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The tuna canning oligopoly and the European market: Implication for the fisheries Patrice Guillotreau, University of Nantes, France Rémi Mongruel, Ifremer.

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Presentation on theme: "The tuna canning oligopoly and the European market: Implication for the fisheries Patrice Guillotreau, University of Nantes, France Rémi Mongruel, Ifremer."— Presentation transcript:

1 The tuna canning oligopoly and the European market: Implication for the fisheries Patrice Guillotreau, University of Nantes, France Rémi Mongruel, Ifremer Brest, France Ramòn Jiménez-Toribio, University of Huelva, Spain The challenge of change: Managing for Sustainability of Oceanic Top Predator Species, NSF, Santa Barbara, April 2007

2 Content Concentration in the tuna industry Horizontal market integration (frozen and canned ; skipjack and yellowfin) => Jeon et al ; Squires et al Price-cost margins of the canneries Market power and implications for the fisheries?...

3 1. Market and concentration of the tuna industry CR441% CR546% CR1062% Global market

4 Concentration in Europe CR443% CR550% CR1072% CR4 US = 80%

5 Number of canneries and trade of canned products in France ( ) First sardine crisis Second sardine crisis World war I World war II Exploitation of tropical tuna fishery … Discovery of gold mines in California

6 The EU supply chain 2003 (source : Oceanic Dev.) EU fleet (89 purse seiners) France and Spain Atlantic 24 vessels Indian 48 Pacific 17 Traders ACP canneries Loin plants abroad South Am., Thailand… EU Loin plants Spain, Portugal… EU canneries EU market (supermarkets) Export markets 290 kT 339 kT 78 kT5 kT Imports 191 kT 17 kT 346 kT 685 kT Seychelles 31% Cote d’Ivoire 19% Thailand 13% Philippines 12% Ecuador 10% Seychelles 15% Côte d’Ivoire 12% UK 34% France 22% Germany 17% Spain 84% Italy 10% Latin America 40% Seychelles 11% Ecuador 46% Colombia 19% Italy 46% Spain 38% Asian & American canneries Taiwan, South Korea, Japan, Mexico, US,…

7 THAILAND SPAIN+10 ITALY FRANCE SPAIN-10 JAPAN YELLOWFIN : Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) 2. Horizontal market integration 2.1 Raw tuna All series I(1,0) or so (JP) All series bivariately cointegrated at the 5% level

8 THAILAND SPAIN AMERICAS JAPAN SKIPJACK : Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) Every series bivariately cointegrated at 5% but Japan with Thailand and Americas

9 SKIPJACK AND YELLOWFIN : JOHANSEN PROCEDURE : All series bivariately cointegrated at the 5% level Multivariate cointegration : 3 models indicate cointegration at the 5% level with consistent Trace and Max E.V. tests : 1) Yellowfin (Thailand-France-Italy-Spain) and Skipjack (Spain) 2) Yellowfin (France-Italy-Spain) and Skipjack (Thailand-Spain) 3) Yellowfin (France-Italy) and Skipjack (Thailand-Spain) LOP does not hold when Thailand SJ is included All causalities are bidirectional in the mutlivariate models

10 THAILAND SPAIN ITALYFRANCE SKIPJACK AND YELLOWFIN : SJ YF Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate)

11 2.2 Canned tuna YELLOWFIN

12 SKIPJACK

13 France (dry) retail price Ivory Coast (oil) export to France UK (dry) import from Thailand Germany (oil) import from Philippines France (dry) retail price Italy (oil) import from Spain YF SJ Canned tuna market (horizontal) Multivariate cointegration SJ: UK-Germany-IC (but no LOP at 5%) Bivariate cointegration LOP: IC-UK and IC-Ger. Causality: Bi. and G=>IC Price series No cointegration

14 3. Price-cost margins of the canneries SKIPJACK Canned (dry) UK – Frozen Thailand Canned (dry) UK – Frozen Spain Canned (oil) Germany - Frozen Thailand Canned (oil) Germany - Frozen Spain All pairwise series cointegrated (bivariate tests) Dual Granger causality in all cases 2 proportional (Germany) and 2 non-proportional (UK) Canned (dry) France – Frozen Italy Canned (dry) France – Frozen Spain Canned (dry) France – Frozen Thailand Canned (oil) Italy – Frozen Italy Canned (oil) Italy – Frozen Spain Canned (oil) Italy – Frozen Thailand YELLOWFIN None cointegrated (bivariate tests) No Granger causality No proportionality Example: LCSJ-GERMANY t *LSJ-SPAIN t =  t LCSJ-UK t *LSJ-BANGKOK t =  t

15 4. Market power, so what ?... Retail France dry YFT Spain-Italy dry YFT German-Bangkok oil SJ Abidjan oil SJ Price-cost margins of canned tuna sold in Europe UK dry SJ

16 Key results:. Skipjack and yellowfin markets are cointegrated Yellowfin is the leader market European canned tuna markets are not so well integrated spatially, except skipjack (caused by US !) Raw tuna prices are better transmitted by the canning industry for skipjack than for yellowfin Margins of canneries and retailers are fairly stable for skipjack and increase for yellowfin

17 Conclusion Consequences of the Yellowfin leadership? Competitive supply-side => race for fish Potential market power on the demand side => affect the consumer surplus (double marginalisation). No impact on the fishing industry? Next step: testing for market power with an I.O. structural model (e.g. Bresnahan-Lau)


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