We’ve been living on a farm land since 2014. During the last 7 years, we have transitioned from an urban lifestyle to a farm life, homeschooled two children, built a house with traditional material and progressively increased the proportion of self-grown food. We have also created a substantial green cover on our 2-acre farm land with a variety of food, timber and other native trees. During this time, we have also enhanced our understanding of some serious ecological, social and health issues being faced by people across the globe.
Creating a food forest and facilitating urban families to adopt a newer, conscious lifestyle will go a long way in tackling most of these serious concerns. We wish to use our experience to grow a food forest and develop living spaces within them. This will not only increase the financial value of the agricultural land, but more importantly help combat some serious ecological, social and economic issues.
Social, Ecological and Economic Impact
The positive ecological impact of creating a food forest with permaculture design is well documented. It is the top-recommended method of fighting global warming, water crisis, deterioration in soil health and depleting bio-diversity.
Creating food forests in interior rural areas will also have positive social impact on residents in these areas. The migration from villages to cities can be controlled by providing employment opportunities and better living conditions in rural areas. Urban residents making a transition to live on farms will help local societies realise the value of their surroundings and villages.
Investments in rural areas to create food forests will not only create livelihood opportunities, but will also mobilise capital in areas otherwise reeling under scarcity of capital. Transition of people from urban areas will boost local markets, increase exposure to better practices and technology.
Of the 17 SDGs, the ones which are directly impacted are as below.
- SDG # 3: Good Health and Well-being
- SDG # 6: Clean Water and Sanitation
- SDG # 11: Sustainable Cities and Communities
- SDG # 13: Climate Action
- SDG # 15: Life on Land
There are three components of the asset: the land, the food forest and the living space. Land has a market price, which can be considered as a ‘given’. The cumulative valuation will be equal to value of development plus value of land.
Is the investment in development of a food forest and living space worth it?Based on our experience, developing a one acre farm land into a food forest and a livable space entails a capex of ₹ 20 lac over 3 years. The life span of this asset (food forest and living space built with traditional materials), though much longer can be considered as 50 years for calculation purposes. The real utility (shelter, food, recreation, health benefits, etc) can be considered as revenue. 5 years post-commencement, these real utilities can be conservatively valued in financial terms at ₹ 4-5 lac per annum. In other words, if another family were to rent this readymade farm, they would be willing to pay a monthly rent of ₹ 40k. Maintenance costs can be taken at ₹100k per annum.
To arrive at the valuation, we shall find the present value of 50 years of net revenues. If we inflate the revenues at 6% pa and discount the net revenues at the same rate, the present value of a food forest with a living space works out to approx ₹ 15 mn plus market price of land.
Thus investment of ₹ 2 mn per acre can be valued at. ₹ 15 mn after 5 years.
The cluster of villages around us have over 3-4 sq km of farm land. Typically, the lease rental is ₹ 10k per annum. Land prices for outright purchase are in the range of ₹ 0.5-0.6 mn per acre. Since this is a long term project, owning land is a better alternative. A 100 acre project will entail an upfront capex of ₹ 50mn and a staggered investment of ₹ 200 mn over 3 years. This includes overhead costs of permaculture design experts, project managers, other supervisory costs, labour and expenses for fencing, irrigation, power, construction material, cattle and composting.
This does not include cost of market development for sustainable lifestyle.