Forecasting cocoa production of six major producers through ARIMA and grey models

Abstract

PurposeIn the current study, two grey prediction models, Even GM (1, 1) and Non-homogeneous discrete grey model (NDGM), and ARIMA models are deployed to forecast cocoa bean production of the six major cocoa-producing countries. Furthermore, relying on Relative Growth Rate (RGR) and Doubling Time (Dt), production growth is analyzed.Design/methodology/approachThe secondary data were extracted from the United Nations Food and Agricultural Organization (FAO) database. Grey forecasting models are applied using the data covering 2008 to 2017 as their performance on the small sample size is well-recognized. The models' performance was estimated through MAPE, MAE and RMSE.FindingsResults show the two grey models fell below 10% of MAPE confirming their high accuracy and forecasting performance against that of the ARIMA. Therefore, the suitability of grey models for the cocoa production forecast is established. Findings also revealed that cocoa production in Côte d'Ivoire, Cameroon, Ghana and Brazil is likely to experience a rise with a growth rate of 2.52, 2.49, 2.45 and 2.72% by 2030, respectively. However, Nigeria and Indonesia are likely to experience a decrease with a growth rate of 2.25 and 2.21%, respectively.Practical implicationsFor a sustainable cocoa industry, stakeholders should investigate the decline in production despite the implementation of advanced agricultural mechanization in cocoa farming, which goes further to put food security at risk.Originality/valueThe study presents a pioneering attempt of using grey forecasting models to predict cocoa production.