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The tuna canning oligopoly and the European market: Implication for the fisheries

The tuna canning oligopoly and the European market: Implication for the fisheries. Patrice Guillotreau, University of Nantes, France Rémi Mongruel, Ifremer Brest, France Ram òn Jiménez-Toribio, University of Huelva, Spain.

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The tuna canning oligopoly and the European market: Implication for the fisheries

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  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, 12-14 April 2007

  2. Content • Concentration in the tuna industry • Horizontal market integration (frozen and canned ; skipjack and yellowfin) => Jeon et al. 2007 ; Squires et al. 2006 • Price-cost margins of the canneries • Market power and implications for the fisheries?...

  3. 1. Market and concentration of the tuna industry Global market

  4. Concentration in Europe CR4 US = 80%

  5. Second sardine crisis 1902-1911 World war I 1914-1918 World war II 1939-1945 First sardine crisis 1880-1887 Discovery of gold mines in California 1848-1853 Exploitation of tropical tuna fishery 1957 - … Number of canneries and trade of canned products in France (1822-2005)

  6. The EU supply chain 2003 (source : Oceanic Dev.) Atlantic 24 vessels EU fleet (89 purse seiners) France and Spain Indian 48 Taiwan, South Korea, Japan, Mexico, US,… Pacific 17 Imports Latin America 40% Seychelles 11% Traders Asian & American canneries 290 kT Seychelles 31% Cote d’Ivoire 19% Ecuador 46% Colombia 19% ACP canneries Loin plants abroad South Am., Thailand… EU Loin plants Spain, Portugal… Thailand 13% Philippines 12% Ecuador 10% Seychelles 15% Côte d’Ivoire 12% Italy 46% Spain 38% 78 kT 5 kT 191 kT EU canneries 339 kT 346 kT Spain 84% Italy 10% 17 kT EU market (supermarkets) Export markets UK 34% France 22% Germany 17% 685 kT

  7. 2. Horizontal market integration YELLOWFIN 1995-1 : 2005-12 2.1 Raw tuna All series I(1,0) or so (JP) All series bivariately cointegrated at the 5% level THAILAND FRANCE JAPAN SPAIN-10 ITALY Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) SPAIN+10

  8. SKIPJACK 1995-2 : 2002-8 Every series bivariately cointegrated at 5% but Japan with Thailand and Americas THAILAND JAPAN AMERICAS SPAIN Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate)

  9. SKIPJACK AND YELLOWFIN 1995-1 : 2005-12 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. SKIPJACK AND YELLOWFIN 1995-1 : 2005-12 THAILAND SJ YF ITALY YF YF FRANCE Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) SJ YF SPAIN

  11. YELLOWFIN 2.2 Canned tuna

  12. SKIPJACK

  13. Canned tuna market (horizontal) Price series SJ 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 Bivariate cointegration LOP: IC-UK and IC-Ger. Causality: Bi. and G=>IC YF No cointegration Multivariate cointegration SJ: UK-Germany-IC (but no LOP at 5%)

  14. 3. Price-cost margins of the canneries SKIPJACK All pairwise series cointegrated (bivariate tests) Dual Granger causality in all cases 2 proportional (Germany) and 2 non-proportional (UK) Example: LCSJ-GERMANYt - 0.88*LSJ-SPAINt - 0.86 = et LCSJ-UKt - 0.52*LSJ-BANGKOKt - 0.99 = et YELLOWFIN None cointegrated (bivariate tests) No Granger causality No proportionality

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

  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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