Abstract
The question of when is the best time to replant the old oil palms is a complex issue. This paper reports the optimum replanting age of oil palm computed with a modified form of the general asset replacement model. The basic principle is to compare gains from keeping the current stand of oil palms for another time interval with the opportunity gains which could be realized friom the replanted oil palms for the same period. The objective is to achieve maximum returns from investments. A total of 108 combinations comprising 3 levels each of fresh fruit bunch yield, palm product price and technological change factor, and 2 levels each of manuring cost and discounting rate are evaluated. The optimum replanting age varies inversely with the level of technological change, proce of palm products and FFB yield i.e. higher levels of the foregoing three factors would reduce the optimum replanting age. On the other hand, the reverse is true for discounting rate and manuring cost. However, this is true only if the levels of the various factors assumed remained the same throughout the lifespan of the palms. This is obviously not the case in practice especially for factors that are beyond management control. It is therefore not unusual to have conflicting opinions on what is the optimum replanting age. Depending on the combination of these five factors, the optimum replanting age varies from 15 years to more than 30 years. Without any imporvement in technology that leads to an upward shift of the net revenue, the optimum replanting age is more than 25 years for all the 108 combinations of factors tested except for one case of 24 years at low manuring cost, 5 percent discounting rate, high FFB yield and price of palm products. It appears that if there is no technological improvement, the best thing to do is to keep harvesting the palms until they are too tall to harvest economically. On the other hand, it is fairly safe to consider early replanting whenever there is and improvement in technology resulting in an upward shift of the net revenue function. Technological improvement could be in the form of better planting material, improved agronomic or management practices. A case in point is the introduction of clonal palms with superior oil extraction rate and fresh fruit bunch yield.The question of when is the best time to replant the old oil palms is a complex issue. This paper reports the optimum replanting age of oil palm computed with a modified form of the general asset replacement model. The basic principle is to compare gains from keeping the current stand of oil palms for another time interval with the opportunity gains which could be realized friom the replanted oil palms for the same period. The objective is to achieve maximum returns from investments. A total of 108 combinations comprising 3 levels each of fresh fruit bunch yield, palm product price and technological change factor, and 2 levels each of manuring cost and discounting rate are evaluated. The optimum replanting age varies inversely with the level of technological change, proce of palm products and FFB yield i.e. higher levels of the foregoing three factors would reduce the optimum replanting age. On the other hand, the reverse is true for discounting rate and manuring cost. However, this is true only if the levels of the various factors assumed remained the same throughout the lifespan of the palms. This is obviously not the case in practice especially for factors that are beyond management control. It is therefore not unusual to have conflicting opinions on what is the optimum replanting age. Depending on the combination of these five factors, the optimum replanting age varies from 15 years to more than 30 years. Without any imporvement in technology that leads to an upward shift of the net revenue, the optimum replanting age is more than 25 years for all the 108 combinations of factors tested except for one case of 24 years at low manuring cost, 5 percent discounting rate, high FFB yield and price of palm products. It appears that if there is no technological improvement, the best thing to do is to keep harvesting the palms until they are too tall to harvest economically. On the other hand, it is fairly safe to consider early replanting whenever there is and improvement in technology resulting in an upward shift of the net revenue function. Technological improvement could be in the form of better planting material, improved agronomic or management practices. A case in point is the introduction of clonal palms with superior oil extraction rate and fresh fruit bunch yield.