Gilthead seabream price dynamics in the Spanish market: The role of retailers and international trade on price linkages

José Fernández-Polanco,Ignacio Llorente,Frank Asche

doi:10.1016/j.aquaculture.2020.735801

José Fernández-Polanco, Ignacio Llorente + Show 1 more

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https://doi.org/10.1016/j.aquaculture.2020.735801

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Abstract

This paper extends the literature on price-integration in the gilthead seabream (Sparus aurata) market in Spain by shedding new light on established relationships using additional data allowing investigation of the importance of origin. Although the conclusions for the overall market are in the line of those previously reported for market integration and price transmission in the domestic value chain, there are significant differences in the relationships across the price series when the market is disaggregated by countries of origin. While the overall model, with minor differences, confirms Turkey's price leadership and the influence of domestic wholesalers on the changes in the price along the value chain, alternative models with more specific focus on the country of origin show how organization along the value chain and differentiation of domestic product provide different distribution channels and different mechanisms of price transmission. Domestic and international producers establish alliances with downstream agents both at national and international level depending on to the market targeted. Differentiation is exerted by domestic producers based on the origin of the product. Although producers have lower ability to influence downstream prices, they may be moving into a less volatile price scenario.

Highlights

The continuous grow of aquaculture production and the internationalization of seafood markets have increased competition on domestic value chains at the main seafood destinations (Fernández Polanco et al 2012)
The most recent previous analysis (Fernández-Polanco and Llorente, 2019) about the seabream value chain in Spain concluded that the fresh seabream market is delimitated and price competitive
Results from the price transmission model suggest an upstream connection in which the changes in the ex-farm price are caused by changes in the wholesale level, and both are independent from retail

Summary

Introduction

The continuous grow of aquaculture production and the internationalization of seafood markets have increased competition on domestic value chains at the main seafood destinations (Fernández Polanco et al 2012). The new competitive scenario has changed the price determination process, in which the shortening of the value chains, the appearance of new agents, and an increasing retail concentration are important elements (Anderson et al, 2018; Asche and Smith, 2018). This development has strongly affected the Spanish seafood market, which is the largest seafood market in the European Union by consumption (EUMOFA, 2019). An increasing proportion of the retail activity concentrates in large retailers As a consequence, these companies get the scale and the capacity of directly negotiate with domestic producers and exporters in third countries. The case of the gilthead seabream (Sparus aurata), the principal product of the Spanish aquaculture industry in terms of value, together with European seabass, clearly illustrates these new competitive environment, in which large retailers’ requirements dominate the market, and the domestic product compete with imports from Greece and Turkey largely on price

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