Time Series Model to Forecast Fresh Coconut Exports from Sri Lanka

Abstract

Coconut accounts for approximately 12% of all agricultural produce in Sri Lanka with the total land area under cultivation covering 409, 244 hectares ranking second to rice production. The primary regions for coconut cultivation are the Puttalam and Kurunegala districts in North- Western Province and Gampaha district in the Western Province, forming what is known as the Coconut Triangle. This region accounts for 232,270 hectares (50.94%) of the overall coconut cultivation area. The remaining coconut cultivation areas are found in the Southern Province, specifically in the districts of Galle (13,833 hectares), Matara (14,946 hectares), and Hambantota (25,837 hectares), and in non-traditional regions of the Eastern and Northern provinces. The annual coconut production varies between 2,800 to 3,000 million nuts. Having advanced knowledge of exporting coconuts offers numerous advantages to Sri Lanka, particularly in terms of establishing forward contracts with other countries. Based on secondary data of annual fresh coconut exports from 1981 to 2020 obtained from the Coconut Development Authority (CDA) of Sri Lanka, the paper developed ARIMA (2,1,0) model to forecast export. The model was selected out of three parsimonious models which were identified from the Sample Autocorrelation Function (ACF) and Partial Autocorrelation Function (PACF) of the stationary series and a comparison of significant parameters and lowest values of Akaike Information Criterion (AIC), Schwarz Bayesian Information Criterion (SBIC) and Hannan-Quinn Information Criterion (HQIC). The errors of the fitted model were found to be random and constant variance. The model was validated using 2021 and 2022 data. The percentage errors for 2021 and 2022 are 20.23% and -29.57% respectively. The predictions for 2023 and 2024 are 14696 and 15052 respectively. The model can be used effectively by the Coconut Development Authority for decision-making. However, it is suggested to develop the model further to reduce the percentage error.