ABSTRACT
Aquaculture production is increasingly important in seafood production and is currently the fastest growing food production technology worldwide. To continue the industry growth, price risk management is an essential part in creating successful projects and sustainable business operations. This research uses trade data on fish and invertebrate prices, and evaluates the relative price uncertainty from farmed and captured products. Moreover, we consider a set of species groups (fish, invertebrates), species’ families (e.g., Salmonidae, white fish and crustaceans), and individual species (e.g., salmon, seabream and prawns), and evaluate their price volatility over time using Value-at-Risk (VaR). The results indicate that the introduction of aquaculture production to a species’ total supply will reduce price volatility. Consequently, incentives and regulations should support research and development of new aquaculture species.
Notes
Brorsen and Fofana (Citation2001) study success criteria for agricultural commodities futures markets. Seafood futures markets are limited, and studies by Martínez-Garmendia and Anderson (Citation1999, Citation2001) demonstrate the difficulties with liquidity and commodity heterogeneity for the shrimp futures market, which had limited success. Articles by Asche and Misund (Citationin review), Asche et al. (Citation2015c, Citation2016a, Citation2016b) review characteristics in the salmon futures markets.
Tveteras et al. (2012) provide a discussion on the reliability of trade data.