An Econometric Estimation of Market Growth for the U.S. Processed Catfish Industry

Inadequate information pertaining to the growth potential of the US. processed catfish industry has been a major factor leading to cyclical periods of excess supply or demand resulting in misal-location of resources and price instability. Better information for industry planners (e.g., producers, processors, government regulatory agencies, and university researchers) on future sales potential would assist in decreasing the misuse of resources. An econometric model of wholesale demand for US. processed catfish was developed to provide estimates of future sales under various scenarios. In addition to the standard variables included in models of demand for food items—price, income, and population—the effects of product life cycle and industry-sponsored generic advertising are quantitatively incorporated. Seasonality of demand and rigidities in marketing and consumer behavior are additional considerations explicitly modeled via monthly dummy variables and a Ner-lovian partial adjustment mechanism, respectively.
Model results indicate the impact of alternative future price scenarios on wholesale processed caffish sales. At the mean real wholesale price of $1.60 (December 1988 dollars) for whole-dressed caffish and a real generic advertising expenditure of one million dollars postulated for 1995, projected aggregate sales are 219.2 million pounds, a 23% increase over 1989 sales. Projected 1995 wholesale sales are very sensitive to price with alternative price postulations of $1.40 and $1.80 resulting in projected sales of 252.3 and 193.6 million processed pounds, respectively. An estimated 7% average increase in wholesale sales of catfish was attributed to the industry-sponsored generic advertising campaign. Model projection estimates and impacts are posed as a quantitative source of information to be used with other information in resource allocation issues faced by industry decision makers.