Prediction of Purchase Prices of Milk in the EU

The Common Agriculture Policy (the CAP) is a set of policies regulating agricultural production that was set up primarily to attain food self-sufficiency and sustainability for Europe by making farming profitable for farmers. One of the problematic issues farmers experienced lately is related to milk production with relation to its price. A forecast of purchase prices of milk in ten selected EU countries is proposed. The bases for modeling were 27 known values - monthly time series from January 2010 to March 2012. The goal was to find, for every country, the simplest appropriate solution in terms of numbers of parameters and possible linearity in parameters. The task was solved by means of ARIMA modeling and exponential smoothing method.