MARKET INTEGRATION BETWEEN FARMED AND WILD FISH: EVIDENCE FROM THE WHITEFISH MARKET IN GERMANY

Global farming of pangasius and tilapia has stagnated over the last five years after continued fast growth over the two former decades. This appears to indicate declining demand and a saturated market. Simultaneously, however, supplies of the main wild-caught species such as cod and Alaska pollock have recovered after earlier overexploitation and due to climate change with higher water temperatures. This paper examines market integration between farmed and wild-caught frozen whitefish in a main market, Germany, and finds close integration. Hence, prices of frozen pangasius and tilapia fillets in Germany are determined not only by supply of these species, but more importantly by the much larger supplies of wild-caught cod and Alaska pollock. Thus, demand is not declining and market integration ensures the small-scale Asian farmers against severe price reductions in Germany arising from farm productivity growth. However, market integration also makes them dependent on competing wild-caught whitefish.

As shown in Figure 1, frozen cod fillets command the highest import price on the German market. The average price is 4.25 €/kg. Import prices for frozen fillets of saithe and tilapia are positioned in the middle price segment, whereas the import prices of frozen Alaska pollock and pangasius are located in the lower price segment. Pangasius is the cheapest whitefish species under study.

Moreover, it can be seen, that frozen fillets of cod and saithe seem to follow a similar pattern over time. The monthly price variations of these two species are stronger than the price variations of Alaska pollock. The price for tilapia is more volatile than the prices of the other whitefish species. In general, it is not obvious from the graphs if the underlying data generating processes are unit root or not and need to be determined with the relevant statistical tools.