Advertisement

Fishing vessel efficiency, skipper skills and hake price transmission in a small island economy

  • Stefano MainardiEmail author
Research Article
First Online:
  • 29 Downloads

Abstract

Determinants of vessel efficiency and vertical/horizontal price transmissions in consumer markets are key elements for assessing the viability of a fishery, particularly for a small fishery-dependent economy. An open issue also concerns whether vessel efficiency levels influence export prices. The paper sets off with a review of evidence from other countries, followed by hypotheses for the Falkland Islands. To test these hypotheses, the analysis first applies a stochastic frontier model accounting for latent skipper skills, to a monthly 2008–2016 panel of fishing vessels operating in the Islands. Using estimated vessel inefficiency by licence type as a proxy indicator of product quality and extra costs of transhipment, the study moves on to examine price adjustments of Falkland hake and other finfish sold at Spanish ports vis-à-vis two major south Atlantic hake supplier countries—Argentina and Namibia—and local traders. Lastly, based on full sample and rolling widow regressions on 2004–2016 monthly data, the analysis formulates and estimates threshold autoregressive models for the hake value chain in Spain, as the largest European port-of-entry and market for fresh and frozen hake, including from the Falklands. Once different output frontiers are accounted for, vessels with licences for hake as their main target do not outperform, in terms of technical efficiency, less-valued finfish vessels. Besides evidence of increasing integration within supplier and consumer markets, econometric results suggest some degree of price ‘leadership’ by Namibian hake exporters and asymmetric behaviour in short-run price adjustments by Spanish retailers. However, producer and consumer markets turn out to be weakly interlinked.

Keywords

Fishery efficiency and price transmission Latent skipper skills Threshold regression 

JEL classification

C23 C24 Q22 Q27 
This is a preview of subscription content, log in to check access.

Notes

Acknowledgements

Formerly at the Dept. of Natural Resources, Stanley, Falkland Islands. The author is grateful to two reviewers, J. Balcar, B.K. Kiyago and colleagues in the Falklands, for constructive comments on earlier drafts. The usual caveat applies.

References

  1. AIPCE-CEP. (2015). Finfish study 2015. European Fish Processors and Traders Association, Brussels. Available from www.aipce-cep.org.
  2. Alvarez, A., & Arias, C. (2014). A selection of relevant issues in applied stochastic frontier analysis. Economics and Business Letters, 3(1), 3–11.Google Scholar
  3. Alvarez, A., & Schmidt, P. (2006). Is skill more important than luck in explaining fish catches? Journal of Productivity Analysis, 26(1), 15–25.Google Scholar
  4. Alvarez, A., Arias, C., Greene, W. (2005). Accounting for unobservables in production models: Management and inefficiency. Efficiency Series Papers No. 07, Dept. of Economics, University of Oviedo. Available from pages.stern.nyu.edu.
  5. Amigo-Dobaño, L., & Garza-Gil, D. (2011). Analysis of the Merluccius merluccius market chain: Estimated results for production in Galicia. International Business and Economics Research Journal, 10(2), 123–130.Google Scholar
  6. Areté. (2012). Study on price transmission in the sugar sector. Areté Research/Consulting in Economics, Bologna. Available from ec.europa.eu/agriculture.
  7. Asche, F., & Guillen, J. (2012). The importance of fishing method, gear and origin: the Spanish hake market. Marine Policy, 36(2), 365–369.Google Scholar
  8. Asche, F., & Tveterås, S. (2008). International fish trade and exchange rates: an application to the trade with salmon and fishmeal. Applied Economics, 40(13), 1745–1755.Google Scholar
  9. Asche, F., Jaffry, S., & Hartmann, J. (2007a). Price transmission and market integration: vertical and horizontal price linkages for salmon. Applied Economics, 39(19), 2535–2545.Google Scholar
  10. Asche, F., Menezes, R., & Ferreira Dias, J. (2007b). Price transmission in cross boundary supply chains. Empirica, 34(5), 477–489.Google Scholar
  11. Bai, J., & Perron, P. (1998). Estimating and testing linear models with multiple structural changes. Econometrica, 66(1), 47–78.Google Scholar
  12. Bai, J., & Perron, P. (2003a). Computation and analysis of multiple structural change models. Journal of Applied Econometrics, 18(1), 1–22.Google Scholar
  13. Bai, J., & Perron, P. (2003b). Critical values for multiple structural change tests. The Econometrics Journal, 6(1), 72–78.Google Scholar
  14. Banker, R., Charnes, A., & Cooper, W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078–1092.Google Scholar
  15. Benkenstein, A. (2014). Rents, rights and restructuring: Namibia’s lessons for the governance of Africa’s fisheries, SAIIA Occasional Papers No. 207, University of the Witwatersrand, Johannesburg. Available from www.saiia.org.za.
  16. Čechura, L., Žáková Kroupová, Z., Malý, M., & Hockmann, H. (2015). Scale efficiency in European pork production. Review of Agricultural and Applied Economics, 18(2), 51–56.Google Scholar
  17. Chami Batista, J., & da Silveira, G. (2010). Trade costs and deviations from the law of one price. American Journal of Agricultural Economics, 92(4), 1011–1023.Google Scholar
  18. Cheung, Y.-W., & Lai, K. (1995). Lag order and critical values of a modified Dickey-Fuller test. Oxford Bulletin of Economics and Statistics, 57(3), 411–419.Google Scholar
  19. Coelli, T. (1993). Finite sample properties of stochastic frontier estimators and associated test statistics. Working Papers in Econometrics and Applied Statistics No. 70, University of New England, Armidale-NSW. Available from www.une.edu.au.
  20. Coelli, T., Rao, D., O’Donnell, C., & Battese, G. (2005). An introduction to efficiency and productivity analysis. New York: Springer.Google Scholar
  21. Coglan, L., & Pascoe, S. (1999). Separating resource rents from intra-marginal rents in fisheries’ economic survey data. Agricultural and Resource Economics Review, 28(2), 219–228.Google Scholar
  22. Elliott, G., Rothenberg, T., & Stock, J. (1996). Efficient tests for an autoregressive unit root. Econometrica, 64(4), 813–836.Google Scholar
  23. Enders, W. (2010). Applied econometric time series. Hoboken, NJ: Wiley.Google Scholar
  24. Enders, W., & Granger, C. (1998). Unit-root tests and asymmetric adjustment with an example using the term structure of interest rates. Journal of Business and Economic Statistics, 16(3), 304–311.Google Scholar
  25. Enders, W., & Siklos, P. (2001). Cointegration and threshold adjustment. Journal of Business and Economic Statistics, 19(2), 166–176.Google Scholar
  26. Enviro-Fish Africa (EFA). (2006). Market analysis of major fish product markets in the Benguela current large marine ecosystem. Project Report LMR/SE/03/02, BCLME, Ministry of Fisheries and Marine Resources, Swakopmund. Available from www.efdinitiative.org.
  27. Falkland Islands Government (FIG). (2014). Fisheries statistics, vol. 18, FIG Fisheries Department, Stanley.Google Scholar
  28. Färe, R., Grosskopf, S., & Walden, J. (2015). Productivity change and fleet restructuring after transition to individual transferable quota management. Marine Policy, 62, 318–325.Google Scholar
  29. Farrell, M. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society A, 120(3), 252–281.Google Scholar
  30. Felix, M. (2012). Supply chain analysis for fresh seafood in Haiti, UNU Fishery Training Programme, United Nations University, Reykjavik. Available from www.unuftp.is.
  31. Floros, C., & Failler, P. (2004). Seasonality and Cointegration in the fishing industry of Cornwall. International Journal of Applied Econometrics and Quantitative Studies, 1(4), 27–52.Google Scholar
  32. Fraser, S. (2015). Inside Spain—the fish and seafood trade. Global analysis report, Agriculture and Agri-Food Canada, Ottawa. Available from www.agr.gc.ca.
  33. García del Hoyo, J., Castilla Espino, D., & Jiménez Toribio, R. (2005). Determination of technical efficiency of fisheries by stochastic frontier models: a case on the Gulf of Cadiz (Spain). ICES Journal of Marine Science, 61(3), 416–421.Google Scholar
  34. Goodwin, B. (1990). Empirically testing the law of one price in an international commodity market: a rational expectations application to the natural rubber market. Agricultural Economics, 4(2), 165–177.Google Scholar
  35. Goodwin, B., & Holt, M. (1999). Price transmission and asymmetric adjustment in the US beef sector. American Journal of Agricultural Economics, 81(3), 630–637.Google Scholar
  36. Grafton, Q., Kirkley, J., Squires, D., Weninger, Q. (2000). A guide to economic evaluation of individual transferable quota fisheries. In: Proc. 10th Biennial Conference of IIFET (International Institute of Fisheries Economics and Trade), Corvallis, OR. Available from oregonstate.edu/dept/IIFET.Google Scholar
  37. Greene, W. (2007). The econometric approach to efficiency analysis. In H. Fried, C. K. Lovell, & S. Schmidt (Eds.), The measurement of productive efficiency and productivity change (pp. 92–250). Oxford: Oxford University Press.Google Scholar
  38. Greene, W. (2012). LIMDEP version 10/NLOGIT version 5. Plainview: Econometric Software Inc..Google Scholar
  39. Greenville, J., Hartmann, J., & Gordon MacAulay, G. (2006). Technical efficiency in input-controlled fisheries: the NSW Ocean prawn trawl fishery. Marine Resource Economics, 21(2), 159–179.Google Scholar
  40. Guijarro, B., Quetglas, A., Moranta, J., Ordines, F., Valls, M., González, N., & Massutí, E. (2012). Inter- and intra-annual trends and status indicators of Nektobenthic elasmobranchs off the Balearic Islands (northwestern Mediterranean). Scientia Marina, 76(1), 87–96.Google Scholar
  41. Hansen, B. (2011). Threshold autoregression in economics. Statistics and Its Interface, 4, 123–127.Google Scholar
  42. Harris, R. (1995). Cointegration analysis in econometric modelling. Hemel Hempstead: Prentice Hall/Harvester Wheatsheaf.Google Scholar
  43. Harris, J. (2002). Environmental and natural resources economics. Boston: Houghton Mifflin.Google Scholar
  44. Harte, M., & Barton, J. (2007). Reforming management of commercial fisheries in a small island territory. Marine Policy, 31, 371–378.Google Scholar
  45. Hassler, U., & Wolters, J. (2006). Autoregressive distributed lag models and cointegration. Allgemeines Statistisches Archiv, 90(1), 59–74.Google Scholar
  46. Hoff, A. (2002). The Translog approximation of the constant elasticity of substitution production function with more than two input variables. FOI Working Papers No. 14, University of Copenhagen. Available from curis.ku.dk.
  47. Homans, F., & Wilen, J. (2005). Markets and rent dissipation in regulated open access fisheries. Journal of Environmental Economics and Management, 49(2), 381–404.Google Scholar
  48. IHS. (2015). EViews 9 user’s guide. Irvine: IHS Global Inc..Google Scholar
  49. Johnston, B. (ed.) (2007). Economics and market analysis of the live reef-fish trade in the Asia-Pacific region. ACIAR Working Papers No. 63, Australian Centre for International Agricultural Research, Canberra. Available from aciar.gov.au/publication.
  50. Kirchner, C., & Leiman, A. (2014). Resource rents and resource management policies in Namibia’s post-independence hake fishery. Maritime Studies, 13(7), 1–23. maritimestudiesjournal.springeropen.com.Google Scholar
  51. Kobayashi, M., Msangi, S., Batka, M., Vannuccini, S., Dey, M., & Anderson, J. (2015). Fish to 2013: the role and opportunity for aquaculture. Aquaculture Economics and Management, 19(3), 282–300.Google Scholar
  52. Kodde, D., & Palm, F. (1986). Wald criteria for jointly testing equality and inequality restrictions. Econometrica, 54(5), 1243–1248.Google Scholar
  53. Koopmans, T. (1951). An analysis of production as an efficient combination of activities. In T. Koopmans (Ed.), Activity analysis of production and allocation (pp. 33–97). London: Wiley.Google Scholar
  54. Kuiper, W., Clemens, L., & van Tilburg, A. (2003). Vertical price leadership on local maize markets in Benin. Journal of Development Economics, 71(2), 417–433.Google Scholar
  55. Kumbhakar, S., & Wang, H.-J. (2005). Estimation of growth convergence using a stochastic production frontier approach. Economics Letters, 88(3), 300–305.Google Scholar
  56. Kwiatkowski, D., Phillips, P., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: how sure are we that economic time series have a unit root? Journal of Econometrics, 54(1/3), 159–178.Google Scholar
  57. Lart, B., K. Green 2013. Responsible sourcing guide: hake, Seafish, 7 May, Grimsby. Available from tinyurl.com/seafishrsg.
  58. Latruffe, L. (2010). Competitiveness, productivity and efficiency in the agricultural and agri-food sectors, OECD Food, Agriculture and Fisheries Working Papers No. 30, OECD, Paris. Available from www.oecd-ilibrary.org.
  59. Lee, K. (2012). Inflation and residential property markets: a bounds testing approach. International Journal of Trade, Economics and Finance, 3(3), 183–186.Google Scholar
  60. Lloris, D., J. Matallana, P. Oliver 2005. Hakes of the world (family Merlucciidae): an annotated and illustrated catalogue of hake species known to date. FAO Species Catalogue for Fishery Purposes No. 2, FAO, Rome. Available from www/fao.org.
  61. MacKinnon, J. (1996). Numerical distribution functions for unit roots and cointegration tests. Journal of Applied Econometrics, 11(6), 601–618.Google Scholar
  62. Maskin, E., & Tirole, J. (1988). A theory of dynamic oligopoly, II: price competition, kinked demand curves, and Edgeworth cycles. Econometrica, 56(3), 571–599.Google Scholar
  63. Meyer, J., & von Cramon-Taubadel, S. (2004). Asymmetric price transmission: a survey. Journal of Agricultural Economics, 55(3), 581–611.Google Scholar
  64. Mundlak, Y. (1978). On the pooling of time series and cross section data. Econometrica, 46(1), 69–85.Google Scholar
  65. Nakajima, T., Matsui, T., Sakai, Y., & Yagi, N. (2011). Capturing changes in asymmetric price transmission: a rolling window TAR estimation using Bluefin tuna case study. Journal of International Fisheries, 10, 1–18.Google Scholar
  66. National Geo-Spatial Intelligence Agency (NGA) 2001. Distances between ports, Bethesda, MD.Google Scholar
  67. Newey, W., & West, K. (1987). A simple positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix. Econometrica, 55(3), 703–708.Google Scholar
  68. Nielsen, M., Smit, J., & Guillen, J. (2009). Market integration of fish in Europe. Journal of Agricultural Economics, 60(2), 367–385.Google Scholar
  69. Noel, M. (2011). Edgeworth price cycles. In S. Durlauf & M. Blume (Eds.), New Palgrave dictionary of economics (pp. 1–9). London: Palgrave Macmillan. www.dictionaryofeconomics.com.Google Scholar
  70. Oliveira, M., Camanho, A., & Gaspar, M. (2010). Technical and economic efficiency analysis of the Portuguese artisanal dredge fleet. ICES Journal of Marine Science, 67(8), 1811–1821.Google Scholar
  71. Page, J. (1980). Technical efficiency and economic performance: some evidence from Ghana. Oxford Economic Papers, 32(2), 319–339.Google Scholar
  72. Pelembe, T. 2014. South Atlantic Overseas Territories Regional Workshop Report. JNCC Report No. 534, Joint Nature Conservation Committee, Peterborough. Available from jncc.defra.gov.uk.
  73. Pesaran, M., & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In S. Strom (Ed.), Econometrics and economic theory in the 20th century: the Ragnar Frisch centennial symposium (pp. 371–413). Cambridge: Cambridge University Press.Google Scholar
  74. Pesaran, M., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–336.Google Scholar
  75. Polanco, J., Bjørndal, T. (2015). Value chain and price integration in the Spanish market for salted cod. Working Papers No. 10/15, Centre for Applied Research/NHH, Bergen. Available from brage.bibsys.no.
  76. Polanco, J., Knapp, G., Llorente, I. (2011). Pangasius effect frozen fish fillet imports in European Union. Global Aquaculture Advocate, September/October, pp. 66–67. Available from repositorio.unican.es.
  77. Polanco, J., Bjørndal, T., Lem, A. (2016). Case studies on price integration in international seafood trade. Fisheries and Aquaculture Circular No. 1115, FAO, Rome. Available from www.fao.org.
  78. Policy Unit (PU). (2015). State of the Falkland Islands economy. Report for Falkland Islands Government, Stanley, Falklands.Google Scholar
  79. Portela, J., Arkhipkin, A., Agnew, D., Pearce, G., Fuertes, J., Otero, M., Bellido, J., Middleton, D., Hill, S., Wang, J., Ulloa, E., Tato, V., Pompert, J., & Santos, B. (2002). Overview of the Spanish fisheries in the Patagonian shelf. In ICES CM 2002/L. Copenhagen: International Council for the Exploration of the Sea Available from www.repositorio.ieo.es.Google Scholar
  80. Portela, J., Sacau, M., Wang, J., Pierce, G., Santos, M., Cardoso, X. (2005). Analysis of the variability in the abundance of shortfin squid Illex argentinus in the Southwest Atlantic fisheries during the period 1999–2004. ICES CM 2005/O, International Council for the Exploration of the Sea, Copenhagen. Available from www.ices.dk.
  81. Quezada, F., & Dresdner, J. (2014). The behavior of hake prices in Chile: is the world market leading? Latin American Journal of Aquatic Resources, 42(5), 1087–1098.Google Scholar
  82. Rajcaniova, M., & Pokrivcak, J. (2013). Asymmetry in price transmission mechanism: the case of Slovak potato market. Review of Agricultural and Applied Economics, 16(2), 16–23.Google Scholar
  83. Ramsden, N. (2013). Hake prices recovering on demand from the EU, Undercurrent News, June 12. Available from www.undercurrentnews.com.
  84. Rapsomanikis, G., Hallam, D., Conforti, P. (2003). Market integration and price transmission in selected food and cash crop markets of developing countries: review and applications. In: FAO, Commodity Market Review 2003–2004, FAO, Rome, pp. 51–75.Google Scholar
  85. Regnier, E., & Bayramoglu, B. (2016). Competition between farm and wild fish: the French Sea Bass and Sea Bream Markets, Aquaculture Economics and Management, 1–21.  https://doi.org/10.1080/13657305.2016.1189012 (www.tandfonline.com).
  86. Sanchirico, J., & Newell, R. (2003). Catching market efficiencies: quota-based fisheries management. Resources, 150, 8–11. www.rff.org.Google Scholar
  87. Simioni, M., Gonzales, F., Guillotreau, P., & Le Grel, L. (2013). Detecting asymmetric price transmission with consistent threshold along the fish supply chain. Canadian Journal of Agricultural Economics, 61(1), 37–60.Google Scholar
  88. Tingley, D., Pascoe, S., & Coglan, L. (2005). Factors affecting technical efficiency in fisheries: stochastic production frontier versus data envelopment analysis approaches. Fisheries Research, 73(3), 363–376.Google Scholar
  89. Tsay, R. (1989). Testing and modeling threshold autoregressive processes. Journal of the American Statistical Association, 84(405), 231–240.Google Scholar
  90. UNEP. (2002). The fisheries sector in Argentina. Country Projects Synthesis Report, Round 2, Economics and Trade Programme, United Nations Environment Programme, Geneva. Available from www.unep.ch/etu.
  91. van Anrooy, R. (2003). Vertical cooperation and marketing efficiency in the aquaculture products marketing chain: a national perspective from Vietnam. In: Proc. AquaMarkets Conference, June, Manila. Available from library.enaca.org/AquaMarkets.
  92. Villasante, S., Sumaila, R. (2010). Linking environmental economics, game theory and fisheries: an estimation of the economic benefits to sharing the Illex argentinus fishery in the Patagonian large marine ecosystem. Beijer Discussion Papers No. 222, Beijer institute of ecological economics, Stockholm. Available from www.researchgate.net.
  93. Villasante, S., Macho, G., Isusu de Rivero, J., Divovich, E., Zylich, K., Harper, S., Zeller, D., & Pauly, D. (2015). Reconstruction of Marine Catches in Argentina (1950–2010), Fisheries Centre Working Papers No. 50. Vancouver: University of British Columbia Available from www.researchgate.net.Google Scholar
  94. Viswanathan, K., Jeon, Y., Haji Omar, I., Kirkley, J., Squires, D., & Susilowati, I. (2001). Technical efficiency and fishing skills in developing country fisheries: the Kedah, Malaysia Trawl Fishery. Marine Resource Economics, 16(4), 293–314.Google Scholar
  95. Wang, X., Hockmann, H. (2012). Technical efficiency under producer’s individual technology: a metafrontier analysis. In: Proc. Conf. International Association of Agricultural Economists, Foz do Iguaçu. (ageconsearch.umn.edu).
  96. Wooldridge, J. (2010). Correlated random effects models with unbalanced panels, Dept. of Economics, Michigan State University. Available from econ.msu.edu/faculty.
  97. World Bank. (2013). Fish to 2030: prospects for fisheries and aquaculture, Agriculture and environmental services. Report No. 83177-GLB, World Bank, Washington, DC.Google Scholar
  98. Young, J. (2013). Argentine individual transferable quota program. Environmental defense fund, San Francisco. Available from fisherysolutionscenter.edf.org.

Copyright information

© L’Institut National de la Recherche Agronomique (INRA) 2018

Authors and Affiliations

  1. 1.Department of Applied EconomicsVŠB-Technical University of OstravaOstravaCzech Republic

Personalised recommendations

Cite article

Buy options