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Model bankable project on Subabul (Leucaena Leucocephala) based agroforestry

Model bankable project on Subabul (Leucaena Leucocephala) based agroforestry 

Source: National Bank for Agriculture and Rural Development 

Useful for : IBPS AFO Mains Exam (Agriculture Knowledge), NABARD Asst. Manager Exam


Model bankable project on Subabul (Leucaena Leucocephala) based agroforestry

1. Introduction 

  • Subabul (Leucaena leucocephala) is an excellent source of fuel, fodder and nitrogen fixing trees.★★★

  • The forage is highly palatable, digestible and protein rich.

  • Since, subabul helps to enrich the atmospheric nitrogen in soil, it can be grown on soils with average fertility.

  • The wood is widely used in the fuel, charcoal, pole and also pulpwood industries.★★★

  • It is commonly known as leucaena, ipil-ipil and subabul.★★★

  • It is one of the fast growing hardy evergreen species.★★

  • It will respond well to pollarding, lopping and pruning.

  • It has deep and strong taproot and even the seedlings are deep rooted.

Types of subabul: 

  • There are four types of subabul viz, 

1) Hawaiian type

  • The plants are short, bushy and remarkably drought tolerant.★★★

  • It is suited to hilly terrains in drought prone areas.

  • It is a prolific seed producer and is good for fodder purpose.

2) Salvador type: 

  • Tall, tree-like and fast growing having maximum annual biomass production.

  • Possesses large leaves, pods and seeds than Hawaiian types.

  • Responds to high fertilisation.

3) Peru: 

  • Tall and extensively branching type and is ideal for fodder purposes.★★★

  • Cunningham: It is a cross between Salvador and Peru types.


2. Botanical features 

  • The leaves are bipinnate, 15 to 20 cm long with 10 to 15 pairs of pinnate leaves.

  • Inflorescence is globular and the flowers are white.


3. Ecology 

  • Subabul is best suited for warm regions and grows well between 22 and 30ºC in regions of 500 to 2000 mm annual rainfall.

  • Because of its strong and deep root system, tree is highly drought resistant.

  • It is restricted to elevations below 500m but withstands variations in rainfall, sunlight, windstorm, slight frost and drought.

4. Soil 

  • Subabul requires deep well drained neutral soil and also can tolerate saline & acid soil.

  • The tree grows very well under alkaline soils and also performs under dry clayey soils.

  • The growth is average under sandy, acidic & dry gravel soils.

  • The performance is poor under marshy and high altitudes.

  • It can also be grown in steep slopes, hilly terrains, gravelly areas and sandy loams.

  • Cultivation practices for subabul 


5. Pretreatment and sowing 

  • Planting of seedlings can be done with the onset of rains in May-June or Sept-October.

  • Since the seed viability is high, it possesses physical dormancy.

  • It can be hastened by concentrated sulphuric acid scarification for five minutes followed by 24 hour soaking in cold water or hot water (80ºC) for five minutes and followed by the cold water soaking for 24 hours.

  • Then seeds should be sundried afterwards for about one hour before sowing.

  • A seed rate of 3-4 kg/ha is recommended.

  • Sowing is preferably done during February-March in a nursery or in polythene bags or in situ at 2-3 cm depth.

  • Seedlings (1.5 to 3 months old with 6-8 leaves) are planted in the main field.

  • A spacing of 1 x 0.1 m is recommended for a pure crop of fodder, 1.5 x 0.2 m for planting in boundaries and borders of coconut gardens and 2 x 0.2 m when raised along boundaries.


6. Planting Material 

  • Methods of propagation for raising plantations are (i) Direct sowing of seeds; (ii) Bag Plantation; (iii) Naked seedlings collected from existing plantation regeneration.


7. Spacing 

  • The most common spacing adopted are 1.27 m x 1.27m (50” x 50”) (i.e.6200 plants/ha); 2m x 2m (2500 plants/ha); 3 x 1.5m (2222 plants/ha).

  • However, the recommended spacing is 1.5m x 1.5m (4445 plants/ha).

  • Inter cultivation may not be possible from second year onwards.


8. Irrigation 

  • Frequent irrigation is required for fodder based plantations.

  • For pole/timber plantation, irrigation is required for the first three years only.


9. Weeding / Soil working 

  • Two weeding / soil workings are required per year for the first 3 years of sowing / planting.


10. Pests and diseases 

  • Subabul generally has been free of serious insect and diseases, but is susceptible to jumping plant lice (psyllids) which have caused serious defoliation and mortality in some areas.

  • Some varieties are susceptible to gummosis, which is most likely caused by Fusarium or Phytophthora species.

  • Leaf spot fungus also can cause defoliation under wet conditions.


11. Yield & Rotation 

  • Harvesting is done at the end of third year.

  • The average yield is 70 ton/ha. ★★★

  • Farmers adopt a rotation of four years.

  • Normally subabul can harvest three coppice crops.

  • During the second rotation, only two coppice shoots are retained in each stem.

  • The sale price for pulpwood is considered at Rs.2400/ton.

  • The stumps removed from plantations after three rotations may fetch a rate of Rs.350/- to Rs.400/-ton for usage as fuel wood.


12. Markets and Marketing Arrangements 

  • There is enormous demand for Subabul wood for pulp (raw material) from many paper industries.


13. Unit Cost 

  • The cost of cultivation of Subabul in one hectare at an espacement of 1.27mx1.27m i.e.6200 plants per ha has been worked out at Rs.69000/- per ha.

  • The details of various items of expenditure are viz., land preparation, digging of pits, plant and material, manure and fertilizer, plant protection, etc.


14. Financial analysis 

  • The techno economic parameters for working out the economics are given in Annexure II.

  •  Financial analysis with the above parameters of the investment cost and yields, the BCR and IRR works out to 1.37:1 and 29.20% respectively.

  • The detailed repayment schedule has been worked out and is shown in Annexure III.


15. Lending Terms 

  • Margin Money 

  • The beneficiaries may contribute towards down payment ranging from 10% depending upon their category, i.e., small and other farmers.

  • Beneficiary’s own labour can also be taken as his contribution towards the margin money requirement.

  • In the current model scheme margin money of 10 % has been considered.

  • With 10% margin money, banks will provide lending of Rs.62,000/-.

16. Repayment period/Interest rates: 

  • The bank loan is considered at 90% of the unit cost i.e. Rs.62,000 /- .

  • Income generation from the activity commences from fifth year onwards.

  • The interest accrued during the gestation period will be deferred.

  • The rate of interest to the ultimate borrowers will be decided by the financing banks which is subject to revision by RBI / NABARD from time to time.

  • The repayment of principal with deferred interest will start from 4th year of plantation and will be paid upto 6th year maximum.


17. Commercial Uses: 

  • Subabul wood can be used for light construction, poles, props, pulp, furniture, flooring and fuel wood.

  • Subabul wood is an excellent fuel wood with a specific gravity of 0.45-0.55 and a high heating value of 4000 kcal/kg.

  • Subabul forage has a high protein and carotene content and pellets or cubes are internationally marketed as animal feed.


Annexure I Unit Cost for Clonal based Subabul (Leucaena leucocephala

  • Techno-economic parameters 

  • Species recommended subabul 

  • Year of harvesting (year) 5 

  • Spacing (m x m) 1. 27m x 1.27m 

  • Economic Life 15 years 

  • No. of plants per ha. 6200 

  • Avg. wage rate per MD (Rs.) 200 

  • Mortality replacement 10% 

  • Interest on term loan 12% 

  • No. of harvestable plants per ha 100% 

  • Margin (of the total cost) for Bank Loan 10%


Yield & income of Subabul plantation in one hectare 

  • Harvesting may be done 3rd year onwards


1. Protective / pot irrigation is provided during the initial years.

2. Seedlings: It is assumed that seedlings will be purchased from government forestry nursery or from private nursery 

3. Labour Charges: Assumed average wage rate@ Rs.200 prevailing in the state.

4. Cost of cultivation provided for 1+2 years for all the crops (1 year for establishment +2 maintenance) 

5. Though the gestation period is 8-10 years, loan instalments provided for 3 years, the remaining years of gestation period bank may charge interest on the outstanding loan amount and the years in term may be kept separate and not to be compounded. Both the principal and interest can be recovered after the harvest.



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