International Journal of Science and Research (IJSR) ISSN (Online): Index Copernicus Value (2013): 6.14 Impact Factor (2013): 4.

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1 Inernaional Journal of Science and Research (IJSR) Index Copernicus Value (2013): 6.14 Impac Facor (2013): Economic Analysis of Agroforesry of Merani (Shorea leprosula Miq) Planed Among Oil Palm Trees as a Model for Developmen of Environmenally Friendly Oil Palm Planaion in The Riau Province, Indonesia Robin Takaweian 1, Almasdi Syahza 2, Usman Pao 3, Mubarak 4 1 Docoral Suden of Environmenal Science Deparmen, Riau Universiy 2,, 3, 4 Graduae School of Environmenal Science, Riau Universiy Absrac: The growh of oil palm planaions in Riau Province is a grea opporuniy o opimize he use of space and land by insering merani (S. leprosula) ree among he palm oil plans. The sudy was aimed o economic analyze he agroforesry of merani planed among he oil palm rees as a model for developmen of oil palm planaions. This research was carried ou in a mixed merani-palm oil planaion privaely owned by a farmer a he Village of Pasir Jaya, Sub-disric of Rambah Hilir, Rokan Hulu Regency, Riau Province, Indonesia. The surveys and srucured inerviews were used o idenify he managemen of oil palm planaions owned by he communiy. Economic valuaion approach was used o deermine he economic analysis of he managemen of oil palm planaions owned by he communiy. The resuls of sudy showed ha agroforesry of merani planed among he palm oil plans were able o provide addiional benefis revealed from he economic value of merani ree as Bank of Replaning of IDR. 56,017,737. The value of BCR of his agroforesry sysem was greaer han he value of BCR on he monoculure sysem of abou 3.1 compared o 2.7. The developmen model of his agroforesry sysem is economically feasible and beneficial and can also be implemened on a broader scale of oil palm planaions boh in main esae and plasma esae. Keywords: Palm oil planaion, agroforesry, Shorea leprosula, environmenally friendly 1. Inroducion Riau Province currenly has he larges oil palm planaions in he counry. The area of oil palm planaion is approximaely 2.4 million hecares wih a yield or producion of almos 40% of naional scale. I is no surprising ha oil palm planaion is he leading commodiy in he economy of Riau Province as i provides a muliplier effecs for he rural economy [16]. Of he 98 percen of fores loss in Indonesia, he deforesaion mosly occurred in high densiy fores areas wihin Sumara and Kalimanan Islands while Riau Province has he highes loss of foress [4]. The average conversion of foress In Riau Province happened beween reached of 40, ha yr -1 for four years [6]. Developmen of oil palm planaions in a monoculure sysem can lead o a habia fragmenaion, ecological and biodiversiy degradaion and furher he decline of plan geneic resources conservaion [10,14]. There are approximaely 1,050,015 farmers from he oal area of 2,405,245 ha of oil palm planaions all over he areas wihin Riau Province [13]. The growh rae of oil palm planaions end o increase and his is a good opporuniy o opimize he use of space by insering and planing he species of Merani among he oil palm rees sands. According o he Inernaional Cenre for Research and Agroforesry (ICRAF) agroforesry is a sysem of naural resource managemen which is ecologically dynamic by which planing rees in a farmland or grazing fields o obain a wide range of susainable producs ha increases social, economic and environmen benefis [17]. In addiion he inegraion paerns of some species wihin a piece of land in a agroforesry landscapes, in he long erm, will have posiive impacs in mainaining soil feriliy from degradaion, be an opion for susainable land use [1], as a carbon sock [9,15] and could play significan roles in reducing carbon dioxide in he air [3]. Inserion of Merani ree species in he oil palm planaions is believed o be an alernaive model for developmen of oil palm planaions ha are environmenally friendly. Merani rees will be ready o be harvesed and cu down when i has reached a diameer of a leas ± 30 cm. This kind of size of diameer could be furher processed as sawnwood, wood panels, veneer and plywood [11]. The species of Merani Tembaga can also be planed in an agroforesry sysem among oil palm rees in a planaion land as Merani has rapid growh [11]. In addiion, Merani Tembaga is a oleran ree species, which a he beginning of is growh requires he shade of oher rees [5]. The difference of he cycle period is he reason o develop his model. The oil palm planaions will end is cycle a he age of abou years old. A he ime, Merani rees are prediced o be abou 20 year old ha i would be ready o be cu down. The sudy was aimed o analyze he financial impacs of agroforesry of merani planed among he oil palm rees as a model for developmen of oil palm planaions. Volume 4 Issue 9, Sepember Paper ID: SUB Licensed Under Creaive Commons Aribuion CC BY

2 2. Research Mehod 2.1. Research Sie Inernaional Journal of Science and Research (IJSR) Index Copernicus Value (2013): 6.14 Impac Facor (2013): The sudy was carried ou a Pasir Jaya village, subdisric of Rambah Hilir, Rokan Hulu Regency, Riau Province, Indonesia. The locaion was chosen because some of he farmers have planed his ype of Merani insered among he oil palm rees wihin heir own planaion lands. 1) CBR or Ne B/C, using he formula: n B C Ne B / C Explanaion : B = Gross revenue a he year ; C = Gross Cos a he year ; 1 n 1 i C 1 1 i n = Economic age of agroforesry model of Merani-Palm Oil Plams; and i = discoun rae Measuremen crieria applied are if Ne B/C > 1 hen he developmen of agroforesry of Merani mixed wih oil palm plans considered as profiable. On he oher hand if he Ne B / C < 1, hen he developmen of agroforesry of Merani mixed wih palm oil plans is considered as no profiable and suggesed no o be coninued Collecion Daa Figure 1: Map of Research Locaion Collecion of daa and informaions relaed o he monoculure managemen of oil palm planaions and agroforesry sysem of merani planed among palm oil rees was conduced by surveys and srucured inerviews. The surveys and srucured inerviews were carried ou o he farmers owning and managing he palm oil planaions ha were mixed wih merani rees. The survey was underaken using lis of quesions ha had previously been prepared. The quesions cover all he aspecs relaed o he cos required o pay he palm oil planaions managemen as well as he revenue aken from he planaions. The economic analysis of he colleced daa is carried ou using he economic valuaion approach. The componens ha were analysed included age of recycling of Merani and Palm oil rees (years), planing disance among Merani and oil Palm rees as well as planing paerns (meer), he cos of producion of frui fresh bunches (FFB), he amoun of FFB producion (meer square), he amoun of merani wood producion (meer square), he price of FFB a farmer level (IDR), he selling price of merani (IDR) and he ineres rae or discoun rae assumed o be 10% year Daa Analysis The valuaion of economic analysis carried ou hrough calculaing all he componens associaed wih he cosbenefi analysis. Based on he value of each of hese componens will be calculaed: 2) Ne Presen Value (NPV) is calculaed using his formula: NPV B 1 C i Explanaion: B = Revenue of agroforesri merani oil palm plans a he ime ; C = Cos of managemen of agroforesri merani- oil palm plans a ime = Economic age of Merani insered ino palm oil planaion area, and i = Discoun rae Measuremen crieria applied are if value of NPV > 0 hen he developmen of agroforesry of Merani mixed wih oil plam plans is considered as profiable. On he oher hand if he value of NPV < 0, hen he developmen of agroforesry of Merani mixed wih oil plam plans is considered as no profiable and suggesed no be coninued. While if he value of NPV = 0, i means ha cos and revenue on developing he agroforesry of Merani wih he oil palm plans is jus equal. To calculae he value of he Merani rees hen ree volume calculaion was carried ou according o [8]. The formula used o calculae he volume of a ree is as follows: V = ¼ π D² Hf Explanaion: V = Volume of he log (m³) D = Diameer a breas heigh (cm) H = High of he rees (m) f = Consana (0,7) The comparison mehod was used o esimae he number of producion facors and he amoun of producion of FFB per year on monoculure paern of oil palm planaions and agroforesry Merani mixed wih oil palm planaion in he las (early of planing) and in he fuure ime (he end of he planaion cycle). Volume 4 Issue 9, Sepember Paper ID: SUB Licensed Under Creaive Commons Aribuion CC BY

3 3. Resul and Discussion 3.1. Economic Value of Merani Tree Inernaional Journal of Science and Research (IJSR) Index Copernicus Value (2013): 6.14 Impac Facor (2013): The economic value obained from agroforesry of merani planed among oil palm rees was no only from he value of oil producion in he form of FFB bu also derived from he economic value of merani rees cu down when he oil palm plans o be replaned. The projecions of diameer growh and heigh of he Merani ree was prediced by using a nonlinier regression equaion. The projeced growh boh merani ree diameer, heigh and volume of sanding ree as well as he price is presened in Table 1. Table 1: Projecion of Diameer Growh, Heigh and Volume of Merani (S. leprosula) and Price of Sawnwood of Merani Age of Projecion of Growh Volume of Volume of Price per Log Toal Price ha - Merani Heigh BTH Sanding Tree (year) Tree (m 3 ) b (m 3 ha -1 ) c (IDR/m 3 ) d (IDR/ha) e (cm) (m) (m) a ,000 11,857, ,125,680 34,872, ,436,685 56,017, ,833,615 77,071,384 Explanaion: a= Branchless Tree Heigh (0.52 of oal heigh) b= Volume of Sanding Tree c= 82 % of oal ree volume in per hecar d= Price of sanding ree and i is assumed ha he increase of price is 5 % a year. e= Toal price wihou couning he price of wood over he BTH Table 1 shows ha when Merani reach he age of 20 year old, log diameer will be abou cm, while he oal ree heigh is m. If he branchless ree heigh (BTH) is assumed by a raio of 0.52 of he oal heigh hen he branchless ree heigh average is m, so ha he average volume of a ree is 0.43 m 3. There were abou 110 Merani rees in every hecar area of palm oil planaion while here will be abou 82% of hem can be harvesed in he age of 20 year old. Therefore here would be abou 90 rees of Merani o be harvesed in a hecar of area so ha would produce volume of processed wood abou m 3. This is ou of he above par of he rees (above he branchless heigh ree) which can also sill be used for oher various purposes. Assuming ha he marke price of merani imber is IDR. 2,000,000/m 3 and price of sanding imber is 40%, hen he price of sanding imber is IDR. 800,000/m 3. Assuming ha he price is increasing of 5% per year, hen in 2025 he price of sanding merani imber will be IDR. 1,436,685/m 3. This means ha addiional revenue from he sales of merani imber a he end of he cycle of oil palm planaions (25 year old) is IDR. 56,017,737 excluding in he above par of he branchless heigh ree ha could also be sold. Agroforesry of Merani planed ino he oil palm planaions will be so beneficial for he communiy. This is because he growh of S. leprosula is relaively faser han oher species of merani rees [12,11,7]. Therefore his could be a significan consideraion for he farmer o choose S. leprosula as a Bank of Replaning (BoR) a he end of cycle of heir oil palm planaions. The BoR could be economically beneficial in supporing he replaning aciviies for heir planaions Economic Value of Oil Palm Planaion To calculae he producion of oil palm planaion harvesed, he comparaive daa aken from he Indonesian Oil Palm Research Insiue (IOPRI) are needed. Furhermore, he daa will be compared wih daa of FFB oil palm planaion of he sudy locaion. The expeced resul is o obain raio beween he wo kinds of daa ha will be required when deermining he projecion of producion in he fuure. The FFB producion daa aken from IOPRI for land suiabiliy S-3 and he oil palm planaion owned by he communiies in research locaion and he raio are presened in Table 2. Table 2: Producion Raio of IOPRI compared wih Producion of Monoculure Oil Palm Planaions a he age of 9 o 13 year old. Age of Palm Oil Producion of FFB (Kg ha -1 year -1 ) Tree Monoculure Sysem** Agroforesry Sysem** IOPRI* (year) Average Raio Average Raio 9 25,938 17, , ,593 18, , ,600 20, , ,614 20, , ,572 20, , Average 27,264 19, , Explanaion: *Source: IOPRI **The daa aken from research locaion A he age of 25 year old, producion of FFB of monoculure sysem of oil palm planaions is 11,287 kg, while producion of FFB aken from agroforesry sysem is 10,233 Volume 4 Issue 9, Sepember kg. In oal FFB producion of monoculure oil palm planaions was 336,356 kg and he producion of research sie (agroforesry of oil palm planaion mixed wih merani) Paper ID: SUB Licensed Under Creaive Commons Aribuion CC BY

4 Inernaional Journal of Science and Research (IJSR) Index Copernicus Value (2013): 6.14 Impac Facor (2013): is 329,978 kg. The producion of boh sysems is sill below he producion IOPRI ha is reaching 475,229 kg. Afer he esimaion of price and projecions of producion of FFB obained, he revenue from oil palm planaions ha are managed eiher in monoculure or in agroforesry paerns mixed wih merani among he oil palm planaions can be known. Ne revenue from he monoculure sysem of oil palm planaion in one cycle (25 years) were IDR. 367,826,527 whereas he ne income gained from he agroforesry sysem of merani planed among he oil palm planaions were IDR. 357,138,999 (he difference were of IDR. 10,687,528). If he selling price of merani imber a he end of cycle is aken ino accoun, he ne income of merani agroforesry paerns among oil palm plans amouned o IDR. 413,156,736 as shown in Figure 2. Figure 3: Projecion of working cos of Monoculure dan Agroforesry Paerns for a cycle (25 year) Figure 3 shows ha he oal cos of producion beween monoculure oil palm planaions and agroforesry mixed wih merani showed he same paern. The oal cos required o manage he monoculure oil palm planaion were IDR. 135,889,221 whereas for he cos required for agroforesry mixed wih merani planed among he palm oil plans were abou IDR. 134,717, Cos-Benefi Analysis The benefi cos raio as well as he ne presen value beween he monoculure and agroforesry sysem is shown in Table 3. Figure 2: Projecion of Ne Toal Income of Monoculure oil palm planaions and he Agroforesry of Merani mixed wih oil Palm Plans in one cycle (25 year). Table 3: Calculaion of oal cos and revenue, benefi cos raio as well as ne presen value in boh monoculure and agroforesry sysem of oil palm planaions Figure 2 shows ha he managemen of oil palm planaions will be able o provide ne income afer he plan is 5 year old. Ne revenue of monoculure oil palm planaions and agroforesry of merani planed among oil palm plans is direcly proporional o he amoun of producion, he higher he number of producion he higher he ne income earned by he farmers. The significan difference beween he ne revenue of he wo paerns of oil palm planing is due o he exisence of merani planed among palm oil plans ha in which is imber could be sold a he end cycle o ge exra income. The addiional income of IDR. 200,690,528 gained by he farmers from Merani as a produc of high economic value planed among he main crop (oil palm plans). This addiional revenue would be able o be uilised by he farmers as a Bank of Replaning (BoR) o rebuild and manage heir oil palm planaions Cos Analysis The cos componen ha has been aken ino accoun in his sudy is cos of invesmen and working capial. The working capial is devided ino wo namely fixed coss and variable coss. Toal coss required o manage he wo models of oil palm planaions is presened in Figure 3. Silviculure models Monoculure Sysem Agroforesry Sysem Volume 4 Issue 9, Sepember Resul of Calculaion Toal Cos Toal Ne (IDR) Revenue (IDR) BCR NPV 135,889, ,826, ,056, ,717, ,156, ,771,093 Resuls of he cos-benefis analysis of monoculure oil palm planaions and agroforesry mixed wih merani planed among he oil palm rees show ha he value of BCR of boh sysem were 2.7 and 3.1 respecively. Boh of hese BCR values were greaer han 1.0. This indicaes ha revenue earned is greaer han cos o be paid. I also indicaes ha boh of managemen sysem are highly beneficial. However based on he BCR analysis, agroforesry sysem is much more beneficial compared o he monoculure one. The value of NPV of monoculure oil palm planaions for he discoun facor of 10% is IDR. 91,056,318. This figure represens sum of all he presen value of ne income in each year over he analysis period. A posiive value of NPV indicaes ha oil palm planaions managed by he communiy financially feasible o develop. Similarly, The NPV value of agroforesry merani among oil palm found were IDR. 92,771,093. These facs suppor he conclusion ha he model of agroforesry mixed wih merani among he oil palm rees is feasible o develop. Developmen model of oil palm planaions hrough agroforesry mixed wih merani Paper ID: SUB Licensed Under Creaive Commons Aribuion CC BY

5 Inernaional Journal of Science and Research (IJSR) Index Copernicus Value (2013): 6.14 Impac Facor (2013): among oil palm plans is no merely financially profiable, bu also ecologically very posiive impacs in erms of carbon sequesraion and reducing carbon emissions in he air. 4. Conclusion Agroforesry sysem mixed wih merani planed among oil palm rees as a model for he developmen of oil palm planaions in Riau Province, Indonesia is environmenally feasible o develop. I is also able o provide addiional benefis in erms of economic value gained from merani ree as a BoR of IDR. 56,017,737. The value of BCR of agroforesry sysem is greaer han he value of BCR of monoculure oil palm planaions in he amoun of 3.1 versus 2.7. Developmen model of agroforesry merani among oil palm can be implemened on a large scale of oil palm planaion indusry boh in he main and he plasma esae as well as in he privae oil palm planaions owned by he individual farmer. References [1] Alam M., Furukawa Y., Harada K., 2010, Agroforesri as Susainable Landuse Opion in Degraded Tropical Fores: A Sudy from Bangladesh, Journal Environ. Dev. Susain. 12: [2] Germer J., Sauerborn J., 2007, Esimaion of he Impac of Oil Palm Planaion Esablishmen on Greenhouse Gas Balance, Journal Environ. Dev. Susain., 10: [3] Hairiah K., Ekadinaa A., Sari RR dan Rahayu S., 2011, The Measuremen of Carbon Socks: from field o landscape, pracical guidance, 2-nd ediion. Bogor, World Agroforesry Cenre, ICRAF SEA Regional Offce, Universiy of Brawijaya (UB), Malang. [4] Hansen M., Poapov P., Margono B., Sehman S., Turubanova S., Tyukavina A., 2013, High-Resoluion Global Maps of 21s-Cenury Fores Cover Change, Science, Vol [5] Indriyano., 2008, Inroducion o Fores Silviculure. PT. Bumi Aksara. Jakara. [6] Indonesian Minisry of Foresry., 2011, Indonesian Foresry Saisics in [7] Isomo, Wibowo C., dan Hidayai N., 1999, Evaluaion of Growh Plan of Merani (Shorea spp) a Haurbenes Research Fores Jasinga Bogor, Perum Perhuani Uni III Wes Java, Journal Manajemen Huan Tropika, Vol. V (2). [8] Jaya I.N.S., Samsuri, Lasini T., Purnama E.S., Guidance of Ramin Invenory in he Pea Swamp Fores, ITTO, Indonesian Minisry of Foresry, Bogor. [9] Kongsager R., Napier J., Merz O., 2012, The Carbon Sequesraion Poenial of Tree Crop Planaions. Journal Miig. Adap. Sraeg. Glob. Change, DOI /s z. [10] Obidzinski K dan Dermawan A., 2013, Pulp Indusry and Environmen in Indonesia: is here Susainable Fuure?, Journal Reg. Environ. Change, Vol. 12: [11] Omon M., Crieria Techniques and Indicaors of he Qualiy of Seed of Diperocarpaceae, Puslibang, Bogor. Volume 4 Issue 9, Sepember [12] Pamoengkas P dan Prayogi J., 2011, The Growh of Red Merani (Shorea leprosula Mig) wih Selecive Cuing and Line Planing of Silviculural Sysem a he Fores Concessionaire PT. Sari Bumi Kusuma Cenral Kalimanan, Journal of Silvikulur Tropika, Vol. 02 (01):9-13. [13] Planaion Deparmen of Riau Province, The Pocke Book of Planaion Deparmen in Riau Province in [14] Purnomo DW., 2012, Vegeaion Corridor Design o Enhance Conservaion Values a Oil Palm Planaion, Journal of Bumi Lesari, Vol. 12 (2): [15] Rosheko JM., Lasco RD., Angeles MSD., 2007, Smallholder Agroforesry Sysems for Carbon Sorage, Journal Miigaion and Adapaion Sraegies for Global Change, 12: [16] Syahza A., 2011, Acceleraion of he Rural Economy Through he Developmen of Oil Palm Planaion, Journal of Ekonomi Pembangunan, Vol. 12 (2): [17] Widiano, Hairiah K., Suharjio D., Musofa A.S., 2003, The Role and Funcion of Agroforesry, World Agroforesry Cenre (ICRAF), Bogor. Paper ID: SUB Licensed Under Creaive Commons Aribuion CC BY

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