IDEAS home Printed from https://ideas.repec.org/p/ags/saea12/119777.html
   My bibliography  Save this paper

Increasing Profitability of Small Scale Orchard Producers through Optimizing Replacement Rate: The Case Study of Ghana

Author

Listed:
  • Mahrizal
  • Nalley, Lawton Lanier
  • Dixon, Bruce L.
  • Popp, Jennie S. Hughes

Abstract

This study sets out to empirically estimate the optimum annual replacement rate and age of cocoa trees in order to maximize the net present value of four common cocoa production systems. The study examines the costs and returns of four common cocoa production systems in Ghana associated with changes in cocoa prices, fertilizer prices, inflation rates, and labor prices. While this study focuses on cocoa, the methodology is applicable to any perennial crop. This study uses empirical yield curves and cost of production data from Ghana to determine when and what percentage of a cocoa orchard should be replaced annually to maximize net present value of revenues over time. Successive versions of the model are solved to determine how input and output price changes affect optimal replacement rates and replacement ages. Producers in both high- and low-income countries are reluctant to cull still productive assets, such as trees that are diminishing in yield over time. The Excel based model developed in this study could provide extension personnel with a simple yet powerful tool to illustrate to producers the benefits of systematic tree replacement. This study provides strong evidence of the benefits of replacing trees at the optimal time and rate.

Suggested Citation

  • Mahrizal & Nalley, Lawton Lanier & Dixon, Bruce L. & Popp, Jennie S. Hughes, 2012. "Increasing Profitability of Small Scale Orchard Producers through Optimizing Replacement Rate: The Case Study of Ghana," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119777, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea12:119777
    DOI: 10.22004/ag.econ.119777
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/119777/files/Mahrizal_%20Nalley_%20Dixon_%20and%20Popp%20SAEA%202012.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.119777?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. J. Edwin Faris, 1960. "Analytical Techniques Used in Determining the Optimum Replacement Pattern," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(4), pages 755-766.
    2. R. K. Perrin, 1972. "Asset Replacement Principles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 60-67.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bradford, Garnett L. & Eidman, Vernon R. & Jensen, Harald R., 1978. "A Systems Model Of The Indirect Energy Expended In Farm Machinery Production And Use," Staff Papers 13285, University of Minnesota, Department of Applied Economics.
    2. Mahrizal & L. Lanier Nalley & Bruce L. Dixon & Jennie S. Popp, 2014. "An optimal phased replanting approach for cocoa trees with application to Ghana," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 291-302, May.
    3. Crane, Donald R. Jr. & Spreen, Thomas H., 1979. "A Conceptual Model Of The Stubble Replacement Decision For Florida Sugarcane Growers," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 277828, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Yates, C.M. & Rehman, T., 1998. "A linear programming formulation of the Markovian decision process approach to modelling the dairy replacement problem," Agricultural Systems, Elsevier, vol. 58(2), pages 185-201, October.
    5. Bradford, Garnett L., 1981. "Comment: Energy Accounting: The Case Of Farm Machinery In Maryland," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 13(1), pages 1-3, July.
    6. Kay, Ronald D. & Rister, Edward, 1975. "The Effects of Income Tax Regulations on Farm Equipment Replacement Age and Cost," WAEA/ WFEA Conference Archive (1929-1995) 323852, Western Agricultural Economics Association.
    7. Ibendahl, Gregory & Griffin, Terry W., 2021. "Machinery Replacement Strategies," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2021.
    8. Bauer, L. & Mumey, G.A. & Lohr, W., 1989. "Economic Replacement Strategies for Dairy Cattle," Project Report Series 232069, University of Alberta, Department of Resource Economics and Environmental Sociology.
    9. Melton, Bryan E., 1980. "Economics Of Beef Cow Culling And Replacement Decisions Under Genetic Progress," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 5(2), pages 1-12, December.
    10. VanTassell, Larry W. & Nixon, Clair J., 1989. "A Further Look at the Effect of Federal Tax Laws on Optimal Machinery Replacement," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 21(2), pages 77-84, December.
    11. Jean-Paul Chavas & Richard M. Klemme, 1986. "Aggregate Milk Supply Response and Investment Behavior on U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 55-66.
    12. Deepa Pradhan & Tihomir Ancev & Ross Drynan & Michael Harris, 2011. "Management of Water Reservoirs (Embungs) in West Timor, Indonesia," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 25(1), pages 339-356, January.
    13. Weiland, Brandon & Sesmero, Juan Pablo & Preckel, Paul & Wetzstein, Michael E., 2017. "Can Wood Pellets Save Coal?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258250, Agricultural and Applied Economics Association.
    14. Nelson, Kenneth E. & Purcell, Wayne D., 1973. "A Comparison Of Liveweight, Carcass And Lean Meat Criteria For The Feedlot Replacement Decision," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 5(2), pages 1-9, December.
    15. Ibendahl, Gregory A. & Anderson, John D., 2001. "Open Cow Replacement Decisions: an Application of Asset Replacement Theory," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36184, Western Agricultural Economics Association.
    16. Chavas, Jean-Paul & Kliebenstein, James B. & Crenshaw, Thomas D., 1984. "A Dynamic Production Response Model For Growing-Finishing Swine," 1984 Annual Meeting, August 5-8, Ithaca, New York 278718, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Brake, John R. & Melichar, Emanuel, 1977. "Agricultural Finance and Capital Markets," A Survey of Agricultural Economics Literature, Volume 1: Traditional Fields of Agricultural Economics 1940s to 1970s,, Agricultural and Applied Economics Association.
    18. Doster, D. Howard & Ibendahl, Gregory & Thompson, Nathan & Mark, Tyler, 2019. "Surprise Moment Management," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2019.
    19. Epplin, Francis M. & Tice, Thomas F. & Baquet, Alan E. & Handke, Steven J., 1982. "Impacts of Reduced Tillage on Operating Inputs and Machinery Requirements," 1982 Annual Meeting, August 1-4, Logan, Utah 279134, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Schuck, Eric C. & Frasier, W. Marshall & Ebel, Robert & Houk, Eric & Green, Gareth, 2011. "Retirement and Salinity Effects on Irrigation Technology Choices," Western Economics Forum, Western Agricultural Economics Association, vol. 10(1), pages 1-13.

    More about this item

    Keywords

    Production Economics;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:saea12:119777. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.