4. A native to southern Asia, sugarcane has been
nourishing man since prehistoric time. It is not
certainly known which culture developed the
technique of converting sugarcane juice into
crystalline sugar, but as earliest known Sanskrit
in about 500 B.C in northern India where the
sugarcane juice was first rendered in the form
of sugar. Within a century sugarcane had
reached the shores of eastern Mediterranean
and North Africa where the first great economic
sugar boom occurred.
5. Early refining methods involved grinding or pounding the
cane in order to extract the juice, and then boiling down
the juice or drying it in the sun to yield sugary solids
that looked like gravel. The Sanskrit word for "sugar"
(sharkara) also means " gravel" or "sand”. Western
Europeans as a result of the Crusades only discovered
sugar in the 11th Century AD. Crusaders returning home
talked of this "new spice" and how pleasant it was. The
first sugar was recorded in England in 1099. The
subsequent centuries saw a major expansion of western
European trade with the East, including the importation
of sugar. It is recorded, for instance, that sugar was
available in London at "two shillings a pound" in 1319
AD. This equates to about US$100 per kilo at today's
prices so it was very much a luxury. By the eighteenth
century, all levels of society had become common
consumers of the former luxury product. At first, most
sugar in Britain went into tea, but later confectionery
and chocolates became extremely popular.
6.
7. As is true in many countries, the Government of
Pakistan is heavily involved in the sugar industry,
regulating mill construction, trade and prices, and
influencing farmers' crop decisions in various
ways. One reason for the large government
involvement with sugar is the political importance
of the crop. Sugar is also the second most
important cash crop in Pakistan after cotton. Self-
sufficiency in sugar is a goal, but one that to date
has proven illusive. The major sugar crop is
sugarcane, but there is a small sugar beet industry
in the cooler high elevations of the Northwest
Frontier Province.
8. Pakistan grows about 1 million hectares of sugarcane,
more than all other cane producing countries except
Brazil, China, Cuba, India and Thailand. Cane is also used
for non-centrifugal sugars and seed, so that the amount of
land harvested for centrifugal sugar each year is only
about two-thirds of the total. Sugar production first rose
above 1 million tonnes in 1982. In 1989-1990, output
reached 2 million tonnes, and 3 million tonnes in 1994 and
1995 (Table 1). However, production fell to 2.7 million
tonnes in 1996 due to a combination of bad weather,
lower acreage, and diversion of cane to non-centrifugal
sugar production, mostly gur. Production for 1997 is
projected at about 3 million tonnes, as farmers respond to
the higher prices received the previous year.
We have taken the data about ten years of sugar prices.
Our objective is to analyze the impact & the changes in
the domestic prices of sugar industry of Pakistan.
9. Time plot is the graphical
representation of data with
respect to time.
OR
It is an illustration of data
points at successive time
intervals.
10.
11. The time plot represents sugar prices in Pakistan for
the ten years of monthly data from 1990 to 2000.
Collectively, the graph shows cyclical variation as well
as seasonality.
The year 1990, a remarkable change in the price of
sugar can be seen, the production of sugarcane was
increased resulting in a sudden decrease of price.
However the next three years has shown seasonal
variation that is low price in winter but a little high
price in summer. Moreover, for the next couple of years
the price has shown a gradual increase in the price.
12. Afterwards in 1995 the price bounced up. Mainly,
due to heavy increase of the price of sugarcane
coupled and the price of US Dollar was also
increased, the cost of sugar production naturally
increased thereby raising sugar price in domestic
market. Furthermore, the next few years has
shown seasonal variation in prices. For two
successive years industry has achieved
remarkable sugar production. During these years,
government pressure constantly remained on
sugar industry to keep the domestic price at
lowest.
Finally in year 2000 sugar industry faced severe
effect due to drought condition, the economy of
Pakistan was badly affected, a huge shortfall in
sugar industry occurred so that the price of sugar
dramatically increased.
13. A graph that shows correlation between two
variables. In the analysis, the correlogram is
an image of correlation statistic.
14.
15.
16. To test whether our series is stationary at level or not,
we applied ADF test of stationary.
Testing at level:
I. Ho: Series is stationary at level.
H1: Series is not stationary at level.
II. Level of significance: = 1%, 5%, 10%
III. Test statistic: -1.023760
IV. Calculation:
ADF Test
Statistic
-1.023760 1% Critical
Value
-2.5813
5% Critical
Value
-1.9423
10% Critical
Value
-1.6170
17. V. Conclusion: As t-statistic>α, so we reject Ho and conclude that
series is not stationary at level.
As series is not stationary at level so we take 1st difference.
Testing at 1st difference:
I. Ho: Series is stationary at 1st Difference
H1 : Series is not stationary at 1st Difference
II. Level of significance: = 1%, 5%, 10%
III. Test statistic: -8.831441
IV. Calculation:
18. Conclusion:
As our t-statistic<α , So we do not reject Ho and
conclude that our series is stationary.
ADF Test
Statistic -8.831441
1% Critical
Value
-3.4815
5% Critical
Value
-2.8837
10% Critical
Value
-2.5784
19.
20. Model Selection:
The pairs for model selection are given
below.
(1,1,0)
(0,1,1)
(1,1,1)
(1,1,14)
(5,1,1)
(5,1,14)
(14,1,1)
(14,1,14)
21. According to the criteria of model selection the model
(14,1,14) has lowest SBC and AIC values, but when the model
with order of MA more than 5 cannot be analyzed so we choose
the other lowest value model that is (0,1,1).
