1. SALMAR Results of the Finnish case study Jari Setälä, Kaija Saarni, Asmo Honkanen and Jarno Virtanen Salmarmeeting in Turku 13.6.2002

2. The Finnish case of salmon and salmon trout

3. Growing demand for salmonids

4. Imported salmon replaces domestic salmon trout

5. Growing demand for salmon

6. Seasonal supply of salmon trout

7. Imported fish dominates in summer Average 1997-2001

8. Salmon: availibility, quality and image Salmon trout: processing

9. Salmon has bypassed salmon trout in the fresh fish market

10. The prices of salmonids converge

11. A single salmon market in Europe

12. Are salmon and salmon trout in the same market ?

14. Salmon trout Salmon Producer Exporter Producer Wholesaler Campaign Retailer Wholesaler 5% 9% 14% Importer 56% 15% 20% 15% Vertical co-integration: Salmon trout and salmon value chain in Finland Direction of arrow =Exogenity9% = Margin %15% = Price difference FinlandNorwayFinlandNorway Broken line = not proportional Whole line = proportional

15. Declining salmon trout margins in the campaign sales

16. Wholesale margin of salmon higher than salmon trout margin

17. Concentration of value chain Herfindalindex 1), year 1999: Producers 0,02 (competition) Wholesalers 0,04 (competition) Retail chains0,26 (oligipoly) 1) H-index = sum(market share j ) 2

18. Conclusions Salmon and salmon trout compete in the same market, but they are not perfect substitutes The markets are competitive from producers to wholesalers The role of salmonids for retailers is twofold: attractive campaign product/profitable business

19. Conclusions Salmon margins higher than salmon trout margins Wholesalers role is central The price of salmon sold to Finnish market is determined in the world market

20. SD-models 1.Analysis of salmon margins 2.Analysis of interaction between salmon and salmon trout

21. 1. Salmon model

22. Annual average margins calculated using production cost data: Margin = Real wholesale prices – calculated production costs Raw material costs: Fresh fillet = 95 % of the total costs Smoked = 87 % Cold-smoked = 85 % Raw pickled = 84 %

23. Declining margins for fresh salmon products

24. 2. Integrated model

25. Statistical analysis of elasticities 1)Ln Pst wh = 2.009 + 0.717 ln Ps wh – 1.181 ln Qst prod 2)Ln Qs cons = 9.709 – 2.725 ln Ps wh + 1.891 ln Pst wh 3)Ln Qs proc = 5.004 – 1,272 ln S imp + 0.522 ln Qst prod + seasonal dummies 4)Ln Qst proc = 10.313 – 0.533 ln Ps imp – 0.875 ln Pst prod + seasonal dummies 5)Ln Qs imp = 5.229 – 2.516 ln Ps imp + 2.374 ln Pst prod Salmon price is an external variable (determined in the world market)

26. Total market of fresh salmon and salmont trout stable

27. The model works well, except 1999 -95-97-96-98-99

28. -95-97-96-98-99 The model works well, except 1999

29. -95-97-96-98-99 The model works well, except 1999

30. -95-97-96-98-99 The model works well, except 1999

31. Conclusions Aggregated demand of fresh salmon and salmon trout is stable Salmon and salmon trout are competing products In the fresh fish market consumer prefer salmon In the growing market of processed products salmon trout has maintained its market share

32. Conclusions The flows of salmon and salmon trout into Finnish market are determined by two main variables: 1)The price of imported salmon 2)The quantity of salmon trout production

33. World market prices fell in 2001

34. Price fall autumn 2001

35. Low world market prices

36. Import rose by 48 % in 2001

37. News in intrafish 9.4.2002 New market for fresh Norwegian sea-farmed trout emerging ! European fresh market is challenging Japan. Finland is hungry for Norwegian trout. A six-fold increase in imports means that Finland is taking one third of the fresh trout being sent out from Norway.

38. Conclusion Oversupply and low world market price of salmon combined with the minimum price led to import of low-priced salmon trout to Finland.