Hybrid poplar plantations in the lake states: a financial analysis [Michigan; Wisconsin]

Hybrid poplar plantations in the Lake States may be a low-cost alternative to conventional sources of wood fiber for industrial users in some areas, but in most areas at this time they are high-risk, low-return investments. On the basis of our specific assumptions and 1979 prices, the return on investment of nonirrigated plantations is projected to be 8 percent. Irrigated plantations have a slightly negative rate of return. Rates differ little between short (5 to 10 years) and long (15 years) rotations. Investment performance measures are most sensitive to estimates of product sale value, yields, irrigation costs, and harvesting costs. The economic feasibility of various intensive production systems would be enhanced if irrigation costs could be reduced and if much higher prices could be obtained for wood fiber. Price increases would, however, tend to sustain the greater economic attractiveness of nonirrigated systems. The detailed sensitivity analyses carried out in the study will permit periodic reevaluation of the economic attractiveness of intensive culture systems as better information becomes available and as significant changes in prices and costs occur.