A SPATIAL EQUILIBRIUM ANALYSIS FOR FISH SUPPLY AND DEMAND IN BRAZIL

Analyzing the  chain relationships in aquaculture is important to understand the synergies within the supply chain, how demand and supply agents interact, and what is the effect of specific changes on the whole sector .  This study  assesses the supply chain of the two main fish farming species in Brazil, tilapia and tambaqui, using a spatial equilibrium model. This approach allows evaluation of the impact of factors like governmental incentives (subsides on fish feed prices), international oil price shocks (changes  in the cost of transportation), increase in the consumers' income and decrease in the retailers gross margin, o n  final  product consumption.

The model scope includes farmers, the processing sector, the transportation sector, retailers and consumers. The final fish to be consumed in the model can be fresh or frozen and gutted or fillet, resulting in four possible final forms for each species.  For each sector of the economy, the country is divided into regions according to the concentration of consumers and producers. The model works with five demand regions, represented by one large city of each region, and eight supply regions (five for tilapia and three for tambaqui). Each supply region produces either tilapia or tambaqui, which  reflects the Brazilian fish supply chain.

Table 1 displays the percentage variation of dema nd and final price due to  factor changes in the spatial equilibrium model. A change in consumers' income does not affect the final price because the supply curve in the model is horizontal being represented by the total cost. An increase in  consumers' income of  10% will increase the total tilapia and tambaqui farmed in Brazil by  15.2%, showing that fish is a normal good in the country. R etailers' gross margin is an important factor in the chain. A 10% reduction will decrease prices by  5.2% and demand quantity by  41% in the country. On the other hand, the impacts of  changes in transportation cost are much lower. A 5% change will impact only 0.1% in the final price and 1.1% on the demand.  The impact  of a reduction in  fish feed cost on demand is also large .