Trend and Forecasting of Sri Lankan Tea Production

Tea industry has a tremendous impact on the Sri Lankan economy. Total tea production in 2013 was 339 million kilograms and the total tea exports earned 164.9 billion rupees which accounts for 58.9% of total agricultural exports. Forecasting of tea production is one of the major important requirements to individual producers, agribusiness firms and policymakers for various purposes. There is a significant research need to update and develop models with present data for accurate forecasting in near future. With this background this study was undertaken to identify the trend and appropriate time series models to forecast elevation wise black tea production. Trend analysis revealed that, high grown and medium grown tea showed the decreasing trend during the early period while low grown tea showed increasing trend. But recent period production of all elevations showed a declining trend, which is a problem that should be addressed strategically. Exponential smoothing techniques and ARIMA methodology were employed to identify appropriate models for elevation wise tea production. MAPE was used as model selection criteria with residual analysis. Among the exponential smoothing models tested, Single exponential models were selected as good models and among the ARIMA models tested, ARIMA (1,0,1), ARIMA (1,1,1) and ARIMA (1,1,0) were selected for high, medium and low grown tea respectively.