Forecasting agricultural production using co-integration analysis

A forecasting method, easily understood and applied by administrators/policy-makers, is developed in this paper. Based on a simple, but quite realistic assumption, that production in a given region 'pulls' or 'shapes' the volume of production nationally a co-integration forecasting method is proposed in the paper. Using data from administrative regions, the empirical analysis suggests that the property of co-integration can be used to forecast agricultural production in the short-run.