The Coconut farmers in Sri Lanka are reluctant to remove their senile palms in replanting. This results in an enormous number of palms crowded within the old plantations, with young palms failing to yield even after 25-30 years. Considering the gravity of this situation, a replacement model was developed in 1983 and a Pilot Project to implement this model was launched in 1984 in Rambukkana of the Kagalle district. Four enterprises viz; removal of senile palms, planting banana as a catch crop, planting hybrid coconut seedli ngs and pi anting cocoa as a perennial intercrop were selected on the basis of technical feasibility, social acceptability and economic viability.

The biophysical conditions of the Project area such as the soil type and the rainfall pattern meet the agroclimatic requirements of the selected crops namely banana, cocoa and dwarf x tall hybrid coconuts. Economics of individual enterprises and different suitable models were worked out before selecting the most suitable model. These results reveal that replanting coconuts with clear felling of senile palms was not an economically viable enterprise per se. The Sum of Net Present Values calculated from the cash flow gave negative results at discount rates higher than 12 percent. Therefore the most economical model was to be selected from number of technically feasible models on the basis of Internal Rate of Return (IRR) calculated from their streams of net returns. Coconut-banana- cocoa model yielded the highest IRR compared to that of coconut-banana-coffee or coconut-banana-pepper models. Hence the coconut- banana- cocoa model was selected for implementation. The economic analysis of the input output data obtained from an average farm which adopted the model in the project area showed satisfactory results. The revenue from the sale of trunks reduced the cost substantially during the first year. The catch crop of banana provided adequate income to overcome the cash deficit from the second year until the sixth year. Economic viability of the model is well illustrated by their higher annuities. The annuity, calculated from the stream of net revenue accrued during the first six years of operation of an average model, has exceeded the annual net revenue accrued from an equal area of old coconuts. The pi lot project at Rambukkana has illustrated that the uneconomic practice of replanting coconuts with clear felling of senile palms can be made economically viable by incorporating other synergistic enterprises into the coconut based farming systems.