Price Transmission Relationships along the Seafood Value Chain in Bangladesh: Aquaculture and Capture Fisheries

Abstract

There is a general concern among policy makers that seafood prices may not be proportional along the value chains in Bangladesh. This article investigates causal and price transmission relationships between wholesale and retail prices for five fish species in Bangladesh that include: hilsa (Tenualosa ilisha), rohu (Labeo rohita), catla (Catla catla), pangas (Pangasius hypophthalmus), and tilapia (Oreochromis mossambicus/O. niloticus). Causal relationships between wholesale and retail prices were tested using the Granger causality test while asymmetries in price transmission were examined using the Houck and Ward approach as well as the error-correction approach. The results show that the direction of causality in prices was from retail to wholesale in many of the value chains analyzed, indicating influence of retail price on wholesale price in the Bangladesh fish sector. In general, the price transmission was found to be symmetric in the short-run while a mix of symmetric and asymmetric in the long-run. The results also show variation in price transmission behavior between aquaculture and capture fisheries products. The retailers of aquaculture products, compared to their fisheries counterparts, are less likely to be in a position to easily pass through falling prices to wholesalers and farmers. For aquaculture products, elasticities of price transmission from retailer to wholesaler were generally greater from increases in price than from decreases in price.

Keywords:

• asymmetry
• Bangladesh
• fish
• Granger causality
• price transmission

ACKNOWLEDGMENTS

The authors thank Mr Salauddin Palash (Assistant Professor) and Prof. Dr. Md Idris Ali Mia from the Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh for generating data. The help and assistance extended by the Department of Agricultural Marketing, Government of Bangladesh, is acknowledged with thanks. The authors are thankful to Prof. Trond Bjorndal, Prof. Carole Engle, Prof. Daniel Gordon, and Dr. Audun Lem for their helpful suggestions on earlier versions of this manuscript.

Notes

Seafood is defined in board terms as all edible aquatic animals, including freshwater organisms.

The detailed discussions on seafood value chains in Bangladesh are available in Alam et al. (2012a, 2012b).

The Department of Agriculture Marketing collects wholesale prices from one secondary market in each district and farm gate prices from two primary markets in each district. Theses wholesales markets are usually located in sub-district (upazila) or district headquarters and are not very far away from primary markets.