This document presents a socio-economic evaluation of agroforestry systems implemented in the state of Odisha, India. It finds that agroforestry provides important economic and social benefits to rural communities in Odisha. Economically, agroforestry increases incomes by diversifying and sustaining agricultural production. Socially, it improves nutrition, health, living standards and community stability by increasing food availability and quality. A case study compares the financial and socio-economic analyses of an agroforestry model combining eucalyptus trees and crops. The socio-economic analysis considers employment and distributional impacts, finding larger net benefits than financial analysis alone. The document concludes agroforestry programs are best evaluated through

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SUBMITTED TO
College of Forestry
O.U.A.T.

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SOCIO-ECONOMIC EVALUATION OF
AGROFORESTRY IN ODISHA
INTRODUCTION :
 Subsistence oriented agroforestry systems are being
implemented in India as a component of social forestry, mainly
to satisfy the poor's basic needs for staple food, fuelwood and
small timber for construction and agricultural implements
 Apart form their production objectives, the emphasis is on
providing employment for the poor as a rural development
objective.
 Employment generation is used as a means of generating
adequate income for the rural poor in order to raise them
above the poverty consumption level
 Agroforestry, therefore, needs to be evaluated in such a way as
to incorporate these two main objectives. Most of the work
hitherto done on the economic evaluation of agroforestry is
focussed on the production objective through simple financial
profitability while important socio-economic aspects are either
neglected or at best dear with superficially.
 The distribution of income generated by an agroforestry
enterprise, and equity of that distribution, are also factors
which concern policy makers and need to be accounted for in
any comprehensive analysis of agroforestry.
 To evaluate agroforestry within the framework of its stated
objectives, a case study is taken from the state of Orissa, where
agro- forestry as a component of the Forest Farming for Rural
Poor (FFRP) has been implemented from the early eighties with

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investment funds from both Forest and Rural Development
Departments. The results obtained from socio-economic
analysis are contrasted with that of conventional financial
analysis
SOCIO-ECONOMIC ENVIRONMENT OF ORISSA
 The State of Orissa is located in the eastern region of India and
is recognised as an economically backward state. 88% of its
population reside in more than 50 000 villages and the
economy is predominantly agrarian.
 Agriculture accounts for 69% of the state's domestic product
and provides employment for 79% of the working population.
 In 1983 the incidence of poverty in Orissa was higher than the
national average (Panda, 1987), and 51% of the total
population were below the poverty consumption level (i.e. the
per capita con- sumption expenditure level required to achieve
an energy intake of 2800 ca- lories per capita per day, fixed on
a normative basis).
 Nearly 23% of the total population are tribals, who are mainly
dependent on the forest economy. Land ownership is highly
skewed in favour of the big farmers and the remaining holdings
are small and fragmented.
 Small and marginal farmers (owning less than 2 ha) farm 75% of
the land holdings but control less than 40% of the agricultural
land, while farmers with more than 5 ha account for only 7% of
total holdings and control 35% of the land.
 The main activities are cultivation, agricultural labourers, village
artisans, forestry, fishing, etc. Official statistics show that 23%
of the state is under forests but as a result of degradation, the
actual area under forest cover) is declined.

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 Fuelwood is the main source of domestic energy. The
increasing scarcity of fuelwood and fodder has resulted in
commercialisation of fuelwood collection.
 As a result, the traditional village forests, on which the poor
villagers depended for their livelihood, are being depleted
rapidly (Sharma et al., 1990).
 A scarcity of fuelwood has also resulted in the rural peasantry
burning cattle dung, which would have otherwise been used as
manure to enhance agricultural productivity on cultivated
lands.
 This vicious circle of land deg- radation has led to large areas of
land becoming degraded and presently nearly 41% of the total
land area has been classified as wasteland.
 The national strategy now reflects the need to develop these
degraded lands through massive afforestation under social
forestry which includes agroforestry as an important
component.
 The establishment of agroforestry will, in addition to halting
and/or reversing land degradation, supply fuelwood,
staplefood, fodder and small timber to the rural poor.
Scope of Agroforestry in Orissa
 Small and marginal farmers constitute 84 % of total number of
holdings and average size of holding is 1.25 ha.
 About 40 % people are below poverty line.
 Varied agro-climatic condition.
 Insurance against recurrent natural disasters.
 Employment generation for rural youth.
 Ensuring nutritional security particularly for children and
women.

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 Well equipped extension support system through Krishi Vigyan
Kendras and various Government Departments.
 Good scope for marketing of diversified products.
SOCIO-ECONOMIC EVALUATION
 The socio-economic analysis is concerned with the equity and
efficiency with which projects such as agroforestry create
overall social utility
 To correct the deficiencies of the market and the distributional
mechanisms, the market prices for the factors of production
and produce from agroforestry need to be replaced by their
shadow prices .
 These are functions of the increase in social welfare from any
marginal change in the availability of factors of production and
are determined by the interaction of the fundamental
VARIED AGROCLIMATIC ZONES OF ODISHA WITH
DIFFERENT FARMING SYSTEM MODULE

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objectives, socio- economic environment and basic resource
availabilities
 The shadow prices based on growth objective alone are called
economic or efficiency prices, while those based on growth and
distributional objectives are called social shadow prices.
Agroforestry project profile of tree-crop interface :
Assumptions:
Tree: Eucalyptus hybrid: Rotation 10
1. no. of tress/ha = 1250
2. Income per tree=Rs. 500(in 10
th
year)
3. Expenses per tree =Rs. 50(in 1
st
year)

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Crops
1. Yield per ha-paddy(1600kg),wheat(1400kg)
2. Expenses per ha- paddy(Rs 5040),wheat(Rs 3780)
Analysis :
Benefit cost ratio at 15% discount factor – 2.33
Net present value in Rs. at 15% discount factor – 114,352
Internal rate of return -32%
Investment:
1 year : Rs. 71320
Economics of an Agroforestry model of 1.25 ha of
area

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Economics of Paddy cultivation(sole crop) :
I.Average paddy field area (ha) 1ha
II. Recurring expenditure for paddy (Rs.)
1. Rice seed 1200.00
2. FYM 2066.00
3. Urea 830.00
4. SSP 833.00
5. Labour cost
(i) Paddy plot preparation 2083.00
(ii) Seeding cost 2541.00
(iii) Paddy cleaning 1866.00
(iv) Paddy harvesting 1850.00
Total (Rs.) 15369.00
III. Total paddy production 2.5 ton/ha
IV. Gross return 27,500
v. Net return 12,131
Socioeconomic benefits
Economic Benefits:
Agroforestry systems on croplands/farmlands bring significant
economic Benefits to the farmer,the community,the region and
nation,such benefits are
 Increment in maintainace of output fodder,food
,fuelwood,timber

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 reduction in incidence of total crop failure, common to single-
cropping
 increase in levels of incomes due to improved and sustained
productivity.
Social Benefits:
Besides the economics benefits, social benefits occur from increase
in crop and and tree product yields and in sustainability of these
products,benefits are
 Improvement in rural living standard from sustained
employment and higher incomes
 improvement in nutrition and health due to increased quality
and diversity of food
 stabilization and improvement of upland communities through
elimination of the need
CONCLUSIONS
 Agroforestry systems need to be evaluated within the
framework of their stated objectives, because the social
objectives are as equally important as the economic objectives.
 This means that a full socio-economic analysis should be carried
out when analysing such programmes rather than simple
financial profitability analysis.
 To avoid subjectivity almost all the parameters for the socio-
economic analysis have been estimated objectively.
 The net socio-eco- nomic benefits from agroforestry are larger
than the net financial benefits mainly because of internalization
of the socio-economic externalities into the analysis.

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 The socio-economic optimal rotation is longer than the
financial optimum rotation, because of the use of the social
discount rate in the analysis.
 This means that the socio-economic analysis not only avoids
adopting exploitative types of management options, but also
takes into account the sustain- ability of agroforestry systems.

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REFERRENCES
 The socio..economic evaluation of agroforestry in Orissa (India)
by R.A. Sharmaa and M.J. McGregor
 Agro-forestry ,Dr. Salil K. Tewari Professor Agro-forestry
Project Dept. of Genetics and Plant Breeding ,College of
Agriculture G.B. Pant University of Agriculture and Technology.