Forecasting Future Pricing
Our analysis denotes that Millennials may have some financial challenges with affording avocado toast and that two-bedroom house with the ‘white picket fence’. With Americans spending around $7,000,000 a week on avocados, millennials in this analysis will have to change their hopes for purchasing a home, or at best modify their spending habits.
Total Consumption of Avocados
We’ve surmised that there were two major dips, one in 2016 and one in 2018, and a smaller dip in 2017. The first dip in 2016 was caused by unexpected terrible weather and shipment-halting labor issues. Around the same time that year, there were droughts in California which also contributed to the decline of the fruit supply.
The second dip in 2017 was because of a weak harvest which was caused by the earlier year’s inclement weather. Also, there was an insatiable demand for avocados the same year and this resulted in the spike we see in average prices.
The third dip in 2018 was due to a price dispute between the avocado farmers in Mexico and Asociación de Productores y Empacadores Exportadores de Aguacate de México (APEAM) which resulted in the halt of avocado exports from Mexico.
Summary
Options Used to Create Forecasts
Time series: Month of Date
Measures: Avg. Average Price
Forecast forward: 19 months (March 2018 – September 2019)
Forecast based on: January 2015 – February 2018
Ignore last: 1 month (March 2018)
Seasonal pattern: 12 month cycle
| Color | Initial | Change From Initial | Seasonal Effect | Contribution | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | March 2018 | March 2018 – September 2019 | High | Low | Trend | Season | Quality | ||
| organic | 1.612±0.141 | 0.053 | September 2019 | 1.078 | December 2018 | 0.945 | 22.5% | 77.5% | Poor |
| conventional | 1.208±0.179 | 0.200 | October 2019 | 1.073 | December 2019 | 0.915 | 75.0% | 25% | Poor |
Model
All forecasts were computed using exponential smoothing.
| Color | Model | Quality Metrics | Smoothing Coefficients | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Level | Trend | Season | RMSE | MAE | MASE | MAPE | AIC | Alpha | Beta | Gamma |
| organic | Multiplicative | Multiplicative | Multiplicative | 0.080 | 0.063 | 0.91 | 3.8% | -158 | 0.500 | 0.000 | 0.233 |
| conventional | Multiplicative | Multiplicative | Multiplicative | 0.105 | 0.083 | 1.17 | 7.0% | -137 | 0.500 | 0.000 | 0.032 |