1. The effect of trade liberation on the salmon market in Finland By Jari Setälä 1), Per Mickwitz 2), Jarno Virtanen 1), Asmo Honkanen 1) and Kaija Saarni 1) 1) Finnish Game and Fisheries Research Institute 2) Finnish Environment Institute IIFET 2002 New Zealand IIFET 2002, Wellington

2. Aim of the study Is to find out if the prices of imported salmon and domestic wild salmon and farmed salmon trout are co-integrated, i.e. do they belong to the same market? IIFET 2002, Wellington

3. Growing salmon market IIFET 2002, Wellington

4. Prices converge in the 1990’s IIFET 2002, Wellington

5. Monthly real prices of domestic salmon trout and wild salmon and imported salmon in 1992-2000 IIFET 2002, Wellington

6. Monthly quantities of domestic salmon trout and wild salmon and imported salmon in 1992-2000 IIFET 2002, Wellington

7. Co-integration analysis Data tranformations Johansen test Co-integration Exclusion tests Weak exogenity test Stationarity Deflation (CI) Logarithms Unit root tests (ADF) Are all price series co- integrated? Causality IIFET 2002, Wellington

8. Studied time series Time series: 1992-1994Prior EU 1995-2000Post EU 1992-1997 (6)Prior MIP 1997 (7)- 2000 Post MIP 1993-1996 (6) Time of radical change 1992-95-96-97-98-99-00 IIFET 2002, Wellington

9. Results unit root tests All the tested series were non-stationary at the levels and their first difference was stationary, and can be included in co-integration tests One exception: Rainbow trout 1992-1994 IIFET 2002, Wellington

10. Results of multivariate analyses Time series:Cointegration: 1992-1994, prior EU---- 1995-2000, post EUYes 1992-1997(6), prior MIPYes 1997(7)-2000, post MIP No 1993-1996(6)Yes 1992-95Yes 1992-96Yes 1992-97Yes 1992-98Yes 1992-99Yes 1992-2000Yes IIFET 2002, Wellington

11. Results of exclusion tests Time series: Part of the common system: Salmon trout Imported salmon Wild salmon 1992-1994, prior EU---------- 1995-2000, post EUYes No Yes 1992-1997(6), prior MIPYesYesYes 1997(7)-2000, post MIP---------- 1993-1996(6)YesYesYes 1992-95YesNoYes 1992-96YesYesYes 1992-97YesYesYes 1992-98YesYesYes 1992-99YesYesYes 1992-2000YesYesYes IIFET 2002, Wellington

12. Results of exogeneity tests Time series: Leading price: Salmon trout Imported salmon Wild salmon 1992-1994, prior EU---------- 1995-2000, post EU No Yes No 1992-1997(6), prior MIPYes Yes No 1997(7)-2000, post MIP---------- 1993-1996(6) No Yes No 1992-95 No Yes No 1992-96Yes Yes No 1992-97Yes Yes No 1992-98Yes Yes No 1992-99Yes Yes No 1992-2000Yes Yes No IIFET 2002, Wellington

13. Adjustment speed towards equilibrium Time series: Adjustment coefficient: Salmon trout Imported salmon Wild salmon 1992-1994, prior EU---------- 1995-2000, post EU-0,080,170,46 1992-1997(6), prior MIP-0,11-0,110,63 1997(7)-2000, post MIP---------- 1993-1996(6)-0,31-0,160,67 1992-95-0,110,310,71 1992-96-0,10-0,200,55 1992-97-0,090,150,62 1992-98-0,080,020,59 1992-99-0,080,150,49 1992-2000-0,100,170,44 IIFET 2002, Wellington

14. Results of bivariate tests Time series: Cointegration: Salmon trout/ Salmon trout/ Imported salmon Imported salmon Wild salmon Wild salmon 1992-1994, prior EU------- No 1995-2000, post EUYesYesYes 1992-1997(6), prior MIP No YesYes 1997(7)-2000, post MIP NoNoNo 1993-1996(6)YesYesYes 1992-95YesYesYes 1992-96 No Yes Yes 1992-97 No Yes Yes 1992-98 No Yes Yes 1992-99 No Yes Yes 1992-2000 No Yes Yes IIFET 2002, Wellington

15. Conclusions There is a long-run relationship between the prices of domestic salmon trout, wild salmon and imported salmon Changes in prices of imported salmon and salmon trout affect quickly to the price of wild salmon The price of imported salmon influence the price of salmon trout: They are substitutes, even not perfect ones The results of imported salmon and salmon trout are sensitive to the period investigated IIFET 2002, Wellington

16. Conclusions Why not co-integration all the time: Not same fish species - not perfect substitutes Salmon has an effect on salmon trout - not the other way around Structural changes: changes in value chain - concentration changes in use of salmon trout from fresh to processed products EU and MIP IIFET 2002, Wellington

17. Monthly prices of domestic rainbow trout and imported salmon in 1992-2000

18. Monthly prices of domestic wild salmon and imported salmon in 1992-2000

19. Monthly producer prices of wild salmon and farmed rainbow trout in 1992-2000

20. Import of fresh salmon was liberated in 1990’s

21. The value of market collapsed in 1994-97