An Estimation of Supply in the Catfish Industry

Abstract

ABSTRACT Lack of research and understanding of the forces that cause fluctuations in the supply and prices of catfish make it difficult for farmers, lenders, and processors to make appropriate decisions. This paper examines catfish supply, using a multi-stage model designed to capture supply dynamics. This model separated catfish supply into distinct production stages that included fry/fingerling, food-size fish, and wholesale supply of round weight processed to analyze effects and interactions of different production stages. Results of the multi-stage model were then used to simulate the effect of changes in feed cost and farm prices on supply of catfish. Quarterly data covering the period 1985-95 were used to conduct the analysis. The supply of catfish reacts to higher catfish prices indirectly, by increasing the supply of fry/fin-gerlings. Food-size supply and feed quantities increase in subsequent quarters. Supply of round-weight fish for processing (wholesale supply) is affected by its role as a cost to processors, who will purchase lower quantities at higher prices unless new markets or strategies are developed. The first two stages (fingerling and food-size fish production) showed relatively weak price effects compared to non-price effects. The inelastic short run supply of food-size fish suggested a non-responsive quantity supplied to price of fish and feed cost. While increased catfish prices may result in increased acreage over the long run, catfish foodfish supply does not adjust rapidly to price fluctuations. An imperfectly competitive market structure at the processor level and the high level of capital and management required in catfish farming may be contributing factors. Simulation results further suggested that an increase in feed cost will lead to a decrease in supply. Increases in farm price would increase supply at both the fingerling and the food-size Stages.