Comparing the economic performance of poplar-based alley cropping systems with arable farming in Brandenburg under varying site conditions and policy scenarios

Abstract Agroforestry can address multiple environmental challenges across the agricultural sector, for example biodiversity loss and soil degradation. However, agroforestry uptake remains low in Germany. Since economic considerations are important for farmer uptake, this paper compares the economic performance of conventional arable farming with silvoarable alley cropping in Brandenburg. Using a modelling approach, the net present value (NPV) is calculated to assess the competitiveness of alley cropping with poplar compared to arable farming under different scenarios. These scenarios cover a range of crops, rotation schedules, alley widths, woodchip prices, and yield levels. Additionally, policy measures that can compensate for potential economic losses associated with transitioning to agroforestry are considered. Results show that short rotation alley cropping had higher NPVs than medium rotation alley cropping, mainly due to cash-flow characteristics. Short rotation alley cropping can be competitive at high woodchip prices without policy support, while at low or average prices alley cropping needs subsidies to be competitive. Medium rotation systems at all price levels were not competitive unless policy support was provided. Current policy payments were unable to make silvoarable alley cropping competitive except at high woodchip prices. When subsidies increase, alley cropping can be competitive even at low or average woodchip prices and over a range of site conditions. Besides policy support, economic performance was strongly influenced by woodchip prices, relative yield potential of poplar and arable crops, and site conditions.