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SUPPLY AND DEMAND PROJECTION OF WHEAT IN PUNJAB FOR THE YEAR 2011-2012
Dr.Hazoor Muhammad Sabir* Safdar Husain Tahir** *Associate Professor, Department of Economics, GCU. Faisalabad, Pakistan. (Corresponding author) ** Assistant Professor, Department of Banking and Finance, GCU. Faisalabad, Pakistan

Abstract
Wheat is the staple food of people in Pakistan. Depending upon the different growth rates of population, the wheat requirements vary from time to time that creates complications for policy makers .The main objective of the study was to forecast accurately the population and wheat requirements in Punjab province for the year 2011-12. For this purpose a time series data regarding population, production and wheat requirements were collected from the National statistics. An exponential smoothing model specific for forecasting was applied. Different weights ranging from 0.3-0.9 were given to the past data to get the precise estimates. Results revealed that a quantity of 7.83 million tons wheat will be surplus in Punjab as the total requirements would be 12.70 million tons for the population of 97.67 million projected for the year 2011-12. Keywords: Population, production, requirement, forecasting and Punjab (Pakistan)

1-Introduction: Pakistan is the 9th largest wheat producer, accounting for 3.04 % of the world's wheat production from an area of 3.57 % of the world (FAO 2009) Wheat is the leading food grain of Pakistan and being staple diet of the people. It occupies a central position in formulation of agricultural policies. It contributes 14.4 percent to the value added in agriculture and 3.1 percent to GDP (Eco Survey 2009-10) Planning is fundamentally a process of thinking ahead and anticipating difficulties through rational actions based on experience, prudence and imagination to conduct the course of development so as to realize the pet and professed goals. The long-term supply projections of agricultural commodities prove helpful for formulating government policies with regard to production, consumption, prices, procurement, marketing, storage and domestic and foreign trade. There is no second opinion on the importance of Agriculture for its being key numerator in the sustainable growth and development of the economy of Pakistan. It is a vital sector, providing food to the fast-growing population of the country. Punjab excelled in wheat production last year. The officials concerned conceded that in southern Punjab crop output averaged between 30 and 60 mounds per acre. Punjab is the main wheat producer in Pakistan. During 2008-09, total wheat production in Pakistan was 24032.90 thousand tons and 76.0 % of the total (18240 thousand tons) were produced in Punjab on a total of 75 % (16892.93 thousand acres) of the total National 800

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wheat-growing area (22353.57 thousand acres). The average yield in Punjab was 27.26 mounds per acre which was 1.41 % higher than the Pakistan average 26.88 mds per acre. During 2009-10, the irrigated areas of Punjab (15650 thousand acres) produced 17817.32 thousand tons of wheat, and in the unirrigated area (1385 thousand acres) produced 422.99 thousand tons. The average yield in irrigated areas was 30.50 mds per acre or 272 % higher than the 8.18 mds per acre yield in unirrigated areas. Thus data statistics indicated that Punjab province has been a major wheat producing province and had great potential to feed the rapidly growing population. 1.1 Significance of Study: Wheat is the major cereal crop in Pakistan and was grown on 17035 million acres (2009-10) in Punjab, Pakistan. More than eighty percent of the people consume wheat as their necessary food ingredient. More than forty percent of the cropped area falls under wheat every year. Whether domestically produced wheat on this area fulfills the requirements of Punjab population? Either some proportion of the total area under wheat could be replaced with some others competitive crops like edible oils, are the questions. To answer these questions, the current study was planned, so that actual estimate could be made for the coming years. It will help the stakeholders accordingly. Keeping in view the importance of current study the following main objectives were set to achieve. 1.2 Objectives of Study: 1. To forecast Punjab population for the year 2011-12. 2. To estimate the wheat consumption requirements for the said period. 3. To workout the surplus/deficiency of wheat quantity. 4. Recommendations and suggestions for the policy makers. 2-Review of Literature: Gajendra (2008) attempted to make short term projections of food grains supply and requirement for the state of Kerala. On the basis of suitability, the forecasting techniques viz. Double Exponential Smoothing and Simple Exponential Smoothing were applied to estimate the projection of production of cereals and pulses respectively, for the years 2005-06 and 2010-11. The age group wise requirement for cereals and pulses were also estimated for the same time periods. The estimates of food grains production and requirement for the state of Kerala indicated that overall cereals and pulses requirement would be in deficit condition in both the periods Bermudez et.al (2006) proposed in their article that Exponential procedures were widely used as forecasting techniques for inventory control and business planning. A number of modifications to the generalized exponential smoothing approach to forecasting univariate time series were presented, which have been adapted into a tool for decision support systems. According to them this procedure may provide forecasts from different versions of exponential smoothing by fitting the updated formulas. It was compared to other forecasting methods on the 111 series from the M-competition Saboor et al (2003) conducted a time series analysis for wheat supply projection in Pakistan and concluded that it appears that total cultivated area increased due to changes in cropping pattern, higher cropping intensity, increased demand from the industry, better marketing facilities and varying efforts of the government to promote
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agricultural production. Similarly, the analysis of the past yield trends indicated that there had not been a significant break-through in the average yield per hectare. However, a rising trend in yield during some period was due to the use of improved varieties of wheat, increased water supply through installation of tube wells, increased use of fertilizers and plant protection measures Gary (2002) in his article proposed a new technique for estimating trend and multiplicative seasonality in time series data. This technique was computationally quite straightforward and gave better forecasts than other commonly used methods. Like many other methods, it attempted to isolate and estimate the several subcomponents in the time series. The basic technique which was developed originally as a way to generate initial parameter values was the exponential smoothing model and it proved to be a useful forecasting method in itself John (1981) concluded that Exponential smoothing was commonly used in automatic forecasting systems. With large data sets, an exponentially smoothed average implicitly weights the data in a declining manner, similar to discounting. This pattern was important in that it minimizes a measure of forecast error Andrew (1970) applied a recent development in statistical theory known as parametric modeling to forecast wheat yields in the United States, Canada, Australia, and Argentina. The essence of this approach was that the data were used for identifying and estimating random components in the form of moving average and autoregressive processes. It did not identify and measure structural relationships when forecasting with econometric models was attempted. Exponential smoothing was also used to forecast yields in the United States and Canada. The Thiel coefficient was then computed to determine the forecasting accuracy of parametric modeling compared with exponential smoothing. 3. Methodology: The main thrust of the study was the province of Punjab, Pakistan. The secondary data for the last one decade were collected from the National statistics of Pakistan. These data pertained to the variables of population, wheat production and overtime its consumption. In order to make the future forecasting, among many, exponential smoothing model was selected. This model is frequently used for forecasting. With the help of this model we can forecast for the period (Ft+1). The value of time series at period t (At) is assigned a weight (w) between 0 & 1 and the forecast for period t (Ft) is assigned the weight of (1-w). The greater the value of w, the greater is the weight given to the value of the time series in period t as oppose to the previous period. Thus the value of forecast of the time series in period t+1 would be; Ft+1 = w (At) + (1-w) Ft Where: Ft+1 is the forecasted value for period t+1 W is the respective weight given to the actual value At is the actual value in period t Ft is the forecasted value in period t.

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For calculation with the help of this model, it was necessary to assign a value to the initial forecast (Ft) to get the analysis started. For this purpose the first value of Ft was taken equal to the mean value of entire observed time series data. Secondly, the different values of weight (w) were assigned to At. Then the validity of the forecasted values obtained through different weights (w) was checked with the help of Root Mean Square Error Test (RMSE).

RMSE =

It was the test which justifies the validity of estimated values. It helps make the comparison of all the estimates, through the assignment of different weights given to the time series data. Lesser the value of RMSE is, more confident we are on the exponential forecast. 4. Results And Discussion: Data given in tables 1-4 demonstrate forecasted values of population, production, wheat requirements and wheat area for 2011-12, in the Punjab province of Pakistan. These values were estimated with the help of exponential smoothing model. Then their validity was tested with the help of Root Mean Square Error (RMSE) test. RMSE test was applied to all the forecasted values obtained through assigning the different weights. RMSE test indicates that higher the error values, lesser the validity of the forecast and lesser the error more valid the forecast will be. 4.1 Population Projection Data given in table-1 demonstrate the population forecasting for period 2011-12. Based on past decade population, it was estimated that total population of Punjab province in 2011-12 would become 93.63 million when the weight of 0.3 was used in the model. The weight of 0.5 revealed the population would be 995.91 million and with the weight of 0.7, it was forecasted about 97.05 million. Finally by assigning the weight of 0.9, it was estimated that population of Punjab will grow to the extent of 97.67 million in the year 2011-12. Now the validity of these forecasted values were checked through RMSE test. The respective values of RMSE from all these forecasted values were 5.04, 4.24, 3.75 and 3.48 for the weights of 0.3, 0.5, 0.7 and 0.9 respectively (Table-1). The error value was least (3.34) for forecasted value of 97.67 million obtained through the weight of 0.9. Thus it was concluded that in 2011-12 total population of Punjab will be 97.67 million.

(At-Ft) 2 n

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Table-1 Projection of Punjab population for the year 2011-12 Population Projections (Millions) Weights Years 2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2011-12 Mean At* 79.81 81.73 83.69 85.70 87.67 89.69 91.75 93.86 96.02 97.88 88.78 0.3 Ft** 88.78 86.09 84.78 84.45 84.83 85.68 86.88 88.34 90.00 91.80 0.5 Ft 88.78 84.30 83.01 83.35 84.53 86.10 87.89 89.82 91.84 93.93 0.7 Ft 88.78 82.50 81.96 83.17 84.94 86.85 88.84 90.88 92.96 95.10 0.9 Ft 88.78 80.71 81.63 83.48 85.48 87.45 89.47 91.52 93.63 95.78

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Root Mean Square Error (RMSE) Test 0.3 (AtFt)2 80.46 19.00 1.19 1.55 8.08 16.08 23.68 30.43 36.26 36.91 253.65 0.5 (At-Ft)2 80.46 6.58 0.46 5.52 9.89 12.90 14.87 16.31 17.46 15.60 180.05 RMSE 97.67 5.04 4.24 3.75 3.48 0.7 (At-Ft)2 80.46 0.59 2.99 6.39 7.45 8.06 8.48 8.90 9.33 7.71 140.36 0.9 (AtFt)2 80.46 1.05 4.25 4.91 4.80 5.01 5.22 5.47 5.73 4.41 121.31

Sum(At-Ft)2 93.63 95.91 97.05

Projectiom for 2011-12

A * is the actual value in the concerned time period and F * is the forecasted value in respective time period . t t

4.2 - Wheat Production Projection: Table-2 demonstrates the estimates made for wheat production based on previous decade production pattern. The wheat production estimates made for 2012, were 19.53, 20.08., 20.37 and 20.50 million tons when the weights of 0.3, 0.5, 0.7 and 0.9 were assigned to the model respectively. The respective RMSE test values for these forecasts were 1.25, 1.06, 0.95 and 0.89. Result revealed that most valid forecasted value for production in 2011-12 was 20.50 million tons because the respective error value was least (0.89) compared with their error estimates given in Table-2. Thus it was concluded that total wheat production would be 20.50 million tons in Punjab province in the year 2011-12.

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Table-2. Projection of wheat production in Punjab (Pakistan) for the year 2011-12 Production Projections( Million Tons) Weights Years 2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2011-12 Mean At* 16.03 16.57 17.11 17.63 18.12 18.61 19.09 19.57 20.05 20.59 18.34 0.3 Ft** 18.33 17.64 17.32 17.26 17.37 17.59 17.90 18.26 18.65 19.07 0.5 Ft 18.33 17.18 16.88 16.99 17.31 17.72 18.16 18.63 19.10 19.57 0.7 Ft 18.33 16.72 16.62 16.96 17.43 17.91 18.40 18.88 19.36 19.84 0.9 Ft 18.33 16.26 16.54 17.05 17.57 18.07 18.56 19.04 19.52 20.00

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Root Mean Square Error (RMSE) Test 0.3 (At-Ft) 5.29 1.14 0.04 0.14 0.56 1.03 1.42 1.73 1.96 2.30 15.63
2

0.5 (At-Ft)2 5.29 0.37 0.06 0.41 0.65 0.80 0.86 0.89 0.91 1.03 11.26 1.06

0.7 (At-Ft)2 5.29 0.02 0.25 0.45 0.48 0.49 0.47 0.47 0.47 0.55 8.94 0.95

0.9 (At-Ft)2 5.29 0.10 0.33 0.33 0.30 0.30 0.29 0.28 0.28 0.35 7.85 0.89

Sum(At-Ft)2 19.53 20.08 20.37 20.53

Projectiom for 201112

RMSE 1.25

4.3 Wheat Requirement Projection:

Table-3, gives the projection of wheat requirements for the year 2011-12 in Punjab. Estimates were made on the same pattern as population and production were estimated by assigning the weight of 0.3, 0.5, 0.7 and 0.9 in the model. Different wheat consumption requirements were made, but error test made in this regard revealed that most authentic forecasted value of wheat consumption would be 12.70 million tons in the year 2011-12. Table-3: Showing the wheat requirement projection in Punjab, (Pakistan) for the year 2011-12 Wheat Requirement Projections(Million Tons) Root Mean Square Error (RMSE) Test Weights 0.3 0.5 0.7 0.9 0.3 0.5 0.7 0.9
(At-Ft)2 Years At* Ft** Ft Ft Ft (At-Ft)2 (At-Ft)2 (At-Ft)2

2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2011-12

10.36 10.63 10.88 11.14 11.40 11.66 11.93 12.20 12.48 12.73

11.54 11.19 11.02 10.98 11.03 11.14 11.29 11.49 11.70 11.93

11.54 10.95 10.79 10.84 10.99 11.19 11.43 11.68 11.94 12.21

11.54 10.71 10.66 10.81 11.04 11.29 11.55 11.82 12.08 12.36

11.54 10.48 10.61 10.85 11.11 11.37 11.63 11.90 12.17 12.45

1.39 0.31 0.02 0.03 0.14 0.27 0.40 0.51 0.61 0.63 4.31

1.39 0.10 0.01 0.09 0.17 0.22 0.25 0.27 0.29 0.27 3.07 RMSE 0.55

1.39 0.01 0.05 0.11 0.13 0.14 0.14 0.15 0.16 0.13 2.40 0.49

1.39 0.02 0.07 0.08 0.08 0.08 0.09 0.09 0.10 0.08 2.09 0.46

Mean 11.54 Projectiom for 201112

Sum(At-Ft)2 12.17 12.47 12.62 12.70

0.66

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4.4-Area Projection: Data given in table-4 relates to the area which will be under wheat in Punjab in the year 2011-12. According to estimates it was projected that most reliable figure of wheat area would be about 16610.1 thousand acres in Punjab. It was finalized at the weight of 0.9 because the RMSE test value was least at this weight. (Table -4)
Table-4 Showing the wheat area Projection in Punjab (Pakistan) for the year 2011-12 Root Mean Square Error (RMSE) Test Wheat Area Projections(000 acres) Weights
Years At*

0.3
Ft**

0.5
Ft

0.7
Ft

0.9
Ft

0.3
(At-Ft)2

0.5
(At-Ft)2

0.7
(At-Ft)2

0.9
(At-Ft)2

2001-2 15078.0 2002-3 15065.0 2003-4 15458.0 2004-5 15762.0 2005-6 16021.0 2006-7 15895.0 2007-8 15819.0 2008-9 16946.0 2009-10 17035.0 2011-12 17091.5 Mean 16017.1 Projection for 201112

16017.1 15735.4 15534.3 15511.4 15586.6 15716.9 15770.3 15784.9 16133.3 16403.8

16017.1 15547.6 15306.3 15382.1 15572.1 15796.5 15845.8 15832.4 16389.2 16712.1

16017.1 16017.1 15359.7 15171.9 15153.4 15075.7 15366.6 15419.8 15643.4 15727.8 15907.7 15991.7 15898.8 15904.7 15842.9 15827.6 16615.1 16834.2 16909.0 17014.9 Sum(At-Ft)2 17036.8 17083.8

881908.8 449395.9 5815.4 62809.7 188732.1 31720.7 2369.0 1348084.8 813152.0 472965.1 4256953.6 652.5

16610.1

16901.8

881908.8 881908.8 232854.5 86865.8 23020.5 92769.6 144295.5 156320.8 201539.3 142591.0 9695.5 161.7 716.5 6370.4 1240141.5 1216731.5 417068.2 176330.0 143947.5 33297.1 3295187.7 2793346.8 RMSE 574.0 528.5

881908.8 11429.7 146160.2 117122.0 85979.8 9346.6 7339.0 1250892.9 40338.0 5865.2 2556382.1 505.6

5. Conclusions. Table-5 Final forecasted values of population, wheat production, area and in Punjab (Pakistan) for the year 2011-12 Description Population (Millions) Wheat Production (Million Tons) Wheat Requirement (Million Tons) Wheat Surplus (Million Tons) Total area under wheat (000 acres) Area (000 acres) required to produce wheat demanded (62 % of Total) Surplus area( 000 acres) (38 % of total)

requirements

Year 2011-12 97.67 20.50 12.70 7.8 16610 10298 6311.8

Based on the results given in Table-5, following conclusions were made: Total population of Punjab province would be about 97.67 million. Total wheat production would be about 20.50 million tons. Total wheat to be consumed by this population would be about 12.7 million tons.

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A quantity of 7.8 million tons would be surplus for the year 2011-12. Total wheat area will grow to the extent of 16610.1 thousand acres. About 10208 thousand acres would be needed to produce required wheat. About 6311.8 thousand acres would be surplus area under wheat in Punjab in 2011-12. Thus Projections made for 2011-12 revealed that about 38% of the total wheat produced would be surplus during this period 6. Recommendations and Suggestions: Based on the results drawn through the study it is suggested and recommended that this surplus area (6311.8 thousand acres) may be transferred to some oilseed crops like, canola, sunflower and rapeseed and mustered. Such practice will help increase the oilseed and oil production. Consequently it will reduce the import bill being incurred on the import of edible oil every year.

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