The replacement model developed and being pilot tested at Rambukkana is an integration of replanting and intercropping in coconut lands. It had overcome the farmers financial deficit at replacement and proved to be an economically viable cropping model with a structural base for Coconut Based Farming Systems. The results of the Pilot project provides a strong case for removal of subsidies for coconut replanting and the underplanting schemes. The subsidy based commodity development model is a "mis-fit" in coconut extension and has become a constraint for future development of effective extension for Coconut Based Farming Systems. The new strategy in coconut extension has farmer development and productivity increasing objectives and its base will be the farmer group and association. The successful diffusion of the replacement model and the development of farming systems will depend on education based extension.