Modelling and Forecasting of National Tea Production in Sri Lanka

The tea plantation is of paramount significance in the Sri Lankan economy, contributing to the Gross Domestic Product (GDP) and foreign exchange earnings. Accurate national tea production forecasting is essential for policy formulation, strategic planning, and the sustainable development of the tea industry. Therefore, this study attempts to develop a robust statistical model to accurately forecast national tea production in Sri Lanka. Historical annual national tea production (in million kilograms) data from 1972 to 2022 were collected through the Tea Board of Sri Lanka. To identify the trend and pattern in tea production, the Autoregressive Integrated Moving Average (ARIMA) time series forecasting model was adopted. The model was developed using the Box-Jenkins methodology, which involves model identification, parameter estimation, and residual checking. Results revealed that the ARIMA (0,2,2) was selected as the best-fitted model for predicting national tea production in Sri Lanka. ARIMA (0,2,2) model forecasts future tea production for the next five-year period (2023-2027). Furthermore, it indicates that national tea production will gradually decline from 262.51 Mt and 231.11 Mt in the next five years (2023-2027). The model indicates a statistically significant decline in the national tea production in Sri Lanka. Therefore, it is essential to have long-term structural planning and management strategies for the sustainable tea plantation in Sri Lanka.