Abstract
Price forecasting is more sensitive with vegetable crops due to their high nature of perishability and seasonality and is often used to make better-informed decisions and to manage price risk. This is achievable if an appropriate model with high predictive accuracy is used. In this paper, Seasonal Autoregressive Integrated Moving Average (SARIMA) model is developed to forecast price of tomatoes using monthly data for the period 1981 to 2013 obtained from the Ministry of Agriculture, Livestock and Fisheries (MALF) in the agribusiness department. Forecasting tomato prices was done using time series monthly average prices from January 2003 to December 2016. SARIMA (2, 1, 1) (1, 0, 1)12 was identified as the best model. This was achieved by identifying the model with the least Akaike Information Criterion. The parameters were then estimated through the Maximum Likelihood Estimation method. The time series data of Tomatoes for wholesale markets in Nairobi are considered as the national average. The predictive ability tests RMSE = 32.063, MAPE = 125.251 and MAE = 22.3 showed that the model was appropriate for forecasting the price of tomatoes in Nairobi County, Kenya.
Highlights
In Kenya, the agriculture sector is the mainstay of the economy, contributing about 30% of the GDP and accounting for about 80% of employments
The wholesale price data was gathered from the Ministry of Agriculture, Livestock and Fisheries (MALF) in the agribusiness department which was collected by extension officers in the various wholesale markets
The results obtained from this study shows that the prices of tomatoes in Nairobi County have not shown any trends towards an increase or decrease, in other words the series is stationary
Summary
In Kenya, the agriculture sector is the mainstay of the economy, contributing about 30% of the GDP and accounting for about 80% of employments. The total domestic value of the horticulture sector in 2012 amounted to Ksh 217 billion occupying an area of 662,835 ha with a total production quantity of 12.6 million tons. As compared to 2011, the total value, area and production increased by 6%, 9% and 38% respectively [13]. Vegetables contributed about 38% of the domestic value of horticulture with 287,000 ha under production and producing 5.3 million tons valued at Ksh 91.3 billion. Production increased by 13% while there was a slight reduction in value by 4% from 2011 levels. The increased production is occasioned by favourable weather conditions that resulting to high yield, reducing the value of vegetables. There was a drop in prices for commodities like Cabbages and Tomatoes thereby reducing the overall value for the year
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