TRADE MARGINS FOR NORWEGIAN SEAFOOD EXPORTS

HANS-MARTIN STRAUME *, FRANK ASCHE and ERLING VÅRDAL
 
Department of Economics, BI Norwegian Business School,
Po.box 6233, 5893 Bergen, Norway
 hans-martin.straume@bi.no
 

Seafood trade continues to increase rapidly, and is an important driver for the growth in aquaculture production. However, while it is well known that markets differ with respect to ability to pay, culture, preferences and a number of other factors, little is known about what makes some firms and products successful in specific markets, and why some firms export to only a few countries while others export to many.

In this paper, we employ detailed export statistics for the 24 most valuable seafood products that together makes up 94 % of the total export value of fish and crustaceans, molluscs and other aquatic invertebrates from Norway, the world´s second largest seafood exporter. We decompose the export value of each product category into several components, and investigate how the components correlates with different trade costs. An augmented gravity model is employed to estimate the effects from different trade costs on each trade margin.

We find that total export value for fresh products are more negatively affected by trade costs than export value of conserved products. The negative effect from increased transportation costs is twice as large for fresh products as for conserved products. For fresh products, this negative effect is mainly driven by a reduction in the number of shipments as well as by smaller shipments. Further we show that per-shipment costs have a different effect on fresh and conserved products. Increased per-shipment costs results in smaller shipments of fresh products, and in larger shipments of conserved products. The perishable nature of fresh products is important for how fresh products are affected by traditional trade costs. Conserved products can be shipped in large bulks without loss of quality, while fresh products need more timely delivery to the destination market to ensure the highest quality.