Optimal Timing of Removal and Planting of Perennial Crops in Anticipation of a New Cultivar

We develop a perennial crop vintage-investment decision model that incorporates the dynamics of growers’ endogenous removal and planting decisions with uncertainty regarding the future release date of a new variety. We apply the model to coconut cultivation to examine the effects of a new cultivar’s higher yield, lower input requirements, and lower discard rates on the removal and planting decisions for various vintages of existing trees and different announced release dates of new cultivars. Results show that if the new variety is highly (moderately) profitable, growers will alter their planting and removal decisions to plant the new variety sooner (later).