Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka, India

Abstract

Sandalwood (Santalum album L., Family: Santalaceae) is one of the most important economic tree species harvested mainly for its heartwood and oil. Sandalwood referred to as “Chandana” in Sanskrit and is commercially known as “East Indian Sandalwood” and its essential oil known as “East Indian Sandalwood Oil”. The oil extracted from the sandalwood trees are considered to be unique and is preferred over other regions for the preparations of perfumes, formulations, flavors, cosmetics, toiletries, beauty aids and medicines. Despite the policy amendments and government support to cultivate sandalwood on farm lands, there is lot of skepticism on the economic aspect of sandalwood cultivation especially due to long gestation period in accruing returns and high investment required for protection. Study on economic viability of sandalwood cultivation would be extremely useful to different stakeholders like farmers to know the relative profitability of sandalwood cultivation. Also, for financial institutions involved in advancing farm loans to sandalwood cultivators, the economics of cultivation at discounted rates is an essential aspect. For calculation of cost of raising sandalwood plantation, information on various inputs and resources at different stages of cultivation, harvesting, processing, transportation and marketing was collected from cultivators. Data related to recent price of sandalwood heartwood and sapwood was collected from Karnataka Soaps and Detergent Limited (KSDL). For financial analysis indicator like Net Present Value (NPV), Benefit-cost ratio (B/C ratio), Internal Rate of Return (IRR), Equivalent Annual Income (EAI) and Land Expectation Value (LEV) were used. Sandalwood cultivated in combination with red-gram showed B/C ratio of 1.93 and IRR of 29%, compared to growing sandalwood alone with B/C ratio and IRR values of 2.58 and 26% respectively. Though the inter-cultivation (sandalwood+tur dal) have slightly lower NPV, B/C ratio and LEV, but higher EAI (annual NVP) when compared to pure sandalwood plantations however, the possibility of yielding Pigeon pea/Tur dal/Red gram (Cajanus cajan (L.) Millsp.) in inter-cultivation makes farmers comparatively more attractive as it gives some income every year.