Modelling and Forecasting of Tea Production, Consumption and Export in Bangladesh

Abstract

Bangladesh is the world’s 9th largest tea producer and the tea industry is a major contributor to the country’s economy. In order to provide information about the demand, supply and foreign trade of tea in the future, forecasting plays a vital role in adjusting the gaps and formulating policy. Taking all of this into account, this study aims at modelling and forecasting tea production, consumption and export in Bangladesh using ARIMA modelling for the period of 2019 to 2028. Forty-seven years of time-series data from 1972 to 2018 were obtained from the Bangladesh Tea Board. Forecasts were computed on the basis of models that were selected using three important information criteria such as Akaike's Information Criterion (AIC), Schwarz's Bayesian Information Criterion (BIC) and Correction for Akaike's Information Criterion (AIC). The study identified that the best-fitting models were ARIMA (0, 1, 0), ARIMA (0, 2, 2) and ARIMA (1, 1, 2) for tea production, consumption and export, respectively. Forecasting showed an upward trend for tea production from 83.40 to 94.88 million kg and consumption from 94.35 to 131.71 million kg over the period of 2019 to 2028. On the contrary, the forecast for tea exports shows a decreasing trend. Such forecast results indicate that the government should immediately take action to accelerate the growth of the tea industry in Bangladesh. Otherwise, the economic development of the country will be hampered by reduced export earnings while relying on imports to meet the domestic demand.