Cocoa plantations in east and central Java : optional economic life and replacement pattern

Abstract

This thesis endeavours to evaluate the economic feasibility of establishing cocoa plantations in Central and East Java. The main objective of the analysis is to determine the optimal replacement period for three different methods of cocoa culture. Chapter 2 briefly describes cocoa plantation conditions in Central and East Java before and after World War II. In Central Java the area of cocoa plantation decreased from some 5,200 hectares (before World War II) to some 1,300 hectares (in 1971). In East Java the establishment of cocoa plantations was begun in 1950 and by 1971 had increased rapidly to 4,500 hectares. Chapter 3 briefly describes World cocoa production trends and prospects. World cocoa production and consumption was approximately 1.4 million metric tons in 1971. The F.A.O. has predicted that the annual growth rate of world cocoa production and consumption will be approximately 2.6 percent (F.A.O., Agricultural Commodity Projection, 1970-1980, 1970, Vol. l). World cocoa prices fluctuate widely but the long term trend lies between A.25 cents and 30 cents per pound. Chapter 4 discusses the theory of rotation length and presents the criteria for achieving maximum discounted profits. Maximum profit occurs when the level of average profit from over the rotation length equals the present value of the marginal profit from extending the rotation one unit of time.