Price transmission along the Vietnamese pangasius export chain

Abstract

Price transmission in international supply chains is important to ensure that price premiums paid by consumers for environmental sustainability labels are transmitted upstream to farmers. This facilitates investment in sustainable aquaculture systems. This study analyzes the price transmission from the international retail stage to the Vietnamese farm, focusing on frozen pangasius fillets. We used monthly nominal prices at farm and export stages in Vietnam, and at wholesale and retail stages in Poland for the period from August 2010 to December 2014. Price signals at the Polish retail stage were found to transmit back to the wholesale, export, and farm stages. Moreover, price transmission from wholesale to export and from export to farm is characterized by both short- and long-run symmetries. In the short run, retailers tend to transmit only wholesale price increases to their customers and wholesalers transmit only retail price increases to exporters. A long-run relationship between retailers and wholesalers is absent, thereby reducing the ability of chain actors to respond to all market signals, including downward changes.Given the delay in price transmission in the short run, the introduction of business-to-business electronic trading or auction markets might reduce this delay along the retail, wholesale, export, and farm stages. To enhance the long-run price relationship in the wholesale-retail market, more retailers should enter the pangasius market. The transmission of price changes from Polish markets back to Vietnamese pangasius farmers is a positive signal for farmers to invest in sustainable production methods, as consumer price premiums likely flow back to the farm.