The economic analysis of the mastic tree (Pistacia lentiscus L.) cultivation projects

Abstract

Background and Purpose: The mastic tree is mostly grown on the island of Chios in Greece. According to local people in Izmir it had formerly grown in the Western side of Turkey. The aim of this study is to bring mastic tree to grow in the Aegean region and for the region to contribute to rural development and national economy by project analysis of gum cultivation in the area to determine whether it is economically feasible.

Materials and Methods: Some information such as elements of cost of production, harvesting and marketing opportunities and problems, competition with Chios and data for the economic analysis were collected at the first stage. At the second stage, to determine the project’s cost, elements were collected using the average market prices and some economic evaluation methods such as Net Present Value (NPV) and Internal Rate of Return (IRR) methods. To incorporate the time and value of money, more complex cash flows were applied for the project, which can be achieved economically.

Results: At the end of the study, we reached the conclusion that mastic tree cultivation projects are not feasible in the region because of the high rent prices of land and that this is a touristic region of Turkey.

Highlights: Until 100 years ago, mastic tree was grown in the region. However, after the local producers migrated to the island of Chios, mastic production disappeared in the region. Nowadays, the attempts to revive this production system are not economically feasible due to land rent. Therefore, it is possible for production to shift to natural forests and damage to forests.

Keywords

• Economic evaluation,IRR,Mastic,NPV,Payback Method

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