The introduction of farmed salmon on the European Union fish markets has coincided with major organisational changes within the value chain (the collapse of European fisheries, increase of foreign trade, rise of processing, concentration of the retailing sector, etc.). The EU-funded Salmar project (2000-2002) has investigated the extent to which the value spread between the intermediaries has been modified thereafter, not only for salmon but also for a few 'wild-caught' species.
The great variety of case studies has enhanced the scope of the results and methodology on an issue that has, so far, been poorly debated by economists in the field. In particular, the background of co-integration theory has been extended to integrate exchange rate pass-through, asymmetry within the price transmission process and structural changes. Dynamic and structural models were also used to deal with the sensitive issues of market power and price discrimination on the fish markets. All quantitative results were analysed with the support of qualitative information obtained through surveys. An original contribution of the present research lies in the cross-referencing between the hypotheses deduced from conventional theory and the feedback from the empirical work in the discussion of results.
The Salmar project has three objectives:
1) an empirical issue: to understand the dynamics of the seafood value chain over the last twenty years in Europe: what benefits has recent change in increased farmed fish imports brought and what have been the effects of this on the organisation of the seafood value chain in some European countries?
2) a theoretical objective: to explain price-cost margins in a dynamic way. The issue of substitutability is central to defining markets properly: what is the size of the relevant market and what are the forces acting on price mechanisms? A mix of quantitative (price series) and qualitative (survey) approaches will highlight any result of the models with actual observation.
3) some policy implications: a better knowledge of fish markets through a dynamic definition is expected, and is a major requirement for market intervention by any regulatory authority. Is the current price supporting system implemented by the Common Organisation of Markets (COM) within the Common Fisheries Policy (CFP) still efficient enough to respond to worldwide and multi-channel forces on prices? Another policy implication lies in the potential disturbance to domestic production caused by imports, which can legally motivate trade sanctions. Furthermore, it is of interest to investigate whether processing and value-adding takes place close to the consumer or close to the producer, and why this is so.
Progress to Date
The Salmar project was completed in March 2003. A final report has been published in book format but it is also accessible at: www.sc-eco.univ-nantes.fr/~salmar
Several peer-reviewed publications of the projects have been accepted or are currently under review and many communications have been presented to various international conferences.
Within the Salmar project, various models and theories have been improved to better understand the vertical organisation of European seafood markets. Recent econometric models were applied successfully to seafood market chains for the first time on such a scale. Dynamic and structural models were also used to deal with the sensitive issues of market power and price discrimination on the fish markets. All quantitative results were analysed with the support of qualitative information obtained by means of surveys. An original contribution of the present research then lies in the cross-referencing between the hypotheses deduced from conventional theory, and the feedback from the empirical work on the discussion of results. As a brief conclusion of the whole research, it could be said that the introduction of farmed salmon and the globalisation of fishery markets have certainly benefited European consumers, but probably not to the extent of the most optimistic expectations due to market imperfections.
FOOD, FISHERIES AND AQUACULTURE, QUANTITATIVE APPROACHES AND MODELLING
Scientist responsible for the project
||Université de Nantes - Centre d´Observation et de Recherche sur les Ressources Aquatiques et les Industries du Littoral
||01 February 2000
||1 651 551 €
|Total EC contribution
||1 253 431 €