Forecasting Kenya’s Sugar Production Using Garch Model

Abstract

The goal of this research project is to predict the production volume of the sugar industry in Kenya in five years’ time projecting from the year 2012, that is, production volume in the year 2017. There has been mechanisms to monitor and manage the potential of the industry in the country which includes formation of bodies which have played key roles in the sugar industry in the country. The bodies have strictly stuck to their core mandates of managing the industry, carrying out the research in cane varieties among other roles. But the projection of production of sugar in the future has been a gap left unfilled for many years. This research project therefore, intends to fill this gap by taking into account the production volumes in the past and using them to project the volume in the future taking into consideration the current trends, seasonality, cyclic factors and others that could influence clear forecast in the coming years. The results of this work will help in policy making among the stakeholders in the sugar industry. It will also aid planning purposes in taking care of what must be done to ensure adequate sugar production in the future. The results which will give the production volume in 2017 will help in determining whether the current production level will be enough going forward, to sustain current and future demand that will ensure adherence to the visions enshrined in the country’s development blue print- ‘the vision 2030’, otherwise, it will build on what need to be put in place to ensure adherence to demand of the sugar production both current and in the future. GARCH model has been used in forecasting the Kenya’s sugar production volume up to the year 2017.