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Smallholder farmers in areas of the semiarid tropics are planting exotic tree species that provide alternative income sources, fuel and building materials. While providing other benefits, these trees occupy land that could produce annual food crops. Eucalyptus is one fast-growing tree species that is grown globally, including in East Africa. This study uses a polyperiod linear programming whole-farm model to explore the opportunity cost of planting eucalyptus trees versus crops in the Nyando watershed of western Kenya. The model indicates that over a ten-year time horizon, a profit maximizing representative farmer facing would allocate 30 percent of a 4-acre farm to producing eucalyptus poles, a typical level reported in farmer individual interviews. Depending on the price of poles, land planted to eucalyptus ranged from 8 to 80 percent. Firewood was less remunerative and did not enter the solution unless poles were excluded. The results are consistent with observed behavior, suggesting that smallholder farmers in western Kenya are responsive to relative prices between timber tree products and crops, and that they grow eucalyptus for its high profitability in the medium term. Timber production is not likely to replace food crops given the high cost of meeting household subsistence requirements from marketed grains.


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