Abstract
AbstractSeveral studies indicate an integrated global market for salmon. However, there is increasing evidence of market segmentation for various seafood species. A disease crisis in Chile that reduced production by two-thirds provides a strong market shock that can shed light on how strongly integrated the salmon market is. Our results indicate that Chilean producers changed the product mix and export markets as a result of the disease shock. Yet, the relative prices remained constant, indicating a high degree of market integration. Moreover, Chilean prices are endogenous to the Norwegian price, indicating that prices are determined at the global market.
Highlights
All biological production processes are exposed to biological shocks such as disease and adverse weather conditions
The strong rebounding of the aquaculture output after the infectious salmon anemia (ISA) outbreak is clearly seen in Figure 1, with production reaching a record level of 580,000 mt in 2015.6 This means that Chile has largely recovered its position in the salmon market, as its production share moved from 27.0% in 2008 to 8.9% in 2010 and back up to 25.9% in 2015 (FAO, 2017)
The first step in the empirical analysis is to test for market integration between the export price of fresh fillets to the United States and whole fresh salmon to Brazil
Summary
All biological production processes are exposed to biological shocks such as disease and adverse weather conditions These exogenous shocks will have a limited market impact, as shocks that do not influence a large share of the production will readily be adjusted by market arbitrage (Stigler, 1969). It is of interest to note that the export share of whole fresh fish increased during the disease crisis as fish were harvested early and at smaller sizes (Asche et al, 2009). The strong rebounding of the aquaculture output after the ISA outbreak is clearly seen, with production reaching a record level of 580,000 mt in 2015.6 This means that Chile has largely recovered its position in the salmon market, as its production share moved from 27.0% in 2008 to 8.9% in 2010 and back up to 25.9% in 2015 (FAO, 2017) The strong rebounding of the aquaculture output after the ISA outbreak is clearly seen in Figure 1, with production reaching a record level of 580,000 mt in 2015.6 This means that Chile has largely recovered its position in the salmon market, as its production share moved from 27.0% in 2008 to 8.9% in 2010 and back up to 25.9% in 2015 (FAO, 2017)
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