IMPACTS OF INTRODUCED AQUACULTURE SPECIES ON MARKETS FOR NATIVE MARINE AQUACULTURE PRODUCTS: THE CASE OF EDIBLE OYSTERS IN AUSTRALIA

Abstract

Economic competition between introduced and native aquaculture species is of interest for industry stakeholders since increased production can affect price formation if both aquaculture species are part of the same market or even substitutes. In this study, we focus on the Australian edible oyster industry, which is dominated by two major species—the native Sydney rock oyster (grown mainly in Queensland and New South Wales) and the non-native Pacific oyster (grown mainly in South Australia and Tasmania). We examine the integration of the Australian oyster market to determine if there exists a single or several markets. Short- and long-run own, cross-price and income flexibilities of demand are estimated for both species using an inverse demand system of equations. The results suggest that the markets for the two species are integrated. We found evidence that the development of the Pacific oyster industry has had an adverse impact on Sydney rock oyster prices. However, our results show that both species are not perfect substitutes. Demand for Sydney rock oysters is relatively inelastic in the long run, yet no long-run relationships can be identified for Pacific oysters, reflecting the developing nature of this sector.

Keywords:

• inverse demand
• market integration
• Pacific oyster
• Sydney rock oyster

ACKNOWLEDGMENTS

The authors would like to thank Ray Murphy and Bob Cox (Oysters Tasmania), Max Wingfield (QLDDAFF), Trudy McGowan (South Australian Oyster Growers Association) and Robert Curtotti (ABARES) for assistence with compiling the data used in the analysis. We thank Ana Norman-López (CSIRO) for her valuable suggestions and critical coments on the use of the methods in this study. We would also like to thank the two anonymous reviewers who provided useful comments that greatly improved the article.

Notes

Note: *A$1 = US$1 (May 2013).

Note: The t-statistic is to be compared with the critical value of −2.8 suggested by Blangiewicz and Charmeza (1990) for time series with a small sample size.

Note: *Indicates lag order selected by the criterion.

Note: Trace CV is the critical value of the trace test.

*Based on the Schwarz information criterion (see Table 3), the F-statistic of the Wald test is to be compared to critical value bounds in Table 5.

*Based on the Schwarz information criterion (see Table 3).

***Significant at 1% level, **significant at 5% level, *significant at 10% level.

Preliminary models of supply suggest that the quantity of Sydney rock oyster produced in any one year is a function of the prices of Pacific oysters two and three years earlier. As Pacific oyster are still a developing industry, no meaningful supply relationship between price and quantity produced can be established.

Given the potential loss of information when choosing such a short lag length (Ng & Perron, 1995), we also conducted a unit root tests with up to four lags to observe outcome behavior. In most cases, the results were consistent with the one lag results, although in some instances the series were identified to be I(2) with higher lag lengths.