Economic analysis of sengon (Paraserianthes falcataria) community forest plantation, a fast growing species in East Java, Indonesia

Despite strong efforts to rehabilitate degraded forests and lands in Indonesia, successful cases of reforestation are rare. A previously identified problem was unclear land tenure in certain forest areas creating conflict between local communities and other forestry stakeholders. Although communities claim to be interested in forestry, encouraging them to conduct reforestation or establish forest plantations has proven to be very difficult because it is regarded as non-profitable. In Kediri, East Java, sengon (Paraserianthes falcataria) mixed plantations are usually found because they are profitable and give more routine income to communities. Sengon is mixed mostly with pineapple, and planted with a density of 800 trees/ha. Pineapple is planted only once, and then harvested every year for 4 years. Within the 8 year rotation age of sengon, a farmer can harvest pineapple 4 times before cutting the trees. To analyze whether mixed plantations give more income to communities than planting pure sengon, the Net Present Value (NPV) and Benefit–cost Ratio (BCR) of mixed plantations were calculated. Using an interest rate of 17.53% as a Minimum Acceptable Rate of Return (MARR), the result showed that mixed plantations are profitable, however community decisions were influenced by the amount of land owned, the cost of mixed plantations, the timber price and the period of gaining the income of harvesting that is difficult to cover monthly living cost. The importance of other factors in determining community interest in reforestation is discussed.