Forecasting prices of onion in major wholesale markets of Gujarat

Abstract

This research focuses into the complex dynamics of onion pricing in the Indian agricultural sector, with a specific emphasis on the volatility observed in onions, particularly within the wholesale markets of Gujarat. The research aims to provide a comprehensive understanding of price fluctuations and their impact on farmers, consumers, and the economy at large. The study employs time series analysis, specifically the ARIMA technique, to forecast future onion prices. The methodology involves unit root tests, model identification, estimation, and diagnostic checking. The selected models, ARIMA (3,1,2) for Mahuva, ARIMA (2,1,1) for Ahmedabad, and ARIMA (2,1,2) for Gondal, showcase the nuanced approach required for different markets. Post-sample period forecasts for 2021 reveal predicted onion prices. The forecasting accuracy is assessed using Mean Absolute Percentage Error (MAPE), with Mahuva exhibiting the lowest MAPE at 21.77 percent. The study emphasizes the market-specific nature of onion price dynamics, underscoring the importance of tailoring forecasting models to individual market characteristics.