Profit Forecasting in Crop Production: The Case of Gazipaşa

Abstract

Agriculture sector in Turkey is among the largest, employing one out of every five working people. In this study agricultural crop income of Turkey’s Gazipaşa district is analyzed. Located on the coast of the Mediterranean, the district’s main economy is based on agriculture with 81 different crops currently cultivated in 43 regions. For each crop type, total planted land size, yield, wholesale price and operating costs are determined using the data from Turkish Statistical Institute and the district’s Directorate of Agriculture. Crop types are ranked based on their economic returns and top 30 that corresponds to 96.45% of the total agricultural income are determined. Profit forecasts are made for those 30 crop types for each of the next 15 years. Future wholesale prices are forecasted using linear trend projection. The annual agricultural loan interest rate of 7.5% is used to estimate the increase in operating costs. Results show that the annual total profit increases slowly in the next 11 years and then decreases. Moreover, profitability increases only for 18 out of the 30 crop types. Internal rate of return is also found to be 15%. Findings suggest that the current crop diversity is not economically sustainable and a better agricultural production plan is required.