The Role of Public Expenditure, Labour and Producer Price in Forecasting Cocoa Production in Nigeria Using ARIMAX Model

Abstract

The study analyzed the role of public expenditure, labour and producer price in predicting annual cocoa production in Nigeria using ARIMAX model. Secondary data on annual cocoa production, public expenditure, labour and producer price for the period of 1981 – 2016 was used for the study. Data was analyzed using descriptive and inferential statistics. The result of Augmented Dickey- Fuller test showed that all the variables (annual cocoa production, public expenditure, labour and producer price) were stationary at first difference. The findings revealed that ARIMAX 1,1,2 was the best model to forecast annual cocoa production in Nigeria, and further indicated that public expenditure and labour had negative effect on annual cocoa production in Nigeria during the period under study while producer price two years’ prior, had positive effect. The result of the forecast showed a gradual upward trend in annual cocoa production during the period of 2017 to 2031. The result further showed that the mean of annual cocoa production forecast for the period under study was statistically significant different at 1% probability level from the mean of the present value, and also revealed that the forecast for 2031 was higher by about 61.06% compared to the value at 2016.