Organic produce price forecasting at a farm level criteria, methods, and forecast evaluation /

by 1977- Gubanova, Tatiana

Organic farmers, wholesalers, and retailers need price forecasts. A methodology and protocol to select the best performing method from several time and frequency domain candidates is suggested. Seasonal autoregression, the additive Holt-Winters exponential smoothing, and spectral decomposition are considered. The forecasting methods are evaluated on the basis of an aggregate accuracy measure and several out-of-sample predictive ability tests. The seasonal autoregression is found to be broadly the best performing method. The Holt-Winters method provides better forecasts in the short run; spectral decomposition is preferable for more distant periods. The price-generating process is found to have a strong autoregressive component and a clear but simple seasonal pattern. The role of better price forecasts for the agents who deal in less common organic produce is highlighted. A confirmation for the claim that the organic produce industry needs better farmgate price forecasts to grow is provided. Contracting and diversification are suggested. Index words: Organic produce, Price forecasting, ARMA, Exponential smoothing, Spectral decomposition, Forecast Evaluation Organic Produce Price Forecasting at a Farm Level: Criteria, Methods, and Forecast Evaluation by Tatiana Gubanova B.A., Petrozavodsk State University, Russia, 1999 Kandidat nauk, Institute of Economics KarRC RAS, Russia, 2002 A Thesis Submitted to the Graduate Faculty of The University of Georgia in Partial Fulfillment of the Requirements for the Degree Master of Science Athens, Georgia 2005 c? 2005 Tatiana Gubanova All Rights Reserved Organic Produce Price Forecasting at a Farm Level: Criteria, Methods, and Forecast Evaluation by Tatiana Gubanova Approved: Major Professors: Committee: Luanne Lohr Timothy A. Park Glenn C.W. Ames Michael E. Wetzstein Electronic Version Approved: Maureen Grasso Dean of the Graduate School The University of Georgia May 2005