Economics of interplanting rubber with tea in the low country wet zone

Abstract

This study examines the economic viability of interplanting rubber with tea in the low country wet zone, where cultivation of both these crops is agronomically feasible. In the analysis, apart from Net Present Value(NPV), other measurments of project worth have also been used to determine the return on investment. Economic lifespan of a 25 years is considered for discounted cash flow analysis. The results reveal the profitability of this intergrated farm activity, which generates a NPV of nearly RS 162,000 at 15 per cent discount rate. The B/C ratio, net benefit investment ratio and IRR are 1.24, 3.73 and 31 per cent respectively. The pay back period of 5 years also emphasizes the economic feasibility of the investment. Sensitivity analysis on certain parameters have been done to ascertain the economic viability. The conclusion is that commencement of interplanting rubber with tea in the law country wet zone, atleast on a limited scale is economically desirable.