FAO Price Index Workshop, Procida, Italy 4.10.11 Frank Asche, Kristin Lien and Sigbjorn Tveteras UN Food and Agricultural Organization (FAO), University of Stavanger (UiS), Pontifica Universidad Católca del Perú and the Norwegian Seafood Export Council (NSEC)
FAO Price Index Workshop, Procida, Italy 4.10.11 Frank Asche, Kristin Lien and Sigbjorn Tveteras UN Food and Agricultural Organization (FAO), University.
Dec 23, 2015
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FAO Price Index Workshop, Procida, Italy 4.10.11
Frank Asche, Kristin Lien and Sigbjorn Tveteras
UN Food and Agricultural Organization (FAO), University of Stavanger (UiS), Pontifica Universidad Católca del Perú and the Norwegian Seafood Export Council (NSEC)
The fact that the fish price index can be disaggregated along several dimensions makes it is possible to
pursue many relevant research issues
In the following we present some of the opportunities that exist for research using the
FPI
Research Issues based on FPI
1.Are global seafood markets integrated?
2.Economic Growth and Seafood Prices
3.Feed Cost and Price of Aquaculture Fish
4.Fuel Cost and Price of Capture Fish
1. Integrated global seafood markets – myth or reality?
The global whitefish market appears to be integrated,
although imperfectly
For example, Alaska Pollock prices seem to diverge from other white fish species, at least
during periods
Whitefish prices
0
20
40
60
80
100
120
140
160
180
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Price:whitefish, whole frozen
0
20
40
60
80
100
120
140
160
180
200
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Africa
Asia
Europe
North America
Oceania
South America
Price:whitefish, whole frozen
0
20
40
60
80
100
120
140
160
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Africa
Asia
Europe
North America
Oceania
South America
Price:whitefish, fillet frozen
0
20
40
60
80
100
120
140
160
180
200
Africa
Asia
Europe
North America
Oceania
South America
Price:whitefish, fillet frozen
0
20
40
60
80
100
120
140
160
180
200
Africa
Asia
Europe
North America
Oceania
South America
Fall in Alaska Pollock prices?
0
20000
40000
60000
80000
100000
120000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
VolumeNorth America - EU
North America - USA
0
1
2
3
4
5
6
7
8
9
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
PriceEU
USA
• Whitefish, fillet frozen
• Origin North America
• Markets EU, Japan and USA
0
20000
40000
60000
80000
100000
120000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
VolumeNorth America - EU
North America - USA
0
1
2
3
4
5
6
7
8
9
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
PriceEU
USA
• Whitefish, fillet frozen
• Origin North America
• Markets EU, Japan and USA
Price:whitefish, fillet frozen
0
20
40
60
80
100
120
140
160
180
Africa
Asia
Europe
South America
Price:whitefish, surimi
0
1
2
3
4
5
6
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
USD
per
kilo
Asia
North America
South America
Pelagic fish prices are characterized by high volatility.
Some of these markets appears to follow common trends, but can periodically experience strong
deviations
Pelagic fish (excl. Tuna) prices
0
50
100
150
200
250
300
350
400
450
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Pelagic fish (excl. Tuna) prices, smoothed
0
20
40
60
80
100
120
140
160
180
200
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
0
100000
200000
300000
400000
500000
600000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EU Europe-Japan Europe-USA
NorthAmerica-EU NorthAmerica-Japan NorthAmerica-USA
Small pelagic prices, origin Europe and North America 0
20
40
60
80
100
120
140
EUROPE
NORTH AMERICA
0
100000
200000
300000
400000
500000
600000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EU Europe-Japan Europe-USA
NorthAmerica-EU NorthAmerica-Japan NorthAmerica-USA
0
20
40
60
80
100
120
140
EUROPE
NORTH AMERICA
Small pelagic prices, origin Europe and North America
There signs of divergenceD
ivergence
0
100000
200000
300000
400000
500000
600000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EU Europe-Japan Europe-USA
NorthAmerica-EU NorthAmerica-Japan NorthAmerica-USA
0
20
40
60
80
100
120
140
EUROPE
NORTH AMERICA
Small pelagic prices, origin Europe and North America
There signs of divergence
Then convergence
Convergence
Divergence
0
100000
200000
300000
400000
500000
600000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EU Europe-Japan Europe-USA
NorthAmerica-EU NorthAmerica-Japan NorthAmerica-USA
0
20
40
60
80
100
120
140
EUROPE
NORTH AMERICA
Small pelagic prices, origin Europe and North America
There signs of divergence
Then convergence
And finally, integration
Convergence
Integration
Divergence
0
0.5
1
1.5
2
2.5
3
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EUEurope-JapanNorthAmerica-EUNorthAmerica-JapanNorthAmerica-USA
0
100000
200000
300000
400000
500000
600000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Europe-EU Europe-Japan Europe-USA
NorthAmerica-EU NorthAmerica-Japan NorthAmerica-USA
Prices at a more disaggragate level show that the divergence originated from North American pelagic exports to Japan (light blue line)
European pelagic exports also command a higher price in the Japanese market (dark red line)
The global tuna market exhibit pronounced common trends in price movements, but still not
perfectly integrated
Tuna prices
0
50
100
150
200
250
300
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Tuna prices, smoothed
0
20
40
60
80
100
120
140
160
180
200
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Tuna prices, smoothed
0
20
40
60
80
100
120
140
160
180
200
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICADifference in steepness of trend can most likely be related to composition of tuna species/product format
Prices of other fish, which represents a hodgepodge of
different kinds of species, are surprisingly convergent at the
regional aggregate level
Could it be the effect of farmed fish such as catfish, tilapia and pangasius that influence
these comovements?
Other fish prices
0
20
40
60
80
100
120
140
160
180
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Other fish prices
0
20
40
60
80
100
120
140
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICA
Salmon prices have converged with the growth of aquaculture
and has become a strongly integrated global market
Salmon prices
0
20
40
60
80
100
120
140
160
180
200 ASIA EUROPE
NORTH AMERICA OCEANIA
SOUTH AMERICA
Shrimp is segmented in two types of markets: 1) aquaculture and
2) capture, where the latter group is more heterogenous
However, wild shrimp prices have not been able to rise like many other fish species, which
is most likely due to the growth of shrimp aquaculture
Shrimp prices
0
20
40
60
80
100
120
140
160
180
ASIA
SOUTH AMERICA
Farmed shrimp prices relatively stable and integrated
Shrimp prices
0
20
40
60
80
100
120
140
160
180
200
AFRICA
EUROPE
NORTH AMERICA
OCEANIAWild shrimp prices more volatile due to seasonality and more divergent because of heterogenous species types
Shrimp prices
0
20
40
60
80
100
120
140
160
180
200
AFRICA
ASIA
EUROPE
NORTH AMERICA
OCEANIA
SOUTH AMERICAHowever, only weak if any increasing trend in wild-shrimp prices
Shrimp prices, smoothed
0
20
40
60
80
100
120
140
160
AFRICA ASIA
EUROPE NORTH AMERICA
OCEANIA SOUTH AMERICA
Shrimp prices, smoothed
0
20
40
60
80
100
120
140
160
AFRICA ASIA
EUROPE NORTH AMERICA
OCEANIA SOUTH AMERICA
Only weakly increasing trends suggest scarcity is not an issue
Finally we compare price development across species
0
20
40
60
80
100
120
140
160
180
200 Fish Species Price Indexes(100=2005)
Data Source: NSEC
Other fish White fish
Salmon Shrimp
Pelagic e/tuna Tuna
SummaryMost markets for particular fish species groups
appear to be integrated across regions although the level of integration appears to be related to
1.Heterogeneity of species within species group2.Production technology
Integration across species group is less, but there is still signs of similar long-term trends when the long run is defined to be 5-10 years intervalls
2. Economic growth and seafood prices
EU, Japan and USA have similar price development for seafood…
0
20
40
60
80
100
120
140
160
180
200
USA
EU
Japan
…and China too, but a bit steeper
0
20
40
60
80
100
120
140
160
180
200
USA
EU
Japan
China
…and Korea too, but even steeper
0
20
40
60
80
100
120
140
160
180
200
USA
EU
Japan
China
Korea
…and finally Brazil with steepest price development
0
20
40
60
80
100
120
140
160
180
200
USA
EU
Japan
China
Korea
Brazil
Why is pricing rising faster in emerging economies?The rise of the middle class in Asia seems to
have two effects1.Increase in consumption of seafood2.Changing the composition of seafood
consumption towards more high-value products
This results in a higher inflation for seafood products in emerging markets
3. Feed Cost and Price of Aquaculture Fish
• Prices of aquaculture feed inputs have spiked during the last years and should affect prices of
farmed fish
Aquaculture feed prices
0
50
100
150
200
250
300
350
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Maize
Sorghum
Wheat
Fishmeal
Soybean meal
Fish oil
Rape oil
Prices of feed inputs and aquaculture products
0
50
100
150
200
250
300
350
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Maize
Sorghum
Wheat
Fishmeal
Soybean meal
Fish oil
Rape oil
Aquaculture
ConclusionThe increase in prices of a broad range of
important inputs for aquaculture feed have led to rising prices for aquaculture products
This reflects the importance of feed cost of total operational costs, and that that there are limited oppurtinities to substitute away from rising input prices
4. Fuel Cost and Price of Capture Fish
One of the main cost components in capture fisheries is fuel prices. The impact fuel prices have
on fish prices is not alltogether obvious
Capture fish and gasoline prices
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
160
180
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Other fish White fish
Pelagic e/tuna Tuna
Crude Oil
Conclusions
The seafood market is highly global, and is becoming increasingly so due to trade growthMarket integration within species groups and
across exporting regions appears to be highWe have to be careful about composition
effects when intepreting price trends
Emerging market growth leads to increased seafood imports and changes in the import composition towards higher value products
ConclusionsPrices are determined globally
For an increasing number of species, production cost in aquaculture determines price
We don’t understand yet the influence of fuel prices on capture fish prices In fisheries where there are overcapacity increasing fuel
prices can reduce the size of the fleet and thereby increase sustainability – but what about prices?
FPI opens up for relevant research questions about price formation in international seafood markets
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