Competition between farmed and wild fish: The French sea bass and sea bream markets

ABSTRACT

Aquaculture is contributing at an increasing rate to the world seafood supply. The interaction between fisheries and aquaculture is especially important for the seafood market where supply of wild and farmed fish can affect price dynamics. We examine market interactions in the French fresh sea bass and sea bream markets. We test for long-term price parity between farmed and wild products for these two species, applying a bivariate cointegration approach to market delineation. We also conduct the Law of One Price (LOP) test between price series. Our data base consists of monthly domestic price series for fish purchased by French households from 2007 to 2012. Our empirical results show that the fresh fish markets for whole wild and farmed sea bream are partially integrated, yet those for whole wild and farmed sea bass are not integrated. The substantially higher price for wild sea bass relative to farmed sea bass suggests that consumers may be more sensitive to seafood production processes when it comes to higher-value species.     

THE RUSSIAN SEAFOOD REVOLUTION: SHIFTING CONSUMPTION TOWARDS AQUACULTURE PRODUCTS

A food consumption revolution is taking place in Russia. After decades of severe constraints on food consumption options under the communist regime Russian consumers are now adopting new food products—including seafood products – at a high pace. Since Russian consumers have previously had very limited seafood consumption choices, the market can be seen as an interesting laboratory for investigating consumer responses to products that have previously not been available. Among imported seafood products are both wild and farmed species. Furthermore, Russian imports include both traditional species such as herring, and ‘new’ species such as pangasius. We analyze market integration among seafood products using Russian monthly import prices from 2002 to 2007 on several products, such as herring, salmonids and pangasius. We find that pangasius compete in the white fish segment, and is a price leader. In the salmonids market, farmed salmon trout appears to be the price leader, both in the fresh and frozen market segment.     

Price transmission among different Atlantic salmon products in the U.S. import market

The cross-commodity price transmission is an approach to derive meaningful results from the price information, and is mostly influenced by the substitutability and complementary relations among products. Using time series data collected from the National Marine Fisheries Statistics, the present study specified and estimated cross-commodity price transmission models for 13 salmon products imported in the U.S. market. The salmon products are differentiated by form, cut, source/origin, and production environment. The estimated cross-product price transmission elasticity and degree of substitutability among them varied considerably. Whole fresh farmed Canadian and Norwegian Atlantic salmon did not have any close import substitutes in the U.S. market among the salmon products considered in the study. A reduced pricing strategy would result in an increase in U.S. salmon import market share of Chilean and U.K. Atlantic fillet fresh, if the U.S. import demand for it is relatively own-price elastic.     

An econometric estimation of Japanese shrimp supply and demand during the 1990s

Abstract

A simultaneous‐equation model of the supply and demand of shrimp in Japan is constructed, and sensitivity analyses are conducted to measure the effects of changing exchange rates and the stock holdings of shrimp. Using monthly statistics from January 1990 to December 1997, the Japanese own‐price elasticity of supply is found to be inelastic and has a less important effect than the beginning stocks factor. The Japanese demand for shrimp is also found to be price‐and income‐inelastic. The beginning of stock holdings is more sensitive to Japanese shrimp demand than the import price and income. The result of seasonality analyses shows that Japanese shrimp demand also depends on cultural factors.     

The potential impact of summer flounder (Paralichthys dentatus) aquaculture on regional flounder price

Abstract

Increasing consumer demand for flounder and dramatic reductions in ocean flounder harvests have raised interest in summer flounder (Paralichthys dentatus) aquaculture. Flounder farmers have several potential markets, including regional seafood dealers and high‐end niche (e.g., sashimi and ike‐jime) buyers. Prices paid by buyers are exogenous to typical aquacultural budgeting models, yet they are a key determinant of potential profitability. We develop a simple economic model to assess the impacts of aquaculture industry supply on prices paid by regional seafood dealers. The model is parameterized for a region with established flounder dealers and active field research in flounder production methods. We derive the price elasticity of regional seafood dealer demand for farmed flounder, and we examine the impacts of changes in production cost and ocean harvest on regional price and the level of aquacultural production that maximizes returns to the aquaculture industry.     

Economic Analysis of Japanese Household Demand for Salmon

The recent glut of both wild and farmed salmon in world markets has forced producers to become aware of the need to expand their marketing efforts to ensure that demand is not outpaced by supply resulting in a further decline in prices. Japan has been a major market for wild salmon, particularly sockeye salmon from North America, since the introduction of the 200 mile Exclusive Economic Zone. As farmed supplies have continued to increase, exporters such as Norway and Chile have turned their attention to this market as well. Up until now, most of the farmed salmon exported to Japan has been targeted to the restaurant market. If exporters wish to expand their market in Japan, they may focus also on the retail market. Prior to any assessment of the potential of the retail market for fresh farmed salmon, it is useful to understand the role that salmon plays in Japanese household seafood consumption.
This paper examines household consumption patterns of salmon in Japan. An econometric model is presented which estimates household demand for fresh and salted salmon focusing specifically on the effects of seasonality, regional location, and prices of other seafood products. Two systems of demand equations, one for each of two regions of Japan, are specified and estimated using monthly data on prices and expenditures to capture the effects on household demand for 12 seafood products. Results indicate that seasonality plays a significant role in the demand for many seafood products, particularly fresh and salted salmon. In addition, these seasonal effects are not necessarily the same between regions of Japan. Salmon competes with different seafood products during different times of the year. A rich variety of factors should be considered when marketing fresh aquacultured salmon in the Japanese retail market.     

Pricing efficiency across destination markets for Norwegian salmon exports

This paper investigates how pricing efficiency of Norwegian salmon exports varies across destination market characteristics. Efficiency is defined as the rate at which individual transaction prices adjust to common market information, and is estimated by dynamic fixed effects panel models with parameters conditional on trade attributes using micro-level trade data. Our results show that contract type (Incoterms) used in transactions can be used to segment the Norwegian export markets into three types: (1) high-value trade to large distant markets, (2) medium-value trade to close high-income markets, and (3) lower-value large bulk trades to lower-income close markets. We find that pricing efficiency is lowest for committed trades over long distance using planes, and highest for less committed large bulk trades to close markets. Despite significant heterogeneity, the majority of salmon price variation (around ¾) is common, providing a clear justification for the representativeness of a salmon price index.     

U.S. seafood consumption

U.S. seafood consumption has changed dramatically in recent decades and has become increasingly dominated by the consumption of a limited number of species that are primarily imported and predominantly sourced from aquaculture. In getting to this point, the United States has been, and still is, at the forefront of some of the most important trends in global seafood markets. Hence, discussing the factors influencing U.S. seafood consumption patterns is an interesting and informative endeavor and will most likely also have strong predictive power for the continued development of seafood markets in the United States. In this article, we will discuss the transitions in the U.S. seafood market, primarily focusing on the period from 1990 to the present, highlighting the main factors that facilitated this development. This article provides an overview of U.S. landings, aquaculture production, exports, and imports and also explores contributing trends in global export and import markets. This will be followed by a discussion of U.S. per capita consumption patterns and an examination of the consolidation of species consumed over time. Finally, implications for future trends in seafood consumption and production are discussed.     

From Atlantic to Pacific: Price links in the US wild and farmed salmon market

Abstract

In 1990, the US International Trade Commission stated that Atlantic and Pacific salmon species did not share a substitute relationship in any of the product forms. This result is contrary to economic demand studies that show a substitute relationship for Atlantic and Pacific salmon species. Time‐series results reported in this paper are consistent with the earlier demand studies and show evidence of an equilibrium price system that includes Atlantic, chinook and coho salmon species for the US market. For these three salmon species a substitute relationship cannot be rejected. However, we observe only weak price links across the three different species in the different US regional markets.     

Price volatility dynamics in aquaculture fish markets

Abstract

In this paper, a time-varying student-t copula is used to capture information on price volatility dependence in the short-, medium-, and long-run horizon in the US market for frozen and fresh salmon, trout, tilapia and catfish. Using monthly data from July 1992 to March 2017, the volatility dynamics for these aquaculture species are assessed. The analysis allows indicating significant differences in the volatility relationships, depending on time-frequency. While short-run volatility has limited dependency, there is significant dependency in both the medium- and long-run, indicating that market integration is stronger in the long-run. The information is particularly important to buyers and producers utilizing the futures markets, as contracts are typically traded using a set of frequencies, and may help them manage and reduce price risk.     

DEMAND FOR FISH IN THE PHILIPPINES: A DISAGGREGATED ANALYSIS

ABSTRACT

This paper sought to establish the fish consumption pattern of Filipino households and estimate the price and income elasticities of fish demand by species, as well as by income groups, i.e., low, middle, and high income. The study used the countrywide Family Income and Expenditure Survey (FIES) for year 2000 of the National Statistics Office, which includes over 39,000 households. A three-stage budgeting framework was used in the analysis, which estimated food and fish expenditure functions in the first and second stages, respectively. In the third stage, a system of demand equations for fish by species was estimated using a quadratic almost ideal demand system (QUAIDS) model. Parameter estimates of the model were corrected through the Heckman procedure to remove the possible bias brought about by zero consumption of certain fish species resulting from nonpreference or infrequent purchases. Results showed that estimated price and income elasticities of demand varied substantially across fish type and across income groups. All 11 fish types included in the study were found to have positive income elasticity for all income levels. Hence, fish in general can be considered normal goods, including processed fish. However, the high-priced fish types generated elasticity values greater than one, which rendered them as luxury food fish. Own-price elasticity, on the other hand, was found to be elastic in most species with values increasing as consumers climbed up the income ladder. This observation, however, was not true in the case of milkfish and tilapia (two most popular species in the country) where price responsiveness of demand was found to be higher among the lower-income groups.     

Media Coverage of PCB Contamination of Farmed Salmon: The Response of U.S. Import Demand

This article evaluates the effects of extensive media coverage of a study published in 2004 regarding the presence of polychlorinated biphenyls (PCBs) and other organic contaminates in farmed salmon on U.S. import demand for fresh farmed salmon. The study indicated that levels of PCBs differed according to source, with highest PCB levels found in salmon from Northern Europe and lowest in those from Chile. Using a newspaper article index as a proxy for information, a two-stage demand model is estimated. In the first stage, total U.S. import demand for fresh farmed salmon is estimated to determine the overall effect of the information, while the second stage determines if there were any significant changes in market shares of source countries. Results indicate that imports declined by approximately one-third of what would have been in the absence of the PCB media stories during 2004–2006, and that some changes in exporters’ market shares occurred. Health implications for U.S. seafood consumers are discussed.     

我国城镇居民水产品消费特征分析

近年来,随着我国居民可支配收入的增加,消费结构不断升级,水产品消费发生显著变化,研究其消费特征具有理论价值和实际意义。文章在分析我国城镇居民水产品消费数量及其变化的基础上,运用变弹性模型测算了水产品需求收入弹性,对城镇居民水产品消费的变化进行实证研究。结果表明,随着可支配收入的增加,城镇居民水产品需求旺盛,水产品消费遵循着高品质的消费规律;相关结果有助于理解我国水产品对外贸易的变化。现阶段我国应从产品和企业两条线促进贸易增长,实现水产品贸易的平衡和渔业经济可持续发展。     

Forecasting weekly salmon prices: Risk management in fish farming

Abstract

Production of farmed salmon has increased substantially during the last decade. Most of the salmon production is sold spot, resulting in large price fluctuations both for the producer and for the exporter. No derivative markets exist; consequently, no one can hedge prices. If prices could be forecasted within reasonable confidence bounds, risk would be reduced. This study used six easily applicable procedures to forecast weekly producer prices for salmon. The procedures tested were Classical Additive Decomposition (CAD), Holt Winters Exponential Smoothing (HW), Auto Regressive Moving Average (ARMA), Vector Auto Regression (VAR) and two different naïve models: post‐sample predictive accuracy was evaluated. Results indicated that the CAD model forecasted the direction of price movements best, whereas the VAR model performed best according to accuracy measures.     

SIMULATING THE IMPACTS OF TRADE RESTRICTIONS: AN APPLICATION TO THE EUROPEAN SALMON TRADE

During the last decade there has been a number of conflicts in relation to the trade of salmon in the EU. A 5-year agreement between Norway and the EU including an import constraint and a voluntary minimum import price agreement for exporter just expired, with a 13% tariff to be paid by exporters that do not accept the agreement. A year after the agreement expired, there are again calls for safeguard measure to protect EU-producers. We investigate the expected welfare effects of this tariff by analyzing a general equilibrium demand curve. In contrast to earlier studies we use a derived demand approach rather the consumer demand as most available data are at the trade level. The results indicate that only Norwegian exporters are beneficial to target for EU producers. The total welfare effect of the tariff depends critically on the supply structure of EU and Norwegian salmon.     

2013年全球鲆鲽类产品主要市场概况与分析

全球鲆鲽类产品市场动态影响到我国鲆鲽类养殖、来料加工出口贸易及国内市场同类产品的消费,适时把握情况十分必要。本文梳理了2013年度欧洲、北美和亚洲等世界主要市场中鲆鲽类产品的市场情况,分析了鲆鲽类产品的市场特征、市场指标变化规律及出现的新情况,为相关业界提供参考。     

WILLINGNESS TO CONSUME GENETICALLY MODIFIED FOODS—THE CASE OF FISH AND SEAFOOD

ABSTRACT

As adoption of genetic modification (GM) technologies grows, so do questions about consumer acceptance. While willingness to consume GM crop products has been studied extensively, similar studies of GM fish and seafood are lacking. Econometric analyses of U.S. survey data reveal that older, higher income, non African American males are most likely to consume GM fish and seafood. The results can contribute to our understanding of GM fish and seafood consumption decisions which, in turn, can be used to identify and exploit the niche market for GM fish products.     

Masked,diluted and drowned out: how global seafood trade weakens signals from marine ecosystems

Nearly 40% of seafood is traded internationally and an even bigger proportion is affected by international trade, yet scholarship on marine fisheries has focused on global trends in stocks and catches, or on dynamics of individual fisheries, with limited attention to the link between individual fisheries, global trade and distant consumers. This paper examines the usefulness of fish price as a feedback signal to consumers about the state of fisheries and marine ecosystems. We suggest that the current nature of fisheries systems and global markets prevent transmission of such price signals from source fisheries to consumers. We propose several mechanisms that combine to weaken price signals, and present one example – the North Sea cod – to show how these mechanisms can be tested. The lack of a reliable price feedback to consumers represents a challenge for sustainable fisheries governance. We therefore propose three complimentary approaches to address the missing feedback: (i) strengthening information flow through improved traceability and visibility of individual fishers to consumers, (ii) capitalizing on the changing seafood trade structures and (iii) bypassing and complementing market mechanisms by directly targeting citizens and political actors regarding marine environmental issues through publicity and information campaigns. These strategies each have limitations and thus need to be pursued together to address the challenge of sustainability in global marine fisheries.     

Price cointegration in spatial markets: An application to milkfish markets in Taiwan

Abstract

The objectives of this study are to analyze the interdependent behavior of lead‐lag milkfish price adjustments between vertically‐related markets (from production to consumption) as well as between five major horizontally‐related wholesale markets. Empirical results show that there is a two‐way lead‐lag cointegrating price relationship between milkfish wholesale and retail markets. Since the fish wholesale market cannot completely and quickly assimilate the retail market information, the speed of response of wholesale prices to retail price changes is relatively slow, inducing low pricing efficiency. The Taipei wholesale market appears to cause the greatest leadership impact on the milkfish price formation compared to other wholesale markets in both the long‐run and short‐run. The results also reveal that there is a high degree of integration relationship between the horizontally integrated wholesale markets (Chiayi, Changhwa and Taichung) for milkfish in the southwestern region within a short distance.