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Humboldt-Universität zu Berlin - Lebenswissenschaftliche Fakultät - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 3/10


Optimum replacement period for rubber plantation in Nigeria

Chinye S. Mesike and Godwin A. Sagay
Rubber Research Institute of Nigeria, Benin City, Nigeria

Rosemary N. Okoh
Delta State University, Asaba, Nigeria


Abstract

The study aimed to derive the optimum replacement period for rubber plantation in Nigeria. The analysis was carried out with the data collected from 30 randomly selected rubber estate holders in Nigeria using the profit maximization concept. Results revealed that the optimum period to replace rubber plantation in Nigeria should be at the 35th year. However, the result of the study suggests that the actual replacement period of rubber plantation in Nigeria may vary since factors such as price changes in inputs and outputs, changes in discount rate and income tax and the management ability of the plantation owner can either shift the replacement period upward or downward. The policy conclusions follow that farmers will have to keep accurate records of the right nature for management purposes and that research on market development and price forecasting should be improved.

Keywords: amortization factor, discount rate, rubber plantation, replacement period, profit maximization

JEL: Q 110

Vol. 49 (2010), No. 3: 257-270