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Economic Analysis of Japanese Household Demand for Salmon
Journal of the World Aquaculture Society
Abstract
The recent glut of both wild and farmed salmon in world markets has forced producers to become aware of the need to expand their marketing efforts to ensure that demand is not outpaced by supply resulting in a further decline in prices. Japan has been a major market for wild salmon, particularly sockeye salmon from North America, since the introduction of the 200 mile Exclusive Economic Zone. As farmed supplies have continued to increase, exporters such as Norway and Chile have turned their attention to this market as well. Up until now, most of the farmed salmon exported to Japan has been targeted to the restaurant market. If exporters wish to expand their market in Japan, they may focus also on the retail market. Prior to any assessment of the potential of the retail market for fresh farmed salmon, it is useful to understand the role that salmon plays in Japanese household seafood consumption.
This paper examines household consumption patterns of salmon in Japan. An econometric model is presented which estimates household demand for fresh and salted salmon focusing specifically on the effects of seasonality, regional location, and prices of other seafood products. Two systems of demand equations, one for each of two regions of Japan, are specified and estimated using monthly data on prices and expenditures to capture the effects on household demand for 12 seafood products. Results indicate that seasonality plays a significant role in the demand for many seafood products, particularly fresh and salted salmon. In addition, these seasonal effects are not necessarily the same between regions of Japan. Salmon competes with different seafood products during different times of the year. A rich variety of factors should be considered when marketing fresh aquacultured salmon in the Japanese retail market.
... Past research on salmon demand and market characteristics has mostly focused on the major conventional salmon-consuming markets, such as Japan (Wessells & Wilen, 1993), the European Union (Asche et al., 2011), and the United States (Herrmann et al., 1993). Taiwan contrasts greatly with these regions: it is an emerging market for salmon consumption far from main production areas and wholly dependent on imports. ...
... In addition, the Atlantic salmon production area can provide products year-round. Taking Japan as an example, however, salmon consumption shows obvious seasonal changes (Wessells & Wilen, 1993) as well as traditionally popular preservation procedures in the form of akiaji salted salmon, which have been well established (Matsuda, 2001). It will be interesting to examine whether Taiwan has already formed its own seasonal salmon consumption patterns after only two decades. ...
Few studies have investigated salmon consumption and trade in unconventional emerging markets. Using import data, we calculate average per capita monthly salmon consumption in Taiwan, where all supply is imported, and use weighted least squares regression to relate it to economic variables, such as price, income, product types, and the exchange rate. By doing so, we interpret importers’ willingness to import and the features of salmon consumption. Results show complementarity between frozen and fresh salmon import quantities, insignificant exchange rate pass-through effects, and strong seasonal factors affecting salmon import quantity. In addition, the import price elasticity of fresh salmon is slightly larger than one, and the income elasticity is 1.33. We conclude that salmon has already become an important item for Taiwanese consumers, representing a case of globalization and liberalization. By explicating attributes of emerging seafood markets, this analysis will support stakeholders to formulate seafood trade policies and marketing strategies. 2016
... Quaas and Requate (2013) show that limited substitutability is an important determinant of stock (local) extinction under open access. In this study, we aim to add to the literature by investigating consumer preferences for different seafood species in a developing country setting with a high degree of species variety. 2 Empirical analyses of fish consumer preferences mostly rely on demand system estimation, in particular in developed countries like North America, Europe and Japan (Asche et al. 1997;Bronnmann et al. 2016b;Bronnmann 2016;Wessells and Wilen 1993;Xie and Myrland 2011). But also the number of studies for developing countries is increasing (Akuffo et al. 2020;Dey 2000;Dey et al. 2011Dey et al. , 2005Dey et al. , 2008Garcia et al. 2005). ...
In a marine multi-species environment, consumers’ decisions may introduce interactions between species beyond biological ecosystem links. The theoretical literature shows that consumer preferences for variety can trigger a sequential (local) extinction of fish stocks. However, consumer preferences are not yet fully understood empirically, as it is uncertain how variety-loving consumers really are, in particular in specific settings such as in developing countries. In this article, we present an aggregation procedure to study consumer preferences in a highly diverse marine system. In a first step, we use co-integration analysis and aggregation theorems by Hicks and Lewbel to find groups of species that consumers find substitutable. In a second step, we use a direct quadratic almost ideal demand system (QUAIDS) to estimate price elasticities between these groups. We then quantify and compare welfare losses and spillovers from species-specific price shocks that may for example result from restoration efforts. Our case study from Senegal across 28 species reveals evidence that consumers do indeed have a preference for diversity of species on their plates.
... Using the instrumental variable approach, the own-price elasticity of demand was estimated. There are numerous studies estimating the price elasticity of demand for different fish products in Japan and other parts of the world (Wessells and Wilen, 1993;Eales et al., 1997;Asche et al., 2005;Tokunaga, 2018). However, most studies have focused on industrial fisheries or national-level consumption figures, and consumers' responsiveness to price changes in small-scale fisheries remains unclear. ...
We studied how local environmental and socio-economic factors impact fish supply and the price outcome of small-scale fisheries. We exploited day-to-day variations in sea surface temperature (SST) and cross-sectional differences in market distance and age of fishers to measure consumers’ responsiveness to price changes in a small-scale octopus fishery in Japan. Using the estimated demand parameters, we quantified the economic consequences of local socio-environmental factors in terms of changes in fishing revenue and consumer surplus. We found that increasing SST and an aging workforce increase the octopus supply and that consumers are responsive to price changes due to such supply shocks. Our results suggest that increasing SST and an aging workforce have positive net effects on fishing revenue and consumer surplus within the fishery. The octopus fishery provides a temporary source of income in the off-season of other species, smoothing the seasonal income variation of elderly fishers in the community.
... The French salmon market is the world's largest salmon market. Many studies have used demand models to estimate demand elasticities in the main salmon markets, such as the European Union (EU), France, the United States, and Japan (e.g., Asche, 1996;Asche, Bjorndal, and Salvanes, 1998;Asche et al., 2005;Bjorndal, Salvanes, and Gordon, 1994;Eales, Durham, and Wessells, 1997;Herrmann and Liu, 1988;Herrmann, Mittelhammer, and Lin, 1993;Wessells and Wilen, 1993). The impacts of generic advertising implemented by the Norwegian Seafood Council (NSC) in most of the Norwegian salmon export markets have also been estimated from the results of some studies (e.g., Xie, 2015;Xie, Myrland, and Kinnucan, 2009). ...
The dependent variable in the Rotterdam model is shown to consist of two additive components: the proportionate change in the average product weight consumed by existing buyers and the proportionate change in the share of total consumers who actually purchase the product. Applying the extended model to household data on salmon consumption in France, results suggest prices have a larger effect on attracting new buyers to the product in question than on getting existing buyers to consume more. However, generic advertising was found to affect consumption intensity but have no effect on market participation in the short run.
... Second, promotional marketing activities were conducted in Taiwan starting in 2001 (see Section 3.1.2.3), so the regression analysis was conducted for two separate time periods (before and after the marketing activities). Third, in line with Wessells and Wilen [26], Sakai et al. [27], household expenditure is added as a potential factor. ...
An in-depth assessment was conducted on the functioning of a Taiwanese Sakuraebi (Sergia lucens) fishery
management institution to understand the role of leadership in the context of long-term incentive creation.
Interviews with relevant stakeholders and statistical analysis of fisheries data indicated that the daily vessel
quota system and fishers’ collective efforts to influence the market resulted in increased sales value, while
simultaneously allowing for the equitable distribution of benefits from the Sakuraebi fishery in Donggang,
Taiwan. Local fishers expressed a high level of satisfaction with the corresponding activities initiated by the
fisher's organization. Interview respondents felt that promotional marketing activities led by the organization to
enhance domestic consumption were particularly effective, and statistical analysis suggests that these activities
helped to reduce the dependency of Taiwanese Sakuraebi fishers on export markets. A notable characteristic of
this fishery is that it combines a large-scale sales organization, which enables the exertion of market influence,
with a small-sized subsidiary organization for fisheries management. An annually rotating leadership system for
managing fishery operations also provides members with the opportunity to share a sense of participation and
responsibility, while keeping long-term policy goals. This study reinforces previous findings that leadership,
social cohesion, and the nature of the resource are key factors determining the effectiveness and success of
fisheries management.
... Responses of fish demand to changes in prices and incomes are important in analysing the effects of any technological change, infrastructure development or economic policy on future production, consumption and trade of various fisheries products. While many past researches on fish demand have treated fish as a single commodity in the consumer food basket, recent studies have evolved into more disaggregated analyses (Wessells and Wilen 1993; Dey 2000; Garcia et al . 2005). ...
Fish demand patterns in nine Asian countries were investigated using a multistage budgeting framework allowing a disaggregated approach to analysing fish consumption. This paper highlights the heterogeneity of fisheries products in terms of species, sources and cultural responses of consumers, factors that are important in fish demand under the Asian setting. Specifically, fish demand by income groups were compared to determine how the low- and high-income households respond to price and income changes. Results showed that the estimated price and income elasticities of all fish types included in the study were relatively more elastic among the poorer households. Copyright 2008 The Authors. Journal compilation 2008 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.
In this study, we use an almost ideal demand system to estimate the price and expenditure elasticities of domestic krill fishery products. The quantity and price of all domestic krill fishery products in the Iwate and Miyagi prefectures of Japan are analyzed. Since krill fishery products are consumed in recreational fishing, we use expenditure on leisure as the expenditure variable. Additionally, since many typhoons hit Japan, the number of typhoon landfalls is used as the instrumental variable for the expenditure endogeneity problem. Estimated expenditure elasticities are between 0.73 and 1.28, and significant own-price elasticities are -1.33 and -0.88 in two markets in Miyagi. Cross-price elasticities show that the products of Miyagi and Iwate markets are substitute goods, while those within Miyagi are complementary goods.
First published in 1990, The Economics of Salmon Aquaculture was the first book to systematically analyse the salmon aquaculture industry, from both a market and production perspective. Since publication of the first edition of this book, the salmon aquaculture industry has grown at a phenomenal rate, with salmon now being consumed in more than 100 countries worldwide. This second edition of a very popular and successful book brings the reader right up to date with all the major current issues pertaining to salmon aquaculture. Commencing with an overview of the production process in aquaculture, the following chapters provide in-depth coverage of the sources of the world's supply of salmon, the growth in productivity, technological changes, environmental issues, markets, market structure and competitiveness, lessons that can be learnt from the culture of other species, optimal harvesting techniques, production planning, and investment in salmon farms. Written by Frank Ashe and Trond Bjørndal, two of the world's leading experts in the economics of aquaculture, this second edition of The Economics of Salmon Aquaculture provides the salmon aquaculture industry with an essential reference work, including a wealth of commercially important information. This book is also a valuable resource for upper level students and professionals in aquaculture and economics, and libraries in all universities and research establishments where these subjects are studied and taught should have copies of this important book on their shelves.
Fishing impacts biodiversity on multiple levels, potentially resulting in unintended feedbacks to the economic performance of the fishery over time. For example, targeting observable traits within a population can impact genetic diversity and targeting valuable species can impact biodiversity at the ecosystem level. The bioeconomic literature, however, has given little attention to the effect of fishing on population diversity, even though population diversity contributes to ecosystem services and estimates of population extinction rates are three orders of magnitude higher than species extinction rates. Here we develop a stochastic bioeconomic model that links the harvest of multiple salmon populations in a single commercial fishery to the trajectory of population diversity in a salmon stock complex. We parameterize our model with biological and economic data from the Copper River Chinook salmon fishery. We show that markets can incentivize the degradation of population diversity, reducing infra-marginal fishery rents, and increasing variability in economic returns. We also show that second-best management can conserve population diversity and improve welfare. Furthermore, depending on fishermen's time preferences, this management strategy is potentially self-financing.
An analysis of fish consumption patterns, and how they are likely to change as income and relative price changes, is required to assess the welfare impact of technological and policy changes in the fisheries and aquaculture sectors. This analysis is based on a matrix of price and income elasticities of demand for fish by type, as fish is a heterogeneous product and consumption patterns may differ by type of product. This paper presents estimates of fish demand elasticities by fish type for Bangladesh, using individual household expenditure data (5,667 households) collected by the Bangladesh Bureau of Statistics in 1988/89. It uses a multistage budgeting framework that estimates a demand function for food in the first stage, a demand function for fish (as a group) in the second stage and a set of demand functions for fish by type in the third stage. Estimated demand elasticities vary across fish type and across income class. Among the various types of fish, carp have the highest (in absolute terms) own‐price elasticity. Income elasticities of all fish types consistently fall with the increase in per capita expenditure level of households, but none of the fish types become an inferior good at the highest income quartile. Dried fish has the lowest income elasticities for the richest quartile of the population.
Over the past two decades aquaculture has emerged as the preeminent source of salmon. The development and evolution of salmon aquaculture in Chile illustrates changes that have taken place to a greater or lesser extent in other salmon producing regions. Although initially comprised of small independent firms with heavy reliance on foreign technology and production inputs, the Chilean salmon aquaculture industry has evolved into a horizontally and vertically integrated complex of interdependent suppliers, producers, processors, distributors, and supporting entities. The structure and organization of industries evolves over time in response to changes in the price and availability of inputs, changes in the demand for outputs and output attributes, and changes in technology. The growing demand for traceability and assurance is a change in the demand for credence attributes. Firms that are able to organize to provide traceability and assurance at low cost will, ceteris paribus, have an advantage.
The generalised demand specification of Barten and Eales et al. is used to estimate the world demand curves faced by major exporters of farmed salmon. Results suggest that the demand for
farmed salmon has become less price elastic over time, fresh salmon from the UK faces the most competition in world markets
and fresh salmon from Chile the least. Promotion programmes sponsored by the Norwegian Seafood Export Council appear to have
increased the demand for fresh salmon at the expense of frozen salmon. Although the estimated promotion effects are small,
the programme appears to have been remunerative from the Norwegian producer perspective.
During the last two decades there has been a tremendous growth in the production of intensively farmed fish. This growth has been accompanied by a substantial reduction in prices. As this enhances the competitiveness of farmed fish, concerns are often raised with respect to the market impact of new aquaculture species. Of particular interest is the relationship to wild species in the output market as well as in the input market because of the demand for feed. In this paper we investigate what we know about market interactions based on two simple market models, where the difference between the two models is whether the competing product is wild-caught seafood or a traditionally produced product.
The effects of income growth and tariffs on salmon prices, production, and trade flows are analysed using total elasticities derived from an equilibrium displacement model of the world salmon market. Results suggest the total income elasticity in world trade for salmon is about one, which means imports worldwide will grow at about the same pace as world income. However, owing in part to policies that restrict supply response, not all exporters will share evenly in this growth, with UK producers benefiting the most and Norwegian producers the least. Within importing countries, imports are more responsive to income growth than is domestic production, which means protectionist pressures are apt to increase with affluence. US tariffs on imports from Norway and Chile are counterproductive in that they reduce world imports with little effect on the US price. Norway's feed quota reduces the efficacy of US tariffs, makes imports less responsive to income, and increases price volatility. Hence, quota elimination may yield producer benefits in excess of producer losses associated with a lower world price.
In this paper, the own and cross-price flexibilities for four high valued species (bass, lobster, sole and turbot) landed in the UK are estimated. System of equation models were developed using the vector error correction model (VECM) approach. Johansen's multivariate approach was used to obtain estimates of the long run steady state relationship (vectors) between fish prices and landings. To find unique vectors (i.e. no interdependent vectors) zero restrictions on the coefficients of the price variables were applied so that the model effectively contained quantity independent variables only. The resulting vectors were four unique cointegration long run relationships of monthly fish prices and landings. Various tests suggested that the variables were I (1) nonstationary variables. The model also suggested that there are more than one cointegration vectors (relationships) between the variables. It was found that bass has the largest absolute long run own price flexibility. Bass and lobster were found to be weak substitutes while sole and turbot were found to be substitutes. The results suggest, however, that the relationship is not symmetrical, with the quantity of sole having a greater effect on the price of turbot than turbot on sole.
In this paper, the own and cross-price ¯ exibilities for four high valued species (bass, lobster, sole and turbot) landed in the UK are estimated. System of equation models were developed using the vector error correction model (VECM) approach. Johan-sen's multivariate approach was used to obtain estimates of the long run steady state relationship (vectors) between ® sh prices and landings. To ® nd unique vectors (i.e. no interdependent vectors) zero restrictions on the coe cients of the price variables were applied so that the model e ectively contained quantity independent variables only. The resulting vectors were four unique cointegration long run relationships of monthly ® sh prices and landings. Various tests suggested that the variables were I(1) nonstationary variables. The model also suggested that there are more than one cointegration vectors (relationships) between the variables. It was found that bass has the largest absolute long run own price ¯ exibility. Bass and lobster were found to be weak substitutes while sole and turbot were found to be substitutes. The results suggest, however, that the relationship is not symmetrical, with the quantity of sole having a greater e ect on the price of turbot than turbot on sole.
In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand. It is common to estimate the linear approximate almost ideal demand system (LA/AIDS) instead of the AIDS. When the LA/AIDS is estimated, all of the previously reported approaches to compute elasticities are theoretically incorrect. This paper presents correct formulas for LA/AIDS elasticities and illustrates the potential errors from using incorrect computing formulas.
Typescript (photocopy). Thesis (M.S.)--Oregon State University, 1987. Includes bibliographical references (leaves 45-46).
"United Kingdom (UK) demand for carnations by exporting country was estimated using a production version of the Rotterdam model, and model estimates were used to assess the effects of EU preferential trade agreements on import demand. Of particular importance was how these agreements affected Colombian and Kenyan carnation exports to the UK, the second largest market for Colombian carnations and the largest market for Kenyan carnations. Results showed that Colombia benefited from preferential access to the UK more so than Kenya: the benefit to Colombia was due to both trade creation and diversion, whereas the benefit to Kenya was mostly due to trade diversion. Results further showed that the competition between Colombian and Kenyan carnations was insignificant, and there was no evidence that the preferences given to Colombia harmed Kenya or vice versa." from authors' abstract
Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expendi- ture system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgen- son and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand the- ory. In this paper, we propose and estimate a new model which is of comparable gener- ality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an ar- bitrary first-order approximation to any de- mand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoid- ing the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry re- strictions. Our results are consistent with earlier findings in that both sets of restric- tions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in de- mand analysis may be due to insufficient attention to the dynamic aspects of con- sumer behavior. Finally, in Section III, we offer a summary and conclusions. We be- lieve that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions asso- ciated with the usual approach. I. Specification of the AIDS
The almost ideal demand system is combined with the Fourier expenditure system. Subject to the assumption that preferences are of the price-independent, generalized-logarithmic class, the resulting demand system has the desirable features of each of its components. Aggregate demand equations are consistent with preferences of a representative consumer, and consistent estimates of elasticities are obtained for all observed prices. Application of the new demand system to U.S. consumption of meats and fish reveals that it fits the data well and that the restriction to the usual specification is rejected.