1. FAO Price Index Workshop, Procida, Italy 4.10.11 Frank Asche, Kristin Lien and Sigbjorn Tveteras UN Food and Agricultural Organization (FAO), University of Stavanger (UiS), Pontifica Universidad Católca del Perú and the Norwegian Seafood Export Council (NSEC)

2. The fact that the fish price index can be disaggregated along several dimensions makes it is possible to pursue many relevant research issues In the following we present some of the opportunities that exist for research using the FPI

3. Research Issues based on FPI 1. Are global seafood markets integrated? 2. Economic Growth and Seafood Prices 3. Feed Cost and Price of Aquaculture Fish 4. Fuel Cost and Price of Capture Fish

4. 1. Integrated global seafood markets – myth or reality?

5. The global whitefish market appears to be integrated, although imperfectly For example, Alaska Pollock prices seem to diverge from other white fish species, at least during periods

6. Whitefish prices

7. Price: whitefish, whole frozen

9. Price: whitefish, fillet frozen

10. Fall in Alaska Pollock prices?

11. Whitefish, fillet frozen Origin North America Markets EU, Japan and USA

12. Whitefish, fillet frozen Origin North America Markets EU, Japan and USA

13. Price: whitefish, fillet frozen

14. Price: whitefish, surimi

15. Pelagic fish prices are characterized by high volatility. Some of these markets appears to follow common trends, but can periodically experience strong deviations

16. Pelagic fish (excl. Tuna) prices

17. Pelagic fish (excl. Tuna) prices, smoothed

18. Small pelagic prices, origin Europe and North America

19. There signs of divergence Divergence

20. Small pelagic prices, origin Europe and North America There signs of divergence Then convergence ConvergenceDivergence

21. Small pelagic prices, origin Europe and North America There signs of divergence Then convergence And finally, integration Convergence Integration Divergence

22. Prices at a more disaggragate level show that the divergence originated from North American pelagic exports to Japan (light blue line) European pelagic exports also command a higher price in the Japanese market (dark red line)

23. The global tuna market exhibit pronounced common trends in price movements, but still not perfectly integrated

24. Tuna prices

25. Tuna prices, smoothed

26. Difference in steepness of trend can most likely be related to composition of tuna species/product format

27. Prices of other fish, which represents a hodgepodge of different kinds of species, are surprisingly convergent at the regional aggregate level Could it be the effect of farmed fish such as catfish, tilapia and pangasius that influence these comovements?

28. Other fish prices

30. Salmon prices have converged with the growth of aquaculture and has become a strongly integrated global market

31. Salmon prices

32. Shrimp is segmented in two types of markets: 1) aquaculture and 2) capture, where the latter group is more heterogenous However, wild shrimp prices have not been able to rise like many other fish species, which is most likely due to the growth of shrimp aquaculture

33. Shrimp prices Farmed shrimp prices relatively stable and integrated

34. Shrimp prices Wild shrimp prices more volatile due to seasonality and more divergent because of heterogenous species types

35. Shrimp prices However, only weak if any increasing trend in wild-shrimp prices

36. Shrimp prices, smoothed

37. Only weakly increasing trends suggest scarcity is not an issue

38. Finally we compare price development across species

40. Summary Most markets for particular fish species groups appear to be integrated across regions although the level of integration appears to be related to 1. Heterogeneity of species within species group 2. Production technology Integration across species group is less, but there is still signs of similar long-term trends when the long run is defined to be 5-10 years intervalls

41. 2. Economic growth and seafood prices

42. EU, Japan and USA have similar price development for seafood…

43. …and China too, but a bit steeper

44. …and Korea too, but even steeper

45. …and finally Brazil with steepest price development

46. Why is pricing rising faster in emerging economies? The rise of the middle class in Asia seems to have two effects 1. Increase in consumption of seafood 2. Changing the composition of seafood consumption towards more high-value products This results in a higher inflation for seafood products in emerging markets

47. 3. Feed Cost and Price of Aquaculture Fish Prices of aquaculture feed inputs have spiked during the last years and should affect prices of farmed fish

48. Aquaculture feed prices

49. Prices of feed inputs and aquaculture products

50. Conclusion The increase in prices of a broad range of important inputs for aquaculture feed have led to rising prices for aquaculture products This reflects the importance of feed cost of total operational costs, and that that there are limited oppurtinities to substitute away from rising input prices

51. 4. Fuel Cost and Price of Capture Fish One of the main cost components in capture fisheries is fuel prices. The impact fuel prices have on fish prices is not alltogether obvious

52. Capture fish and gasoline prices

53. Conclusions The seafood market is highly global, and is becoming increasingly so due to trade growth Market integration within species groups and across exporting regions appears to be high We have to be careful about composition effects when intepreting price trends Emerging market growth leads to increased seafood imports and changes in the import composition towards higher value products

54. Conclusions Prices are determined globally For an increasing number of species, production cost in aquaculture determines price We don’t understand yet the influence of fuel prices on capture fish prices In fisheries where there are overcapacity increasing fuel prices can reduce the size of the fleet and thereby increase sustainability – but what about prices? FPI opens up for relevant research questions about price formation in international seafood markets