Agriculture Reference
In-Depth Information
14.2.7 Risk Analysis
To quantify the impacts of price risks (variability) on the estimates of the net bene-
fits of the tree-based options considered in the study, risk analysis was undertaken.
While SCUAF model is a deterministic model, a stochastic component can be built
into the economic decision variables of the model. The stochastic version of the
model was solved through Monte Carlo Analysis based on deterministic results.
This analysis was implemented using the @RISK software package trial version
(Palisade 2000).
Following Purnamasari et al. (1999), the uncertainty specified in the output
prices (i.e., historical price series from 1985-2001) of timber and crop was used as
a base to produce numerical results as probability distribution of NPV. One thou-
sand iterations were used for each stochastic run. A 10 percent discount rate was
used, thus the results from the risk analysis are comparable to the point estimates
obtained with a 10 percent discount.
14.3
Results and Discussion
14.3.1 Socio-economic Characteristics
The mean age of the farmer-respondents was about 45 years. The mean age of tree-
based system adopters was 46 years while the mean age of non-adopters was about
39 years. This indicates that upland farmers who invested in tree-based farming
systems were significantly older than non-adopters. In a similar pattern, the average
years of farming experience of adopters (20 years) was significantly longer than
non-adopters (13 years).
On average, upland farmers reached at least the primary level of education,
which implies spending at least six years in school. The mean educational attain-
ment of adopters (6.2 to 6.3 years) was not significantly different compared with
the non-adopters (5.8 years). A majority (92 percent) of the upland farmers who
make decisions concerning their upland farming activities were male. Both tree-
based system adopters (90 percent to 94 percent) and non-adopters (93 percent)
were predominantly male. The household size of all upland farmers surveyed
ranged from two to 11 people with an average of about six members. The average
household size of adopters and non-adopters were not significantly different, which
means that adopters and non-adopters have similar family labor resources.
The annual cash income of upland farmers came from farm, off-farm, and non-
farm sources. Among these, the farm income provided the highest cash income for
both adopters and non-adopters, while the off-farm source provided the least
income for adopters and also for the non-farm source for non-adopters. Farm
income came from the following sources: (i) annual crops such as corn, lowland
and upland rice; (ii) perennial crops such as mango, coffee, coconut, and banana;
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