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DOI: 10.4172/2168-9776.1000223

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Open Access
ISSN: 2168-9776

Research Article Open Access

Economics of Santalum album L. Cultivation Under Semiarid Tropics of

Karnataka, India
Divakara BN, Viswanath S, Nikhitha CU and Kumar S
Institute of Wood Science and Technology, 18th Cross Malleshwaram, Bangalore-03, 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.

Keywords: Santalum album; Benefit/cost (B/C) ratio; Internal information has been published regarding the growth rate of S. album.
rate of returns; Net present value; Equivalent annual income; Land It is reported that heartwood and oil formation in sandalwood are yet
expectation value to be studied in detail [7].

Introduction Although S. album is grown in small quantities, India has a virtual

monopoly over sandalwood production. Over 90 per cent of India’s
Santalum album L., commonly known as Indian sandalwood, is a sandalwood is grown in Karnataka and Tamil Nadu. The present
small tropical tree, widely accepted as most precious and commercial Government policy pertaining to the management of sandalwood goes
timber species with an estimated market volume of more than $1 back to King Tipu Sultan, erstwhile ruler of Mysore. King Tipu Sultan
billion [1]. The species is naturally distributed from 30°N to 40°S; from declared sandalwood a royal tree and monopolized the sandalwood
Indonesia in the east to Juan Fernandez Island (Chile) in the west and trade in 1792. Till 2002, state governments, especially Karnataka and
from Hawaiian Archipelago in the north to New Zealand in the south. Tamil Nadu have had monopoly control over all the sandalwood
It is believed that sandalwood was introduced into India from Timor, resources including those in private lands. According to the prevailing
Indonesia [2]. More than 90% of the sandalwood is distributed in the rules in the southern States, except Kerala, sandalwood continues to
state of Karnataka and Tamil Nadu covering around 9,000 km2 [3] of be a royal tree and trade in the wood is the monopoly of the state. In
which more than 70% occurs in Karnataka [4]. The species is mostly Kerala, however, there is no restriction on storage and transportation.
found in dry deciduous and scrub forests. In Karnataka, Santalum This has given rise to widespread smuggling and illegal trade especially
album is estimated to be spread over an area of 5245 km2 [5]. between Karnataka and Kerala. Places such as Karnataka-Kerala-Tamil
Sandalwood tree is mainly exploited for its heartwood which Nadu border have become havens for illegal trade in sandalwood. Due
yields the renowned East Indian Sandalwood oil, rated very high for its
sweet fragrant, persistent, spicy, warm, woody note, tenacious aroma
and fixative property. The aromatic oil, which is contained in the *Corresponding author: Divakara BN, Institute of Wood Science and Technology,
18th Cross Malleshwaram, Bangalore-03, Karnataka, India, Tel: +919483253839;
heartwood, is only produced when the trees reaches a certain maturity.
E-mail: [email protected]
Sandalwood is used for various purposes like medicinal purposes,
perfumes, agarbathis, handicraft, carvings, religious purposes etc. Received December 04, 2018; Accepted December 21, 2018; Published
December 30, 2018
The value of a sandalwood tree is largely determined by the Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of
weight of its heartwood and the concentration and composition of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka, India. Forest
the oil contained within it [6]. Determining the rate of heartwood Res 7: 223. doi: 10.4172/2168-9776.1000223
development in sandalwood tree is important, since it will largely Copyright: © 2018 Divakara BN, et al. This is an open-access article distributed
determine the length of its commercial rotation. The weight of the under the terms of the Creative Commons Attribution License, which permits
heartwood is invariably dependent on the size of the tree. Very little unrestricted use, distribution, and reproduction in any medium, provided the
original author and source are credited.

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 2 of 7

to extensive illegal cutting of native Sandalwood trees, this species has 1. Discounted rate 15% (annual percentage deletion in value of
become vulnerable to extinction. today’s money)
In Karnataka, sandalwood populations are sparse and devoid of 2. Rotation of sandal is worked out for fifteen years.
larger girth classes; matured trees have been nearly vanished. Despite
3. All figures are calculated on per ha basis.
favorable conditions for its growth and natural regeneration in many
forests of Karnataka and Tamil Nadu, both production and export of 4. Land expectation value was considered in calculation.
sandalwood and its products have shown a steep decline. Sandalwood
genetic resources in the country are threatened by a variety of factors,
5. Land owner’s time not included in the costing.
because of its high economic value both inside the country as well as 6. Cost of security includes cost of labour charges as and when
in the International market [8]. Sandalwood production in the country required for miscellaneous activities like fertilizer application,
has fallen from about 4,000 tonnes per annum in the 1960s to less irrigation, pruning etc.
than 1,000 tonnes during the 1990s [9]. Sandalwood oil has virtually
disappeared from the international market and its place has been taken 7. Soil/site quality is optimum for this regime
over by synthetics. With sandalwood bio-resources depleting at a rapid 8. Carbon values and comparisons have not been included.
pace due to various reasons, the gap between demand and production
has widened tremendously. Note: Citrus is grown as secondary host both in combination and
pure sandalwood cultivation. However the citrus crop is maintained
During 2001 and 2002, Karnataka and Tamil Nadu governments only for 6 years only. Hence cost and income is neutralized.
have relaxed the existing rules and regulations related to sandalwood
in an effort to boost production through encouraging private To workout cost of raising sandalwood plantations, information
domestication of sandalwood. Despite the policy amendments favoring regarding labour, material and management cost at different stages
private growing of sandalwood and the advantages of sandalwood as of cultivation, harvesting, processing, transportation and marketing
an agro forestry species, there prevail considerable skepticism on the was collected from sandalwood cultivating farmers in semiarid tropics
economic prospects of sandalwood cultivation due to the time lag in of Karnataka. Among the ten agro-climatic zones of Karnataka,
accruing returns from the tree and the high investments required for sandalwood growing farmers of Eastern Dry Zone (Bangalore Rural,
its protection. Against this backdrop the present study assesses the Bangalore Urban, Kolar, Tumkur districts), Southern Dry Zone
viability of sandal cultivation practices in southern India through a (Mysore, Mandya, Tumkur, Hassan districts) and Southern Transition
Benefit Cost (BCA) analysis using financial indicators like; Net Present Zone (Hassan, Shimoga districts) were visited to collect information
Value (NPV), Benefit-cost ratio (B/C ratio), Internal Rate of Return on cultivation costs. Some of the data related to price of sandalwood
(IRR), Equivalent Annual Income (EAI) and Land Expectation Value i.e., heartwood and sapwood were collected from Karnataka Soaps and
(LEV). Detergent Limited (KSDL), Government of Karnataka, Bangalore.

Materials and Methods Details of cost of cultivation

First plantation year cost data (sandal wood):
Raising of sandalwood plantation on farm land offers a feasible
alternative to augment supplies especially since the species is quite 1. Site preparation (JCB@ 800 Rs/hr for 10 hr)
hardy and can thrive in stress conditions making it an ideal tree species =800 × 10=8000
even in dry and degraded lands. In our study a modest attempt is made
to find out the economic viability of sandalwood cultivation as a sole 2. Cost of 400 seedlings/ha (Spacing 5 × 5 m) @ 30 Rs. per seedling
crop and along with the combination of Pigeon pea/Tur dal/Red gram =400 × 30=12000
(Cajanus cajan (L.) Mill sp.) under semi-arid conditions of Karnataka. 3. One labor can dig 20 pits per day therefore 20 labors can dig 400
The economics of cultivation of sandalwood compares input cause and pits in one day.
anticipated returns of 3 scenarios; an annual cropping system and 2
plantations of sandalwood regimes over a 15 year period is considered. Cost of digging the pits; Rate per labour – 350 rupees =20 × 350=7000
The economic analysis compares 3 management regimes; Cost of Tur seed 1 Kg seeds @ Rs 250 =250
1. Growing only tur/red gram cropping system: using a continuous Cost of sowing primary host (Tur) =4 × 350=1400
red gram rotation for simplicity.
4. Fertilizer:
2. Sandalwood plantation with generation of revenue from timber
harvest only. 2 Kg FYM per plant; cost of 1 Kg FYM is Rs 5

3. Sandalwood plantation with red gram, generation of revenue The required fertilizer for 400 plants is 800 kg.
from sale of sandalwood plus annual red gram harvest for 15 Cost of 800 kg FYM @ Rs. 5/Kg =5 × 800=4000
years.
Labour charges for FYM application (four labour) =4 × 350=1400
Since, the financial returns from sandalwood cultivation are
delayed, the feasibility of this practice is judged through financial 5. Fencing:
indicators like Net Present Value (NPV), Benefit-cost ratio (B/C ratio), Cost of barbed wire fencing per running kilometer is 650000 rupees
Internal Rate of Return (IRR), Equivalent Annual Income (EAI) and
Land Expectation Value (LEV). For 1 ha, 400-meter fencing is required (including labour)
=(650000 × 400)/1000=260000
For calculating the cost of cultivation and economic returns the
following assumptions were considered: 6. Watering:

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 3 of 7

Cost of bore well, pipe line, transformer, pump set - 5 HP motor, =5400 × 6000=Rs 3,24,00,000
drip system=350000
For one tree 30 Kg of white/sap wood is produced, for 360 trees
For next 14-year costs: =360 × 30 Kg=10800 Kg
1. Fertilizer: White/sap wood sold @ Rs. 70/Kg =10800 × 70=7,56,000 Rupees
250 gm per plant; 1 kg for 4 plants; cost of 1 kg fertilizer is 15 rupees The income earned from sandalwood (heart wood+sap wood)
=(3,24,00,000+7,56,000)=Rs. 3,31,56,000
Required fertilizer for 400 plants is 100 kg.
After deduction of 10% as processing and transportation final
Cost of fertilizer per year 15 × 100=1500 Rs
income from sandalwood/ha=Rs 2,98,40,400
Cost of fertilizer for 5 years =5 × 1500=7500
Income from Pigeon pea/Tur dal/Red gram (Cajanus cajan (L.)
Labour charges for fertilizer application (four labour) =4 × Millsp.)
350=1400
Tur dal production @ 2500 Kg/year in sole crop @ Rs 100/Kg=2500
2. Security: × 100 =Rs 2,50,000
2-3 years 5000 × 24 months=120000 Rs Tur dal production @ 2000 Kg/year in intercrop @ Rs 100/Kg=2500
× 100 =Rs 2,00,000
Cost of one security guard per month =5000 Rs
As the financial returns from sandalwood cultivation are delayed,
4-9 years the viability of the practice is judged through a Benefit-Cost Analysis
Cost of one security guard per month =5000 Rs (BCA), taking the time value of money into account following. The
various financial analysis models associated with each of the models
For two security guards=10000 Rs of costs and benefits were identified initially for the specific rotation
Cost of security guards for one year- 10000 × 12 =120000 periods. Costs and benefits were valued at retail prices and discounted
at 15% based on prevailing interest rates (9%). Discounting is necessary
Cost of security for next 6 year =120000 × 6=720000 to find the present value of future stream of returns or future returns,
10-15 years at a specified interest rate. In order to bring on par the returns realized
in different periods of time, Discounted net benefits were added up to
Cost of one security guard per month =5000 Rs calculate NPV [10].
For four security guards =20000 Rs
T
Bt -C t
Net Present Value(NPV)= å
t=0 (1-r) t
Four security guards are required for rest 6 years
where, B is the benefits in year t, C is the costs in the year t and r is
For four security guards 240000 Rs/year required the selected discounted rate, following Nair [10].
Cost for security for rest 6 years =240000 × 6=1440000 Net Present Value (NPV): It is the difference between sum of the
Cost of agriculture crop (Tur cultivation) PV of benefits and sum of the PV of costs and denotes the net worth
of the project. Project with positive NPV is worth considering and
Site preparation (JCB @ 800 Rs/hr for 10 hr) =8000 Rs ranking the projects based on magnitude of NPV is made in the case of
capital rationing.
Disc ploughing @ Rs 8000/ ha =8000 Rs
Benefit cost ratio: BCR is the ratio of sum of present value of benefits
Cost of tur seeds 12.5 Kg /ha @ Rs 250/Kg =250 × 12.5=3125
to sum of present value of costs. It is precisely called as discounted
Sowing @ 12.5 Kg /ha 10 MD @ Rs 350/MD =350 × 10=3500 BCR. A project is viable and worth taking up when the Discounted BC
ratio is more than 1. The Benefit Cost Ratio was worked out using the
Cultivator @ Rs 3750 /ha =3750
formulae:
Fertilizer (25-30 kg N, 50-75 kg P2O5) Total discounted benefits
Benefir Costs Ration=
=10000 Total discounted costs
FYM 5 tractors/ha @ Rs 3500/tractor =3500 × 5=17500 Internal Rate of Returns (IRR) indicates the rate of net return
realizable for every Rs. 100 of investment made at any point in time in
Pesticide expenses (Endosulfan 35 EC or Nuvacrone 40 EC) =10000 any enterprise.
Harvesting Processing (2500 Kg/ha) =10000 Equivalent Annual Income (EAI): EAI is the cost per year of
Security =60000 owning and operating an asset over its entire lifespan. The Equivalent
Annual Income was calculated using the formulae:
Income from sandalwood plantation: Out of 400 trees planted,
r (1 + r) t
10% of trees died during the period of 15 year, therefore 360 trees EAI = NPV
(1 + r) t-1
survived healthily.
Where, r is the selected discount rate and t is the selected time period.
One trees gives 15 kg heart wood; 360 trees gives 360 × 15=5400 kg
heartwood, 1 kg heartwood cost 6000 rupees. Land Expectation Value (LEV): LEV is the value for the bare land
for growing successive rotations of ever-aged timber. It can also be
Cost of 5400 kg heart wood defined as the present revenue value for the bare land with all future

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 4 of 7

costs and income generated by the productive asset. This is calculated Results
using the formulae:
The details of expenditure incurred in cultivation of sandalwood as
(1 + r) t
LEV = NPV a sole crop, tur dal as sole crop and intercrop cultivation of sandalwood
(1 + r) t-1 and tur dal on per hectare basis are presented in Tables 1-3. The
where, r is the selected discount rate and t is the selected time period. profitability of sandalwood cultivation was assessed in the present

Particulars (only
0 year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year
sandalwood)
Site preparation (JCB @
8000
800 Rs/hr for 10 hr)
Cost of 400 seedlings/
ha (Spacing 5 × 5 m) @ 12000
30 Rs. per seedling
Cost of digging the pits;
@ 350 Rs/labour; for 20 7000
labours
Cost of Tur seed 1 Kg
250
seeds @ Rs 250
Cost of sowing primary
1400
host (Tur)
Cost of 800 kg FYM @
4000
Rs. 5/Kg
Labour charges
for FYM/ fertilizer 1400 1400
application
Cost of fertilizer 1500 1500 1500 1500 1500
Cost of barbed wire
fencing per running
kilometer is 650000
260000
rupees. For 1ha, 400
meter fencing is required
(including labour)
Cost of bore well, pipe
line, transformer, pump
350000
set 5HP motor, Drip
irrigation
Security for sandalwood 60000 60000 120000 120000 120000 120000 120000 120000 240000 240000 240000 240000 240000 240000
Actual cost 20400 626550 61500 61500 121500 121500 120000 120000 120000 120000 240000 240000 240000 240000 240000 240000
Interest @ 9 % 2826 58226 61925 11070 16470 21870 21735 21600 21600 21600 32400 43200 43200 43200 43200 43200
Cost of sandalwood
23226 684776 123425 72570 137970 143370 141735 141600 141600 141600 272400 283200 283200 283200 283200 283200
cultivation
Table 1: Raising cost of Sandalwood (Santalum album) plantation on per hectare basis.

Particulars (only Tur dal) 0 year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year
Site preparation (JCB @
8000
800 Rs/hr for 10 hr)
Disc ploughing @ 8000/ ha 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000
Cost of tur seeds 12.5 Kg /
3125 3125 3125 3125 3125 3125 3125 3125 3125 3125 3125 3125 3125 3125 3125
ha @ Rs 250/Kg
Sowing @ 12.5 Kg /ha 10
3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500
MD @ Rs 350/MD
Cultivator @ Rs 3750 /ha 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750
Fertilizer (25-30 kg N, 50-
10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000
75 kg P2O5)
FYM 5 tractors/ha @ Rs
17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500
3500/tractor
Pesticide expenses
(Endosulfan 35 EC or 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000
Nuvacrone 40 EC)
Harvesting Processing
10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000
(2500 Kg/ha)
Security 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000
Actual cost 8000 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875 125875
Interest @ 9 % 19329 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658 22658
Cost of Tur dal
27329 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533 148533
cultivation
Table 2: Cultivation cost of Tur dal (Cajanus cajan) on per hectare basis.

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 5 of 7

Particulars 11
0 year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 12 Year 13 Year 14 Year 15 Year
(sandalwood+tur) Year
Site preparation (JCB
8000
@ 800 Rs/hr for 10 hr)
Cost of 400 seedlings/
ha (Spacing 5×5 m) @ 12000
30 Rs. per seedling
Cost of digging the pits;
@ 350 Rs/labour; for 7000
20 labours
Cost of Tur seed 1 Kg
250
seeds @ Rs 250
Cost of sowing primary
1400
host (Tur)
Cost of 800 kg FYM @
4000
Rs. 5/Kg
Labour charges
for FYM/ fertilizer 1400 1400
application
Cost of fertilizer 1500 1500 1500 1500 1500
Cost of barbed wire
fencing per running
kilometer is 650000
rupees. For 1ha, 260000
400 meter fencing is
required (including
labour)
Cost of bore well, pipe
line, transformer, pump
350000
set 5HP motor, Drip
irrigation
Securirty for
60000 60000 120000 120000 120000 120000 120000 120000 240000 240000 240000 240000 240000 240000
sandalwood
Cost of Agriculture crop
65875 65875 65875 65875 65875 65875 65875 65875 65875 65875 65875 65875 65875 65875 65875
(Tur dal cultivation )
Actual cost 20400 692425 127375 127375 187375 187375 185875 185875 185875 185875 305875 305875 305875 305875 305875 305875
Interest 2826 64154 73782 22928 28328 33728 33593 33458 33458 33458 44258 55058 55058 55058 55058 55058
Cost of intercropping
23226 756579 201157 150303 215703 221103 219468 219333 219333 219333 350133 360933 360933 360933 360933 360933
sandalwood + tir dal
Table 3: Intercropping cultivation cost of Sandalwood (Santalum album) in combination with Tur dal (Cajanus cajan) on per hectare basis.

Sandalwood Tur dal / Red gram Sandalwood+Tur

Remarks
sole crop sole crop dal intercropping

Intercropping of tur dal with sandalwood is considered for initial five years.
Net Present Value 2584914 677644 2436994
Later the shade effects of sandalwood inhibit the cultivation of tur dal.

(NPV in Rs)
2.58 1.68 1.93
Benefit – Cost ratio
(B/C ratio)
Internal Rate of Return (IRR) 26% - 29%
Equivalent Annual Income (EAI) 43586 108423 389919
Land Expectation Value (LEV) 2778782 728467 2619768
Table 4: Financial analysis of sandalwood cultivation per hectare.

study through B-CA using indicators like NPV, B/C ratio, IRR, EAI lakhs and IRR of 29%. IRR represents the intrinsic rate of return that
and LEV. The results of three different sandalwood cultivation regimes is expected to be derived from an investment considering the amount
(tur dal plantations, sandalwood plantation and sandalwood+tur dal) and timing of the associated cash flows. Though the inter-cultivation
considered, showed financially viable as all of them have NPV greater (sandalwood+tur dal) have slightly lower NPV and B/C ratio compared
than Zero and B/C ratios higher than one (Table 4). to pure sandalwood plantations, the possibility of yielding tur dal
The actual cost in cultivation of sandalwood per hectare is Rs. 34.40 in inter-cultivation makes farmers comparatively more attractive
lakhs (including interest at 9% rate), whereas when sandalwood is as it gives some income every year. Added to this, an IRR of 29% in
grown with tur dal as intercrop, cost of cultivation is Rs. 46 lakhs. The combination of sandalwood and tur dal suggests that the proposed
B/C ratio with 2.58, 1.68 and 1.93 was recorded for sole sandalwood, investment will generate an average annual rate of return equal to 29%
pure tur dal and combination respectively. However, combination of over the life of the project taking into consideration the amount and timing
growing tur dal and sandalwood resulted in higher NPV of Rs. 24.37 of the expected cash inflows and outflows are specific to the investments.

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 6 of 7

The NPV were expressed in terms of Equivalent Annual Income farmers, they paid an average price of Rs. 6400/kg from Karnataka
(EAI) and Land Expectation Value (LEV) to compare the annual NPV Soaps and Detergents Ltd. (KSDL), Bangalore. So, in the present study
and annual returns from the particular NPV for pure sandalwood Rs. 6000/kg of heartwood and Rs. 70/kg of sapwood was considered in
cultivation, pure tur dal cultivation and inter-cultivation of Sandalwood the calculation.
and tur dal; keeping in view the rotation period of sandalwood is 15
In the present scenario of sandalwood cultivation emphasizing
years. EAI values were high with Rs. 3.89 lakhs for inter-cultivation of
is more on farmlands than natural forests, hence the 18 categories
Sandalwood and tur dal followed by Rs. 1.08 lakhs from pure tur dal
of pricing followed during King Tipu Sultan period (1782-1799) is
cultivation. However, the LEV values showed higher returns for pure
not so appropriate and there is a need to rethink on reclassifying the
sandalwood cultivation and inter-cultivation of sandalwood and tur
categorization into 4 four classes viz. stem heartwood, root heartwood,
dal with Rs. 27.78 lakhs and Rs. 26.19 lakhs respectively.
sapwood and branch heartwood. Keeping in view of the present
Discussion scenario the economics of sandalwood cultivation was calculated by
considering the average price paid to farmers by Karnataka Soaps and
Similar types of results were found during analysis of financial Detergents Ltd. (KSDL), Bangalore on procurement of sandalwood
viability of sandalwood based agroforestry practices in southern India which is Rs. 6400/kg.
[1]. The returns that can be expected from sandalwood will depend on
the yield which can influence by soil type, rainfall and management The results of the financial analysis is only applicable in liberalizes
practices. This analysis does not take into account the environmental policy environment with open markets, where the owner is entitled
benefits that are derived from the establishment of sandalwood to receive the full market value of the wood on extraction. According
plantations such as providing habitat and ground water and erosion to the prevailing rules in the southern states of Karnataka and Tamil
control. Nadu, except Kerala, even when the tree is located on private land, it
belongs to the State Government and the owner of the land is required
The reason behind selection of tur dal in combination with to make a declaration on the number of trees on his land [12]. The
Sandalwood as tur dal is an important legume crop, which helps in wood can be sold only to the forest department or any public sector
nitrogen fixation through symbiosis to enrich soil fertility naturally. In undertaking as notified by the government from time to time. The
addition to it, they are short lived, fast growing shrub and suitable to price is determined by forest department based on the average prices
dry climatic and poor soil conditions (drought-resistant as preferred of the last two auction held in Karnataka or Tamil Nadu. But, prices
by Sandalwood). Considering the morphology, they are shorter, less are not periodically renewed by forest department based on auction
shady and significantly smaller plants making it appropriate as primary prices every year. Moreover, the delay in payment due to bureaucratic
host for sandalwood beginning from nursery stages. As sandalwood, red tapes will further bring down the financial indicators if the time
these plants don’t prefer water logging, heavy rains etc which is better lag in payment is also accounted for. Thus the present policy regime
for heartwood formation in sandalwood. The cultivation of this the financial profitability of sandalwood cultivation are varied by
highly valued gram (nutritive value) helps to earn additional profit the restrictive policies which deny farmers the full market value for
in comparison with pure cultivation. Added to this, intercropping their produce and compel them to go through elaborate bureaucratic
with and without tur dal which in turn will be an example for farmers
procedures to receive the benefits. Hence, revamping of legal provisions
cultivating only tur dal, so has to enhance their income by intercropping
related to sandalwood is urgently needed to felicitate free trade and
with sandalwood.
the markets to ensure higher and speedy returns to farmers, thereby
Under natural conditions, sandalwood tree at 27-30 yrs would yield encouraging private domestication of this priced resource.
25/30 Kg of heartwood. But, under managed plantation conditions,
rotation period of sandalwood is considered as 15 years because with Significance of Research
scientific approach like initial watering at seedling stage, periodical This paper aims to highlight the role and importance of economic
pruning and fertilizer application, sandalwood trees easily yield at least analysis related to investment and earnings by sandalwood cultivation
15 kgs of heartwood at the age of 15 yrs with the dbh of approx.15 under semi-arid conditions of Karnataka, India. Any tree cultivation
cms (Mishra et al.). According to recent studies, heartwood initiates projects require detail understanding of cost requirements keeping in
at the age of 6 to 8 yrs and sizable heartwood is formed at 15 years view of long gestation period and associated risks factors, so as to arrive
which is worth harvesting. As per Viswanath et al. [1], comparison of at a profit oriented bankable projects adoptable by farming community.
overall financial indicators at 15 and 20 years proved that a rotation Economic analysis of sandalwood cultivation is most useful when
period of 15 years is more economically viable than 20 years for all used early at implementation stage, for identify the economic, social
the sandalwood cultivation models under study. Added to this, beyond and environmental benefits and risks associated with project and its
the age of 15 years, cost of security/protection (theft issues) increases components.
considerably with added marginal increase in heartwood yield ending
in less profit. In the international market the prices for the heartwood Conclusions
and sandalwood oil are quite high.
Raising of sandalwood as a sole crop cost Rs. 34.40 lakhs per
According to Mishra et al. [11], the heartwood costs more than hectare (including interest at 9% rate), whereas when sandalwood is
Rs. 2 lakhs/kg for sandalwood oil. However, the retail outlets in India, grown with tur dal as intercrop, cost of cultivation is Rs. 46 lakhs. The
like Cauvery emporium of KSHDC, Bangalore purchase heartwood analysis for the economics returns of the sandalwood cultivation in
at the cost of Rs. 28,000/kg. Then again, the average auction price combination with tur crop resulted in higher NPV of Rs. 24.37 lakhs
of sandalwood in the Salem depot of Tamil Nadu during 2013 was and IRR of 29%. Though the inter-cultivation (sandalwood + tur dal)
Rs. 6500/kg. But, recently in 2016 the average e-auction price of have slightly lower NPV, B/C ratio and LEV but higher annual NPV
sandalwood in Marayoor forest of Kerala was Rs. 12,000/kg. Though (EAI) when compared to pure sandalwood plantation, the possibility
the costs of heartwood are high, on procurement of sandalwood from of yielding tur dal in inter-cultivation makes farmers comparatively

Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223
Citation: Divakara BN, Viswanath S, Nikhitha CU, Kumar S (2018) Economics of Santalum album L. Cultivation Under Semiarid Tropics of Karnataka,
India. Forest Res 7: 223. doi: 10.4172/2168-9776.1000223

Page 7 of 7

more attractive as it gives some income every year, as farmers prefer in Karnataka. Proceedings of the National Seminar on Conservation,
Improvement, Cultivation and Management of Sandal (Santalum album L.).
immediate returns.
6. Doran JC, Thomson L, Brophy JJ, Goldsack B, Bulai P, et al. (2005) Variation
Acknowledgements in heartwood oil composition of young sandalwood trees in the south Pacific
(Santalum yasi, S. album and F1 hybrids in Fiji, and S. yasi in Tonga and Niue).
The authors wish to thank the Director, IWST for providing all necessary
Sandalwood Research Newsletter 20: 3-7.
facilities for this study. The authors are also thankful to the National Medicinal
Plants Board, New Delhi for funding the project to conduct this study. 7. Kumar ANA, Joshi G, Mohan Ram HY (2012) Sandalwood: history, uses,
present status and the future. Current Science 103: 1408-1416.
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Forest Res, an open access journal

ISSN: 2168-9776 Volume 7 • Issue 3 • 1000223