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Assessment of cost-efficiency for wood production in poplar plantations in Ravan Srem, based on internal rate of return

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Author(s): Keča Ljiljana

Journal: Glasnik Šumarskog Fakulteta
ISSN 0353-4537

Volume: 2010;
Issue: 102;
Start page: 25;
Date: 2010;
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Keywords: internal rate of return (IRR) | plantations | poplar | revenues | expenses | commercial cost efficiency

ABSTRACT
The paper presents the commercial cost efficiency analysis of poplar plantations, according to project evaluation indicator in agriculture and forestry - internal rate of return (IRR). The analysis was performed for planting poplar clone I-214 in the area of Ravan Srem, planting space 6×6 m, with different rotations and on different soil types. The methodology, used in this paper refers to the implementation of the dynamic method of economic research, which explains the discount rate, according to which, the current value of cash flow will be equal to the current value of the cash outflaw. The research goal was to check the justifica­tion of funds invested in wood production in poplar plantations, based on revenues and cost analysis in different plantation ages, using the IRR. The research showed that the IRR for 12 sample plots varied in interval 4.32-6.94% with average rate of 5.63%. The internal rates are larger for plantations on good quality soil types, regarding of poplar plantation (aluvial semigleyic soil), and for shorter rotations and vice versa. The IRR values higher than 12% were not found in researched framework of cost-revenues changes rate. The sensitive analysis proved that the project is very easily affected by cost-revenues changes. .
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