Economic appraisal of sheep grazing under rubber plantation in Peninsular Malaysia

Sheep rearing under rubber plantation in Malaysia is a relatively recent development of agroforestry practice in the country. This practice is triggered by the need to reduce the dependence on imported mutton and to make the country self-supporting as far as mutton is concerned. The government plans to intensify rearing of sheep under rubber plantation involving the smallholders. The anticipated target in order to meet the domestic requirements of mutton is to have at least 10 million heads of sheep grazing under our rubber plantations. Besides giving additional income to the smallholders through the sale of the animals, sheep rearing offers other advantages such as saving in weeding costs and additional input of fertilizers from sheep dropping. This will also perhaps enhance the growth of rubber trees. Being new to the agricultural as well as forestry area, much has to be investigated regarding this practice. One of the many aspects needing research is economics. A study was therefore conducted to appraise the economic viability of this agroforestry practice. The study was carried out by collecting the necessary information from a FELDA scheme in Trolak Timur, Trolak in Perak and also from FELDA Headquarters in Kuala Lumpur. The main objective of this study is to assess the economic feasibility of grazing sheep under rubber plantation. The information obtained was analysed using the LOTUS 1-2-3 computer programme to determine the following criteria: Internal Rate of Return (IRR), Net Present Value (NPV), Benefit-Cost Ratio (B/C) and Pay Back Period (PBP). The results indicated that for the production of latex, scrap, rubberwood and sheep for the project (2 years), the Internal Rate of Return (IRR) is 18 percent, Net Present Value (NPV) is M$ 446 8181, Benefit-Cost (B/C) is 4.07 and Pay Back Period (PBP) is 8-9 years. By introducing sheep for the whole rotation of rubber plantation of 25 years, it was found that the Internal Rate of Return (IRR) is 19 percent, Net Present Value (NPV) is M$ 496 181. Benefit-Cost Ratio (B/C) is 4.46 and the Pay Back Period (PBP) of 8-9 years