In the Philippines, smallholder farmers have become major timber producers. Farmers' intensive tree establishment and management practices ensure tree survival and growth. However, the systems of timber production practiced have several limitations. In intercropping systems, the practice of severe branch or root pruning reduces tree-crop competition and increases annual crop yields, but is detrimental to tree growth and incompatible with commercial timber production. In even-aged woodlots, lack of regular income and poor tree growth, resulting from farmers' reluctance to thin their plantations, are major constraints to adoption and profitable tree farming. Financial analyses showed that at current stumpage prices, smallholder agroforestry systems that produce low quality timber are not a viable alternative to maize farming. On the other hand, higher returns to labor and capital invested from intercropping systems suggests that farmers with scarce labor or capital would maximize returns by establishing timber-based agroforestry systems on their excess land. The application of a simple linear programming model developed for the optimal allocation of land to monocropping and tree intercropping considering farmers' resource constraints showed that cumulative additions of widely spaced tree hedgerows provides higher returns to land, and reduce the risk of agroforestry adoption by spreading over the years labor and capital investment costs and the economic benefits accruing to farmers from trees. Therefore, incremental planting of widely spaced tree hedgerows can make farm forestry more adoptable and thus benefit a larger number of resource-constrained farmers in their evolution towards more diverse and productive agroforestry systems.