Depends on your soil type. Coastal soils are actually quite fertile, especially along the delta regions. However, they are also the perfect breeding ground for ganoderma, which can rapidly kill the oil palms. But the area you are referring to is actually of marginal fertility, so add that with possible ganoderma problems, and you have a pretty bad combination.

Just a few more things to add to your consideration:
(i) What's the average yield per hectare? At 136 stand per ha, you should be getting about 18tonnes per ha for that age profile on coastal soils.
(ii) Is it a low-lying area? Flood prone?
(iii) How's the sanitation of the field? If it is grassy, and the fronds are not stacked properly, you're gonna have a headache bringing it back to shine.
(iv) Could you tell more about the palms themselves? What materials are they from? Are they IOI, Guthrie, Sime, UP, Golden Hope OR any certified seed producers?
(v) Inspect the field: Check the sex ratio. How many male flowers are being produced vs. female flowers. Now the palms are in male cycle, so you need to wait a few more months before the cycle breaks.
(vi) Was the land planted with coconut before? If it was, chances are the ganoderma inocculum is already there, so no point buying it up.

250 acres (100ha) is a pretty sizeable investment. If ever in doubt, it's better to keep on the safe side, especially since you have noted that the palms do not look good. And RM30,000 per acre leasehold is too pricey.

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Added on July 30, 2008, 5:47 pm
I thought there has been a halt on forest to plantation clearing announced recently? Or does that only apply to East Malaysia?

Hmmm... a rough guide for replanting from old oil palm stands is about RM9,000 per ha. With prices now, you should increase that by another 30% to around RM12,000 per ha. But the total cost till maturity (assuming you do ablation like most major plantations) will cost you another 4-5k per year for a further two years, or a total of around RM22,000 till Year 3 per ha.

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Added on July 30, 2008, 6:02 pmLet me put it in this way: Agriculture has always been a low profit venture compared to other industries. With the exception of the cyclical booms, not all agricultural produce will give you good yields.

Certainly is the case with palm oil. Now, prices may look good, but in truth is it over-inflated. We in the industry are not making the "tonnes of money" claimed by many in the media. Because do not forget, other costs have also gone up as well: Fuel, fertilizers, labor, taxes (aka windfall tax....*grumble!*), and disease control. Those in East Malaysia are in a panic actually, as they are seeing their crude profits crashing to about 4-5k per ha recently with all the hikes taking place. 40-50million may seem a lot of earnings, but that is because the land and cultivation costs are charge out over a period of years. In fact, it appears that to recover the initial cost of cultivation, it will take up to the 10th or 11th year before the land and plantings costs are fully paid for with oil palm.

And don't forget to project in futures costs. Would you be able to survive in this venture if CPO prices fall to around RM2200? It really depends on the management of the plantation. A good management team can keep cost down to about RM900-1000 per ha per year. A not so good one would probably incur a RM1500 operation cost yearly.

Take it from the ironman of the palm oil industry:
In good times, anyone can make money from oil palms; it is the bad times that the goats get separated from the sheeps.

Just like in '97-'98.

D Tourist,

Sorry if I answer first before Michael J,

You can get the transaction prices from MPOB. I can give you an indication from our last year's prices we got from MPOB. The average transaction price is $28,000-$32,000 per acre.

Of course, there may be variations depending on many factors :-

1) What is the average yeild per hectare
2) Is there any mill on the plantation, and if there is not,
3) How far away is the next mill?
4) What are the prices offered for the FFB from the mill
5) Are they good paymasters?
6) What are the surrounding areas and aminities?

Mmm... Sorry for the late reply D-Tourist. Have been really busy of late. And please, just call me Mike, or Michael if you feel that's too informal.. hahaa...

As Danny has pointed out, RM28,000 to a maximum of RM30,000 is considered a fair price for lower Perak region, as long as it isn't peat soil. From how you're describing the land, I have an idea where it is located, and the area is actually flood prone. Some flood mitigation had been done in the area, but not all the planters there had participated in the operation.

Regarding the seeds, let me put it this way: As long as it is coming from a certified producer, the material is good in terms of yield. All seed producers have to follow the minimum SIRIM standard for oil palm seeds. However, given the strong competition for the oil palm seed market, none will go for the lower spectrum. What you may want to consider are things like palm characteristics, which will affect the plantings on different terrains. Sime's (Golden Hope, Guthrie, and Sime) are characteristically more vigorous palms, meaning they grow taller faster. This might become an issue for harvesting when the palms are 12-14 years old and beyond. Also, note that more vigorous palms tend to suffer more stress on elevated soils than shorter palms, and have a tendency to lean on softer soils like peat.

Just a quick guide for seed selection

Felda
Yangambi based material, which has very high bunch number, good oil production. However bunches tend to be smaller in size, with thicker shell and bigger kernel. Palms are moderate vigour.

Sime (inclusive of merged companies)
AVROS based materials, which are notably vigorous. Moderate bunch number, with moderate bunch sizes. Good oil profile, and high oil yielding. Also noted to be very uniform in growth.

United Plantations
A class of its own. UP's selected materials are known for very high oil yields in excess of 30% lab extraction, and oil yields per hectare between 6-7 tonnes. Moderate bunch sizes, and moderate bunch numbers, but capable of reaching 35 tonnes per hectare.

IOI
AVROS based materials, similar to Sime's performance. However, recent selections have edged its oil production closer to what UP's materials are capable of.

AAR
Good planting materials. Refrain from commenting.

These above are considered to be large seed producers.

Other producers (now no longer available) are Unilever's Pamol, and SOCFIN. Both of these producers have materials similar to UP's. Check ex-SOCFIN's Johor Labis estate, you will know how good it is (OER around 23-24%).

However, one note of caution: There are now many fraudsters selling oil palm seeds illegally. These seeds might be from certified producers, but the "agents" they have no permission to sell seeds. Also note that seeds are sold as GERMINATED SEEDS, so any ungerminated or "preheated" seeds are most likely fakes. Needless to say, if the reseller cannot produce a certificate to attest the legitimacy of the seed source, they are likely to be those dug from under the palms, i.e. non-hybrids.

Please be careful about this, as the demand for oil palm seeds has become overwhelmingly high, and just as what happened in 1984, fraudulent sale of oil palm seeds nearly killed the industry. Be responsible, and buy only certified seeds.

Other than that, I believe Danny has given a very good explanation of things.

PS: Checked the latest CPO prices? Already below RM2200 lei.... The forecastings were correct all the while... And just a hint, South America is planning to flood the market with oil crop.

Well, seedling prices have almost doubled over the last few months, that's for sure. What's the name of the agency? A nursery operator I guess? Soon Soon Plantation, Ziran Trading, and United Agri Harvest in the Teluk Intan and Slim River area do have UP materials, that's what I'm certain of. But honestly, with seedlings, it is quite hard to know, unless you ask the operator for the official letter given out by UP to attest the seedlings' origin.

And yes, UP's materials do give exceptional large early bunch sizes. However, even the best material in the world would not reach its full potential without good agricultural practices. Do note that UP is one of the best managed agricultural entity in Malaysia. With their high standards, it wouldn't be a surprize to see them getting 20tonnes FFB in the first harvesting year alone. That's about 10-12kg bunches for every 36-40 month old palms. Their newer materials have even shown 40tonnes FFB for 4-5 year old palms.

Hmm.... I have a strange feeling that we've met before.

Haha... Well, it was just a hunch that's all.

Yes, Soon Soon Plantation is based in Nibong Tebal. However, I heard that they also have another small nursery in Lower Perak region. Not sure if it is the same operator or just similar named.

Haha... different types of materials? Tell you a "secret" lar.. most other producers who have "various" materials, are actually selling the same thing, just that they've been rebranded. Of course there would have been some level of selection done, but the improvements haven't been something to shout about. As far as UP is concerned, they only sell two materials: the DxP, and the Sawit Perdana Biclonal Seeds.

Let me just elaborate a little about the Biclonal seeds, as so far UP is the only producer with more than 6 years of knowledge on the production of these premium graded seeds.

In the industry, cloning of oil palms have always been seen as a means to improve the performance of the industry, as cloning basically replicates individual palms as identical individuals, with uniform character and behaviour. Hence, cloning high performance Tenera (DxP) palms and planting them out could result in fields with uniformly high production palms which could give extremely high yields. How high? Let's just say some clones have been reported to give about 10tonnes CPO per hectare easily.

However, there are a few problems with cloning oil palm. For some reason yet to be resolved, cloned oil palms have not been performing as expected. Some problems include severe bunch failure, mantling, somaclonal variation etc., and the problem can be quite severe.  However, the brains at UP came up with the idea of cloning the parents of the DxP hybrid progenies which showed high performance, and then crossing them again to produce hybrid seeds. The theory was that by doing so, they could produce large quantities of high performance DxP hybrids. Hence, after many years of research, they have come up with a unique system and methodology that enabled them to clone the parents of the DxP hybrids, while reducing the residual effect of the cloning process. This resulted in the Sawit Perdana Biclonals Seeds, which do not have the problems associated with cloned palms, but have the high uniformity instead.

In Peninsular Malaysia, there are only a few nurseries that do carry the Biclonals, as West Malaysians are little more stingy (joking here.. haa..) and would go for normal DxP. However, the biclonals have become a major hit in East Malaysia for a number of years now, and many major plantation there without a seed production facility are demanding these biclonal seeds. And yes, you read it correctly: DEMANDING.

For a quick reference, UP is selling their DxP seeds for RM1.85, while the Biclonals are sold at RM2.50 each. However, according to the nursery operators there, UP seeds are fully booked till first half of 2011.

For D-Tourist,
1) Have you purchased your plantation land yet?
2) What has attracted you to invest into a palm oil plantation land?
3) Judging from economies of scale, a min of 50 acreas will only be viable. Do you agree on this?
4) What is your expected yearly net profit (in terms of %) from your investment?
5) What is the average price that you expect to get for your FFB from your nearby mills?
6) Who will manage the plantation for you, will you take an active role in your management, or do you think it is safe to assign it to a 3rd party?

Like the petroleum crude oil, when the price is at the lowest now, they have begun to cut off supply by 1.5 million tons. I expect the same to for crude palm oil. It will be interesting how the events will unfold the next few months.