An econometric model for forecasting Coffee production and surplus stocks In Kenya

Abstract

The study highlights the importance of the coffee industry to Kenya and stresses the need for a resilient industry in the face of an over supplied international market. It calls for systematic planning and monitoring of the production and marketing of coffee, which requires a comprehensive development and updating of planning tools for the industry , Combining the vintage capital approach, dynamic optimisation and econometric analysis, a forecasting model is developed. As a planning tool this model is used to predict coffee production and surplus stocks for the Kenyan coffee industry. the forecasts used to analyse production and stockholdihg prospects for the industry under various scenarios. The study recommends a comprehensive stock management strategy to bring stock accumulation under control. It also recommends that the industry should intensify production on the existing acreage and replace the present coffee varieties with superior ones before going for expanded acreages.