Oa. Ramirez et al., Financial returns, stability and risk of cacao-plantain-timber agroforestry systems in Central America, AGROFOR SYS, 51(2), 2001, pp. 141-154
Diversification of agroecosystems has long been recognized as a sound strat
egy to cope with price and crop yield variability, thus increasing farm inc
ome stability and lowering financial risk. In this study, the financial ret
urns, stability and risk of six cacao (Theobroma cacao L.) - laurel (Cordia
alliodora (R&P) Oken) - plantain (Musa AAB) agroforestry systems, and the
corresponding monocultures, were compared. Production and cost data were ob
tained from an on-going eight-year old experiment. The agroforestry systems
included a traditional system and a replacement series between cacao (278,
370, 556, 741 and 833 plants ha(-1)) and plantain (833, 741, 556, 370 and
278 plants ha(-1)) with a constant laurel population (timber tree; 69 trees
ha(-1)). An ex-post analysis was conducted using experimental and secondar
y data to build a simulation model over a 12-year period under different pr
ice assumptions. The probability distribution functions for the three commo
dity prices were modeled and simulated through time, accounting for their p
ossible autocorrelation and non-normality. The expected net incomes from th
e agroforestry systems were considerably higher than from monocultures. The
agroforestry systems were also less risky. Agroforestry systems with propo
rtionally more cacao than plantain were less risky, but also less stable. T
he timber component (C. alliodora) was a key factor in reducing farmer's fi
nancial risks. Methodologically, the study illustrates a technique to evalu
ate both expected returns and the corresponding financial risks to obtain a
complete, comparable profile of alternative systems. It shows the need to
allow for the possibility of non-normality in the statistical distributions
of the variables entering a financial risk and return analysis.