Forecasting of Common Paddy Prices in India

Abstract

Paddy is an important food crop in India and second most in the world. About 35% of net cropped area under paddy and about 50% of the farmers cultivate paddy every year. Farmer’s decision making on acreage under paddy depends on the future prices to be realized during harvest period. Hence this paper presents a methodology to forecast prices during harvest period and applied the method to forecast for the kharif 2017-18. The time series data on monthly average prices of paddy from January, 2006 to December, 2016 collected from AGMARK was used. ARIMA (Box-Jenkins) model was employed to predict the future prices of paddy. Model parameters were estimated using the R programming software. The performance of fitted model was examined by computing various measures of goodness of fit viz., AIC, BIC and MAPE. The ARIMA model was the most representative model for the price forecast of paddy in overall India. In kharif season the paddy is harvested during September – November. The forecast shows that market prices of paddy, would be ruling in the range of Rs. 1,600 – 2,200 per quintal in kharif harvesting season, 2017-18.