Market integration of domestic and imported seafood: Insights from the Sydney Fish Market*

Australia has experienced a significant increase in seafood imports over the past two decades. Concurrently, Australian seafood producers have raised concerns that the low market prices of imported fish may negatively affect the prices of domestically produced seafood and, subsequently, the profitability of the Australian fishing industries. To validate this concern, this study examines the relationship between prices of domestically produced seafood and imported fish. Price data from the Sydney Fish Market (SFM), Australia’s largest auction wholesale fish market and fish import data are used for a cointegration analysis which is conducted using the bivariate Johansen test. Results indicate that prices of most domestic species traded within the SFM are not cointegrated, implying that they largely develop independently of each other. However, imported fish, particularly fresh imports, were found to be cointegrated with Australian produced fresh fish supplies traded on the SFM. Although the law of one price (LOP) was only confirmed to hold for some price pairs, the results suggest a partial substitution relationship between imports and domestically caught fish. This implies that prices of domestically produced fish within the Australian market are likely impacted by price dynamics within the international seafood market.     

Econometric Examination of U.S. Potato-Related Market Relationships

Abstract

Modeling results, from a U.S. International Trade Commission investigation, that illuminate potato-related competitive conditions, particularly U.S. market impacts of potato imports, are presented. Estimation and simulation results of a monthJy vector autoregression model of the U.S. fresh and frozen trench fry markets suggest that the own-price elasticity of fresh table potato demand is more moderately elastic than previously thought; that U.S. fresh potato and trench fry markets only modestly interact, because the fresh table market residually and infrequently supplies raw product to processors; and that increased U.S. imports of fresh Canadian potatoes are likely a regional problem in Northeast U.S. markets, and do not appreciably influence potato-related prices or quantities nationally. Given the scarce potato-related literature, the model's estimated market parameters arc of interest.     

Air pollution and food prices: evidence from China

Air pollution is one of the top environmental concerns in China. On days with severe air pollution, people (both consumers and producers) often reduce outdoor economic activities in order to avoid possible health damages. This impacts the market trade of fresh food products, at least in a short run. This empirical study sheds light on the impact of air pollution on the short run prices of three major fresh food products (Chinese cabbage, tomatoes and pork) using daily data from the largest outdoor wholesale market in Beijing. With an increase in AQI (Air Quality Index) by 100 units, prices for Chinese cabbage and tomatoes decrease by 1.19 and 0.89 per cent. With an increase in PM2.5 concentration by 100 μg/m³, prices for Chinese cabbage and tomatoes decrease by 0.64 and 0.55 per cent. Air pollution affects vegetable prices, but has no significant impact on prices of pork products.     

Consumer Behavior and Fish Market Development in Oman

Abstract

Capitalizing on the rich fishing grounds that populate the coastal waters of the Sultanate of Oman is important in that country's economic diversification. Domestic fish markets have been constrained by consumers⁵ habits, which show very strong preferences for fresh fish over other processed forms. This study relates fish market and product development to consumer habits, perceptions, income, and other demographic and socioeconomic factors. Educational attainment and rural/urban households demonstrated the strongest relationships to likelihood of Omani fish choice by species and form. Income group, importance of price, and price expectations were significant influences on fish variety and form consumption, as were attitudinal choice characteristics, such as place of purchase, fish product characteristics, and spousal purchasing decision. Rural households and household size affected the odds of Omani consumption of fresh fish negatively.     

Market liberalization and integration of maize markets in Malawi

The paper studies the extent of market integration of maize markets in Malawi in order to understand how it has been affected by market liberalization. Several measures of integration are introduced to analyze both the comovement of prices and the price adjustment process over time. Monthly retail prices of maize at eight main locations over the period January 1984 to December 1991 are considered. The main conclusion is that liberalization has increased market integration.     

The demand for meat and fish in Spain: Urban and rural areas

The aim of the paper is to explain to what extent meat consumption patterns in Spain are different in rural and urban areas and which are the factors explaining differences and similarities. A demand system using cross-section data from the latest Spanish National Survey has been estimated. Unit values have been used instead of market prices and price and quality effects have been obtained. The main conclusion is that meat consumption patterns in urban and rural areas are not really different as regards economic factors. Some small income and price effect differences have been found, specially for fresh pork and fish, Responses to changes in income and price are higher for fresh pork consumption in rural areas and for fish in urban areas.     

Spatial Integration of Wheat Markets in India: Evidence from Cointegration Tests

Using the maximum likelihood method of cointegration, this paper empirically evaluates intra-state and inter-state spatial integration of wheat markets in India. The cointegration tests provide strong evidence in favour of spatial integration of the regional wheat markets. Even though the regional markets are geographically dispersed, the prices across different market centres within and across the selected states have exhibited long-run spatial linkages, suggesting that all the exchange locations are integrated and the prices provide relevant market signals. There are several implications of these results for agricultural price policy and food market liberalization programmes.     

Tariff equivalents of nontariff measures: the case of European horticultural and fish imports from African countries

In the context of the Partnership Agreements between the European Union (EU) and the African, Caribbean, and Pacific countries, this study estimates ad valorem tariff equivalents of European food safety standards on imports of key horticultural and fish products from Kenya, Tanzania, Uganda, and Zambia. The study uses an extension of the price‐wedge method to account for imperfect substitution and factor endowment in monopolistic competition. The estimated tariff equivalents are 55% and 98% for imports of fresh peas from Zambia to the Netherlands and the U.K., respectively. They range from 39% to 64% for imports of green beans and avocados from Kenya and from 63% to 270% for imports of frozen fish fillets in EU countries from the East African Community. We also observe large variations in tariff equivalents for the horticultural and fish products over time and EU importing countries.     

Modelling the Risks Associated with the Increased Importation of Fresh Produce from Emerging Supply Sources Outside the EU to the UK

The risk of non‐indigenous plant pests entering the UK via international trade in fresh produce is increasing. The objective of this article is to identify existing and emerging supply sources for UK fresh produce importers and examine the extent to which they could provide invasion pathways. We tested the hypothesis that increased imports of fresh produce from new sources outside the European Union could increase the risks of non‐indigenous insect pests. We use a bio‐economic model approach in which the number of species arrivals is a function of the volume of imports, whereas the volume of imports itself is a function of gross domestic product, relative import prices and seasonality. The study has identified clear trends, which show import volumes of fresh produce and species detections increasing from new supply sources. If this trend continues in the future, then the UK inspection agency should expect to confront species from new suppliers in much greater numbers, given that import volumes of fresh produce are income elastic.     

Estimating the Degree of Market Integration

Existing tests of spatial market integration are commonly based on statistical criteria without an explicit link to an economic model of price determination. This article proposes new measures of market integration defined directly in terms of a well-known spatial price determination model and develops an econometric methodology for estimating these measures. Due to the intractability of the conditional density function of prices, we use indirect inference to estimate the model parameters and market integration measures. The methodology is illustrated with simulated data and is applied to soybean price data for the United States, Brazil, and the EU.     

Demand for improved fish feed in the presence of a subsidy: a double hurdle application in Kenya

Fish farming households’ demand for improved fish feed from the private market in Kenya is potentially influenced by the government's feed subsidy program. This article applies the double‐hurdle model to a cross‐section of fish farms to analyze demand for improved fish feed from private markets, and whether the government feed subsidy program has an effect on private demand for improved feed. The results indicate that households’ decisions to participate in the improved feed market are affected by the quantity of improved feed received from the government. Once the participation decision has been made, we find evidence of crowding‐in of the private improved feed sector; that is, the government's allocations of subsidized feed appear to increase private sector demand. In addition, the price of improved feed negatively affects the quantity purchased as expected. Education, extension contacts, and ease of marketing matured fish increase household propensity to purchase improved feed commercially. Policies that help reduce the price of improved feed such as reduction in tariffs on imported feeds and feed ingredients will foster demand for the feed, as will policies that facilitate marketing of fish at reasonable prices by households.     

Adaptive thinning strategies for mixed-species stand management with stochastic prices

This paper presents an efficient and flexible approach of determining optimal thinning strategies for mixed-species stands with stochastic timber prices. The approach aims to determine the optimal stock of each species to be maintained in the stand conditional on the observed stand state and timber prices, whereas thinning intensity is given by the difference between the existing and the optimal stocks. For demonstration purpose, the approach is applied to determine the optimal thinning strategies for an example stand of Scots pine (Pinus Sylvestris L.) and Norway spruce (Picea abies L. Karst.) in northern Sweden. The optimal stock of each species is formulated as a parametric function of stand age and stumpage prices of the respective species. A reservation price function is constructed to determine the optimal time of clearcut based on the observed stand state and timber prices. The parameters of the optimal stock-level and reservation price functions are determined by maximizing the expected present value of the stand. The results indicate that using the optimal stock-level function approach can significantly improve the thinning decisions for mixed species stand with stochastic timber prices.     

Influence of Trade Policies on Price Integration in the World Beef Market

The article develops three hypotheses about how policy interventions in major trading nations influence price integration in the world beef market. Simple correlation coefficients, tests for significant differences between coefficients, and Granger causality tests are used to test the hypotheses. First, segmentation between prices in Foot and Mouth Disease (FMD)-free and FMD-endemic countries is found, but it is much less than previously assumed. Second, European Community policies that closed the E.C. import market have isolated prices in the E.C. from other markets. These policies also led to greater integration among prices in FMD-free and FMD-endemic market segments by forcing exporters from both segments to compete directly in new import markets. Third, the U.S.A. is found to be the price leader in world beef markets, due not only to market size, but also to U.S. policies that allow transmission of price information from the U.S. market to the world market but not vice versa.     

Integration in the Norwegian pulpwood market: domestic prices versus external trade

Pulpwood from Norway spruce (Picea abies (L.) Karst) traded domestically in Norway, imported to Norway, or exported from Norway is investigated with respect to commodity homogeneity and market integration. The prices imply that pulpwood from Norway spruce is a homogenous commodity, and the three price series are analyzed with respect to market integration. Using the cointegration estimator two cointegrating vectors are found within the system, and the weak Law of One Price can be imposed on domestic- and import prices. Imports are weakly exogenous to the two other variables, indicating that international pulpwood prices leads the domestic market.     

Price expectations of sheep and goats by producers and intermediaries in Quetta market,Pakistan

Analysis of producers' and intermediaries' livestock price expectations was used to describe the market in Quetta, the largest livestock market in the highlands of Balochistan Province, Pakistan, and to identify factors that determine price expectations of small ruminants. A total of 4800 expected prices for sheep and goats were collected from producers and market intermediaries at monthly intervals between January 1991 and December 1992. In addition to the expected price of the animal, liveweight, species, sex, breed, body condition (fatness), calendar day and month were recorded, and whether data were collected on a meat or meatless day. Monthly rainfall data were also collected. Models of goat and sheep price expectations were built to compare the similarity of the behaviour of producers and intermediaries. Results indicated that producers and intermediaries expected high prices from November to January and during religious holidays. They expected premiums and discounts related to animals' attributes. Liveweight and seasonality had the strongest effect on prices. Rainfall in the current and previous month was positively related to seller's expected prices suggesting that livestock are retained to take advantage of favourable grazing conditions. The models of price expectations showed that producers adjusted expected goat prices (P ≤ 0.10) for seasonality, liveweight, body condition, age, sex and breed, while they adjusted sheep prices for seasonality and liveweight only. High pay-offs could be expected if extension efforts focused on factors that determine sheep meat quality; however, the retail ceiling price of meat and the lack of grading are a disincentive to work in this direction. Seasonality of supply and demand is important in determining prices and this study provides baseline information for market scheduling; however, scheduling of sales of transhumant pastoralists may be difficult to achieve. Further investigation is justified to understand the gap in marketing knowledge between producers who sell in the villages and those who sell in Quetta.     

Assessing the U.S. Market Economics for a Cultured Flounder,Paralichthys sp., Industry

There is considerable interest in the culture of flounder because of its high retail market value, the established worldwide market for flatfish, and the ability of flounder to grow in fresh or brackish water. The author assesses the U.S. market potential for a cultured flounder, Paralichthys sp., industry. Regression analyses were used to estimate both the price and income elasticity of demand for flounder. Demand forecasting was used to predict effective annual future demand for flounder. Although the U.S. flounder market is large and expanding, there are indications of excess supply suppressing prices below profitable levels for aquaculture producers. Demand is price inelastic, so an increase in supply from aquaculture production will produce a disproportionately large decrease in price, reducing total producer revenue. Unless niche markets are targeted or an export market is developed, the outlook for large-scale flounder aquaculture in the United States is not economically promising.     

IMPACTS OF THE COMMON AGRICULTURAL POLICY ON INTERNATIONAL WHEAT PRICES

The emergence of the EC as a major exporter of cereals in the 1980s and the escalation of international agricultural trade confrontations emphasize the importance of understanding the effects of EC policy actions. Several important features of the EC wheat market are incorporated in an analytical and empirical model including imperfect substitutability in demand between imports and domestic supplies, the simultaneous import and export of wheat by the EC, the distinct impact of threshold versus intervention policy prices, MCAs, and the imperfect transmission between market and intervention prices. Results indicate that EC policies have a smaller impact on world price than found in previous studies.     

Derivation of an aggregate supply curve for U.K. beet production

Abstract

This paper examines the relationship between real agricultural land prices and real rents for farmland using annual data. Taking account of inflation as a third variable there is evidence to suggest that rents and land prices are cointegrated; that is, changes in rents are mirrored in the long run by changes in land prices. It is also found that the implied real rate of return in the land market is around 3%.     

Value of moving from central planning to a market system: lessons from the Israeli water sector

This paper explores the implications of the transformation of the system of water resources allocation to the agricultural sector in Israel from a one in which allotments are allocated to the different users without any permission to trade with water rights. A mathematical planning model is used for the entire Israeli agricultural sector, in which an ‘optimal’ allocation of the water resources is found and compared to the existing one. The results of the model are used in order to gain insight into the shadow price of the different water bodies in Israel (about eight). These prices can then be used to grant property rights to the water users themselves in order to guarantee rational behavior of water use, since now one can sell their rights at the source itself. The implication is clear with regard to any possible movement towards a market system in any other sector. From the dual prices of the primal problem we can forecast the equilibrium prices and their implications for the different users. The central government does not have to interfere with the market mechanism because, as will be shown, every farmer has the option to sell his right or to use it. As participation in the market is voluntary, every farmer makes a decision that is both individually and socially rational. However, in moving from a central planning allocation to a market mechanism, the government has another task, which is to grant the property rights in order for the market to begin to evolve. It is not guaranteed that under any initial allocation a decentralization of the system will benefit all the regions but at least part of the problem is to be resolved between the regions themselves. As the results shows, there is a potential budgetary benefit of 28 million dollars when capital cost is not included and 64 million dollars when they are included.     

The Extent, Pattern, and Degree of Market Integration: A Multivariate Approach for the Brazilian Rice Market

The extent, pattern, and degree of integration are analyzed in a multivariate system with cointegrating restrictions. The extent of the market is found by identifying locations that are linked by trade and where prices share identical long run information (permanent component). The pattern of integration characterizes interdependence and is analyzed by estimating a vector error correction model. The degree of integration is calculated with persistence profiles of the long run relations. We demonstrate that bivariate models are inadequate for capturing the spatial dynamics of price adjustment. The methodology is applied to the Brazilian rice market and policy implications are discussed.