A MODEL OF THE STUBBLE REPLACEMENT DECISION FOR FLORIDA SUGARCANE GROWERS

Sugarcane has been cultivated since at least Sugarcane also can be replanted immediately 8000 B.C. (Barnes, p. 2) and today is grown without allowance for a fallow period. This throughout the world's tropical and subtropipractice, generally called "successive cal regions. In Florida, sugarcane has been proplanting" in Florida, usually results in lower duced commercially since 1920 (Zepp). Before productivity but avoids the loss of revenue 1960, however, Florida sugar production was associated with fallowing. The main purpose of not significant; only three mills were in operathe fallow is to kill pests in the soil such as tion. With the ban on importation of Cuban grubs and wireworms. sugar and the lifting of domestic sugarcane The sugarcane grower is faced with a tradeacreage restrictions in 1960, the industry grew off between declining sugar yield and the cost rapidly. of replacement of the aging stubble including In recent years Florida has been vying with the cost of seed cane, the cost of plowing under Hawaii for the lead in domestic sugarcane prothe old stubble, cultivation, leveling, and reduction. Cane is also grown in Louisiana and planting, and possibly the loss of revenue Texas. Sugarcane accounts for approximately during a year of fallow plus any costs of fallow 42 percent of domestic raw sugar production maintenance. and sugarbeets account for the remaining 58 The grower's problem is analogous to the percent. In 1975, Florida contributed 16 perproblem of replacement of industrial equipcent of domestic sugar production and slightly ment subject to declining efficiency, which is more than 1 percent of world production treated in texts of finance and engineering (Kidder and Lyrene). economy (e.g., Mao, Grant et al.)' or, in agriculSugarcane grown in Florida can be harvested ture, to the replacement decision for fruit annually and yields a stalk containing about orchards with declining yields. Sugarcane 0.3 pounds of raw sugar. Sugarcane is propafields, however, cannot all be harvested when gated vegetatively by planting sections of they are at individual optimum productivity stalk known as seed cane, usually in the fall. because heavy capital requirements of raw The first crop, called plant cane, is harvested sugar mills necessitate an extended harvest approximately 16 to 18 months later. It is a and grinding season. Thus, the replacement perennial plant which grows back each year decision cannot be done on a field-by-field after harvest from the portions of the stalk left basis; rather, all fields belonging to a under the ground. The subsequent crops are particular firm are interdependent and optimiknown as ratoon or stubble crops. Several zation must proceed at the firm level. factors generally combine to cause cane and The replacement decision hinges on expected sugar production to decline at a declining rate future revenues. Therefore, it is necessary to with subsequent ratoons. The stubble is predict, in some manner, future yields for the typically replaced between two and five years current stubble crops as well as for the potenafter planting (Kidder and Lyrene). tial replacements. No fully satisfactory formal The costs incurred when the stubble is redecision model is available. placed are the cost of plowing under the The objectives of our article are to (1) review stubble, the cost of field preparation, and the asset replacement theory and modify it for the cost of seed cane. Generally an additional opstubble replacement decision, (2) propose a portunity cost is associated with the loss of model to quantify the stubble replacement revenue from one crop while the field is put to decision, and (3) empirically implement the fallow; however, the cane can be grown in rotamodel and demonstrate its use. tion with corn or vegetables, and rotation with rice appears to be a promising alternative (Alvarez et al.).