Price transmission among different Atlantic salmon products in the U.S. import market

ABSTRACT

The cross-commodity price transmission is an approach to derive meaningful results from the price information, and is mostly influenced by the substitutability and complementary relations among products. Using time series data collected from the National Marine Fisheries Statistics, the present study specified and estimated cross-commodity price transmission models for 13 salmon products imported in the U.S. market. The salmon products are differentiated by form, cut, source/origin, and production environment. The estimated cross-product price transmission elasticity and degree of substitutability among them varied considerably. Whole fresh farmed Canadian and Norwegian Atlantic salmon did not have any close import substitutes in the U.S. market among the salmon products considered in the study. A reduced pricing strategy would result in an increase in U.S. salmon import market share of Chilean and U.K. Atlantic fillet fresh, if the U.S. import demand for it is relatively own-price elastic.

KEYWORDS:

• Atlantic salmon
• cross-commodity price transmission
• marketing strategies
• U.S. salmon imports

Acknowledgments

The author wishes to thank William Chalmers for technical assistance in preparation of the manuscript.

Notes

http://www.st.nmfs.noaa.gov/st1/trade/index.html.

varsoc reports FPE, AIC, SBIC, and HQIC lag order selection statistics for a series of vector autoregressions.

varlmar implements a Lagrange multiplier (LM) test for autocorrelation in the residuals of VAR models, which was presented in Johansen (1995).

vargranger performs a set of Granger causality tests for each equation in a VAR. For each equation and each endogenous variable that is not the dependent variable in that equation, vargranger computes and reports Wald tests that the coefficients on all the lags of an endogenous variable are jointly zero. For each equation in a VAR, vargranger tests the hypotheses that each of the other endogenous variables does not Granger-cause the dependent variable in that equation.

The SBIC and HQIC indicate the optimum lag order 0, and the FPE gives the optimum lag order 1. The model used is in the first difference, if any of the series has a unit-root. Some of the series have autocorrelation. I have used extra lag to take care of autocorrelation.

Average import unit values of farmed Atlantic salmon farmed products during 2013 (USD/kilogram) for i) whole fresh: Canada = 9.02, Chile = 9.91, Norway = 9.31, and U.K. = 9.89, and ii) fillets fresh: Canada = 13.45, Chile = 13.85, Norway = 13.33, and U.K. = 12.34.