Determinants and Univariate Forecasting of Palm Oil Production in Nigeria: Application of Autoregressive Distributed Lags Modeling and Box Jenkins Techniques (1981-2040)

Samuel Binuomote

Abstract


The aim of this study is to assess the drivers of palm oil production in Nigeria as well forecast the future values of palm oil production with a view to identifying the principal factors determining production in the Nigerian palm oil industry and also examine the future level of production in the light of prevailing circumstances. Autoregressive Distributed Lags and the ARIMA Box- Jenkins univariate forecasting techniques were employed in carrying out the research objectives. Production and  other relevant data on Palm oil production in Nigeria were sourced from the historical data of the online Statistical  database of the Food and Agricultural Organization of the United Nations. Augmented Dickey Fuller unit root test used to examine the time series properties of the data showed that all the variables have an order of integration of 1. Results of Autoregressive Distributed Lags modeling of Palm Oil production in Nigeria showed that acreage of palm oil palm cultivated, rural population which is proxy for agricultural labour and capital invested in palm oil production are the main divers of palm oil production in Nigeria. The Box-Jenkins’ autoregressive (p) and moving average (q) parameters were identified based on the significant spikes in the plots of partial autocorrelation function (PACF) and autocorrelation function (ACF) of the different time series. ARIMA (4,1,0) model was found suitable for Nigeria palm oil production. Prediction was made for the immediate next 25 years (2016-2040) for palm oil production using the best fitted ARIMA models based on minimum value of the selection criteria, which are, Akaike information criteria (AIC) and Schwarz-Bayesian information criteria (SBC) with the performances of models validated by the necessary diagnostic tests. Box-Jenkins model results generated on R software show that palm oil production in Nigeria will continue to increase going into the future although the rate is slow.


Keywords


ARIMA, Palm Oil, Time Series, Nigeria, MAPE, Forecast

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References


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