Abstract

This study examines the long-term trend in prices obtained in timber auctions in the Kerala Forest Department depots, and predict future prices. The timbers considered for the study are teak (Tectona grandis) in different girth-classes: E-(logs with mid-girth underbark 185 cm and above) 1 (150-184), 2 (100-149 cm), 3 (75-99 cm) and 4 (60-74 cm), anjily (Artocarpus hirsutus), irul (Xylia xylocarpa), jack (Artocarpus heterophyllus), maruthu (Terminalia paniculata), thembavu (Terminalia crenulata), venga (Pterocarpus marsupium) and venteak (Lagerstroemia microcarps). The analysis of real prices, obtained by deflating the current prices with the wholesale price indices, for the period from 1956-57 to 1993-94 using moving averages showed that the overall trend was more or less similar for all timbers. The current year's real price of a timber was closly related to its preceding year's price and the sale quantity of a timber had no influence on its real price. The price was found to be inelastic with respect to the quantity of timber sold. The influence of annual forest timber production of prices was also examined. The real prices were not related to current year's production. However, the prices of teak, venteak and maruthu were related to one and two year lagged production. The reduction in the production in the previous one and two years had influence on the increase in the current year's real price. For the timber from the forest to be sold in auction, there exists a time-lag for transporting logs form the forest to the depots and auction procedure. Timber traders take into account the availability of timber in the depots during auction. This is the reason for the relationship between price and lagged production. Future prices of teak logs in girth-classes 1, 2 and 3 were predicted for the years up to 2015-16, using autoregressive integrated moving average models based on current prices for a 53-year period from 1941-42 to 1993-94