Application of Forecasting Methods on Prices of Local and Imported Rice in Ghana

Abstract

The field of forecasting is concerned with approaches to determining what the future holds. It is also concerned with the proper presentation and use of forecasts. Fluctuations in the prices of commodities are a phenomenon that is of statistical significance. In modern mathematical and social sciences it is important that the field of forecasting is developed and designed as a tool to help decision making and planning.  This project discusses how we can use simple objective methods of forecasting on price data to forecast to a relatively high degree of accuracy, the prices of commodities. The study highlighted on the adequacy of the quadratic method of curve fitting for forecasting the prices of local rice based on a 5-year data set. It shows that, though most models can predict the prices reasonably, by considering the R² values and the Root Mean Squared residual values, the quadratic models are better than the other models such as linear, lognormal, logistics and the simple exponential. The project also depicts very similar trend characteristics between prices of imported and local rice in Ghana. It discusses how the use of forecasting methods on prices of commodities  need to be developed to empower people because their use implies that, we can modify variables now to alter (or be prepared for) the future. Successful application of forecasting methods on prices of commodities especially a stable food like rice can improve the income of farmers and bring efficiency into the commodity market.

Keywords: Forecasting, Price, Response, Predictor, Regression. RMS, Residuals.

Application of Forecasting Methods on Prices of Local and Imported Rice in Ghana