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

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The tuna canning oligopoly and the European
marketImplication 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
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Content

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

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Global market
1. Market and concentration of the tuna industry
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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)
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The EU supply chain 2003 (source Oceanic Dev.)
Atlantic 24 vessels
EU fleet (89 purse seiners) France and Spain
Indian 48
Pacific 17
Taiwan, South Korea, Japan, Mexico, US,
Imports
Traders
Latin America 40 Seychelles 11
Asian American canneries
290 kT
Seychelles 31 Cote dIvoire 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 dIvoire 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
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YELLOWFIN 1995-1 2005-12
2. Horizontal market integration
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)
SPAIN10
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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)
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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
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SKIPJACK AND YELLOWFIN 1995-1 2005-12
THAILAND
SJ
YF
ITALY
FRANCE
YF
YF
Legend Granger causality LOP 5 (bivariate) LOP
5 (multivariate)
SJ
YF
SPAIN
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YELLOWFIN
2.2 Canned tuna
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SKIPJACK
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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 GgtIC
YF
No cointegration
Multivariate cointegration SJ UK-Germany-IC (but
no LOP at 5)
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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 - 0.88LSJ-SPAINt - 0.86
et LCSJ-UKt - 0.52LSJ-BANGKOKt -
0.99 et
YELLOWFIN
None cointegrated (bivariate tests) No Granger
causality No proportionality
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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
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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

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Conclusion

• Consequences of the Yellowfin leadership?
• Competitive supply-side gt race for fish
• Potential market power on the demand side gt
  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)