Constructing the agriculture purchasing managers' index in the Taiwan rice industry

Wen-Shin Lin, Yi-Ting Tseng and Tzong-Ru Lee

International Journal of Economics and Business Research, 2024, vol. 28, issue 2, 238-251

Abstract: This study takes the concept of purchasing managers' index (PMI) into consideration to construct agriculture purchasing managers' index (APMI) in the rice industry. The purpose is to provide comprehensive and objective investment reference and economic conditions for the agriculture business and the government to make the decision. This study takes an important crop in Taiwan, the rice industry in 2016 as the case study. The data from the council of agriculture (COA) and agriculture and food agency is used to construct the APMI and formula using principal component analysis (PCA). The results indicated that the result of APMI using PCA with four variables (productivity, price of paddy, planted area, and export quantity) has the highest correlated coefficient (r = 0.94) with revenue. The higher the correlated coefficient, the better the ability to use APMI to demonstrate the economic status of the industry. In conclusion, constructing the APMI formula using PCA could provide suitable investment months in the rice industry.

Keywords: purchasing managers' index; PMI; principal component analysis; PCA; diffusion index; agriculture business. (search for similar items in EconPapers)
Date: 2024
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