ABSTRACT:
Malaysia is expected to only contribute 45.6% of the world palm oil output in 2005, a decrease of 4.5% compared to production in the year 2001. The declining contribution to world palm oil output is in part attributed to the lower production due to the increase in the aged oil palm trees.It is important that old palms, which are less economic to maintain be replanted, hence ensuring a continuous productive Malaysian oil palm industry. The question arises as to what age is oil palm economically suitable for replanting? The objective of this paper is to determine the optimum age for oil palm replanting. Following Faris (1960) the optimum age of replanting is when the marginal net revenue in year n of the present stand is equal to or exceeds the amortised value of net revenue in year n of the second stand.It is concluded from this analysis that the optimum replanting age depends on the price of fresh fruits bunches (FFB), cost to establish and maintain new palms, technology that changes the yield profile, and the discount rates adopted. In Malaysia, it is found that the optimal replanting age lies between 25 and 26 years if the FFB price is RM 200 per tonne. The replacement age declines to between 24 – 25 years if the FFB price rises to RM 220 per tonne.
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