these systems the stocking rate can be increased from 0,5 to 3 animals per hectare. Likewise, with one hectare of these systems it is possible to increase the income in, at least, USD 440/ha/year.

An evaluation of the economic repercussions of this type of project revealed that when the profitability of the milk, meat and leucaena seeds was considered, the internal profitability rate went from 5-11 to 33,5 %. The farmers' incomes increased five times and the exploitation expenses were doubled, with the subsequent growth of the local economy. In addition, after the implantation of intensive silvopastoral systems (ISPS), the value of the lands increased in 33 % (González and Solorio, cited by Murgueitio et al., 2012).

Compared with other studies, the alternative that is shown in this research allows the farmer to decrease the investment costs for the establishment of a SPS; besides, the investment is recovered in the first year with an appreciable profitability, which facilitates the process of technology transference.

In the region of the eastern plains of Colombia the M. trianae wood is highly demanded for the preparation of a traditional dish called «mamona» or «ternera a la llanera», for which the extraction of this species has increased and this leads to the increase of its value. Table 5 shows a projection of wood production and its potential income value in the future (in 5, 7 and 12 years), while table 6 shows the incomes for weight gain in meat and thinning wood (after 5 years).

In the future, when more light is needed in the grassland it is expected to apply thinning to several growing trees, so they are projected to finally be at a distance of 14 m x 14 m which is the canopy area the adult trees may have, which will allow an extra income for wood and firewood that will benefit the farmer during several years and thus the investment will be widely justified.

 

CONCLUSIONS

The harvest of corn to be ensiled amortized the investment costs and left profits that allowed to recover the investment during the first year of establishment of the shade silvopastoral system, with an IRR of 31,63 % and a NPV of USD 407 per hectare; the profitability in the establishment stage of this system was USD 714/ha.

 

ACKNOWLEDGEMENTS

The authors thank the Institute of Research of the Colombian Orinoquia (IIOC), of the University of Los Llanos, for funding the project; the National Learning Service (SENA), site Agroindustrial Center of the Meta El Hachón, and especially professors Edwin Javier Hernández Herrera and Ángela Patricia Bernal Parrado. They also thank the students that did their internship in the project: Jorge Eduardo Cala Amaya (of Veterinary Medicine and Animal Science, of the University of Los Llanos) and Cindy Lulú Martínez Riaño (of Technology in Livestock Production, of the SENA, site Yopal Casanare), the rest of the staff and the students of different programs who participated in accompanying their professors in several processes of the project.

 

 

 

Received: March 10, 2014
Accepted: December 1, 2014