Optimum land allocation for plantation

Abstract

The panel topic, as I understand it, is on choosing a crop mix which is optimum in the economic sense. Then it is important to know, at the outset, what do we mean by "optimization". And from which viewpoint is this optimization problem seen.

The concept of optimization is fundamental to micro-economics. Simply, optimization is defined to mean the act of choosing the "best" alternative out of whatever alternatives are available. It is a description of how decisions (i.e. choices among alternatives) are or should be taken. A decision may vary according to the particular economic context, or viewpoint (e.g. a firm's production decision, a consumer's choice of consumption basket, a planner's choice of resource allocation in the economy). For the subject under consideration, it is understood that optimization is viewed from the standpoint of a firm (e.g. plantation group, public agency). It is based on the idea of rationality in economics, which implies, among other things, that a decision-taker tries to optimize, or find the best alternative.

All optimization problems consist of three elements. These are: (a) choice variables (e.g. rubber, oil palm and cocoa areas and their respective outputs) whose optimal values have, to be determined; (b) the objective function, i.e. a mathematical specification of the relationship between the choice variables and the variable whose value we wish to maximize (e.g. profit) or minimize(e.g. cost); and (c) a specification of alternatives (e.g. various crop combinations) that are available to the decision-taker, or a feasible set.