Economic Analysis Determining the Optimal Replanting Age of Date Palm

Abstract

Two alternative analytical models were used to estimate the economically optimal age of replanting date palm, namely; Comparison of Equivalent Annual Net Revenue (CEAN) and Multi-Period Linear Programming Model (MPLP). Solution procedures of both models are based on the theory of optimal replacement of capital assets. Data on date palm age-yield relationship and other socioeconomic variables were gleaned through a farm survey of 34 large commercial farms, in Izki, Bahla, and Al-Hamra wilayats in the Al- Dakhilya governorate of the Sultanate of Oman. The study estimated the optimal age of replanting date palms as 50-55 years. Both models, CEAN and MPLP gave consistent estimates. The optimal age to replant date palms was sensitive only to changes in the interest rates. Low interest rates shortened the optimal age of date palm replanting. Changes in date price, yield and variable production costs did not change the optimal age of replanting date palms. The incremental revenue that could be accrued to the Sultanate of Oman through replanting date palms was estimated as 7 million OR/ year.