Keča, L., Keča, N. and Pajić, S. 2011. Investment Appraisal of Poplar Plantations in Serbia. Baltic Forestry 17(2): 268-279
In conditions of increasing wood consumption and demand in the world, the aim of the majority of national economies is to intensify local resource production. Due to the fact that poplar rotation is one of the shortest in forestry, and as production of poplar wood requires rational and well-planned management, the potentials of sites and species must be maximally utilised. Favourable financial effects of such a production should be realized.
The commercial profitability of poplar cultivation was analysed in an artificial poplar plantation in Serbia. The aim of the study was to validate the invested financial means in artificial poplar plantations, based on the analysis of costs and receipts in different rotation (25-42) years, on different fluvisols (alluvial semigley, humifluvisol, humogley and α/β–β gley), at different discount rates (4-12%). Methods of analysis of commercial profitability, especially some methods of dynamic investment calculation (net present value - NPV, internal rate of return - IRR, benefit-cost method – R and pay back period - PBP) were used. The investigated plantations were established from Populus x euramericana cl. I-214, with planting spacing 6 x 6 m. Thirteen study plots – management units (55 stands), with a total area of 331.05 ha were investigated in the period 2002-2010.
For a discount rate r = 12%, all tested areas had a negative NPV of 11 088 to 23 676 €·ha-1, regardless of age and site quality. The discount rate of 6% can be accepted by shorter production cycles in younger stands (to the age of 28 years) on better sites (alluvial semigley). IRRs varied in the range 4.32-6.94% (average 5.63%) at a discount rate of 12%. Internal rates were larger for plantations on good quality soil types and for shorter rotations and vice versa. The analysis showed that PBP is practically unacceptable for the investor under the discount rate of 6%. The most favourable situation is the discount rate of 2% in younger plantations. The average amount of R was 0.36 for all studied plots.
Key words: hybrid poplar plantations, investment, financial appraisal, commercial profitability, costs, revenues, dynamic methods