Impacts of Crawfish, Catfish, and Shrimp Imports on U.S. Domestic Prices. Young-Jae Lee P. Lynn Kennedy

Transcription

1 Impacts of Crawfish, Catfish, and Shrimp Imports on U.S. Domestic Prices Young-Jae Lee P. Lynn Kennedy

2 Common Market Issues Imports increasing (relatively higher marginal cost of production in U.S.) Low domestic prices Decrease in domestic production Domestic consumption increasing (new cuisine, health concerns, etc) Homogeneity (between imported and domestically produced goods)

3 Crawfish Market Louisiana is the leader in freshwater crawfish production Most crawfish cultured in rice field - rice-crawfish integrated faming system Crawfish are routinely graded into three sizes - large, medium: whole live or whole boiled - small: processed tail meat

4 Louisiana s crawfish industry was affected negatively by massive imports of crawfish tail meat from China. Imported crawfish tail meat displaced more than 90% of Louisiana s domestic crawfish meat market. Rice-crawfish producers lost markets for small crawfish and were deprived of a significant source of income. Louisiana s crawfish industry lost an estimated 4,000 full-time and part-time jobs

5 LAES developed management practices to increase production of larger, high-valued crawfish and to reduce production costs to compete with imports. Researchers identified overcrowding, food shortages and overharvesting as the major causes for the harvests of small crawfish. An inter-cropping strategy was developed whereby small crawfish could be relayed into a growing rice crop to increase in size and subsequent market value, while preserving acceptable rice yields. Research continues to develop effective supplemental feeding and forage systems, along with strategies to increase production of large crawfish by preventing overcrowding.

6 LCES, LDAF, and producer and processor groups worked successfully to have the U.S. Department of Commerce impose an antidumping tariff on the imported Chinese crawfish meat. The Byrd Amendment directs the U.S. Bureau of Customs and Border Protection to distribute monies to companies that petitioned or supported antidumping tariff action

7 MT CRAWFISH $/lb Year CRIM CRDP CRRP Source: National Marine Fisheries Service (

8 Harvesting farm raised Crawfish under controlled water conditions ensures a quality product Crawfish are washed and inspected prior to boiling. Some are hand selected for live sales

9 Parboiling is accomplished with specially built equipment operated under careful supervision Crawfish is peeled in a sanitary environment

10 Packers check the crawfish meat to assure quality The crawfish meat is bagged and iced for fresh shipment, or bagged and quick-frozen

11 Domestic Crawfish Tail Meat Price: $13.99 Chinese Crawfish Tail Meat Price: $5.99

12 Catfish Market Mississippi, Arkansas, Alabama, and Louisiana are the leaders in freshwater catfish production - Four states produce 94% of catfish production Three Market Issues for catfish - low prices - increase in imports of catfish from Vietnam - high feed and fuel cost

13 Since 2000, catfish industry has suffered because of low prices in the market place by the influx of imported catfish Low prices received by producers in 2002 ($0.57/pound) and 2003 ($0.58/pound) have caused economic hardship for Mississippi producers resulting in a decrease of 10,000 acres since While catfish prices improved in 2004, higher catfish feed prices and increasing fuel prices mostly negated gains.

14 Imports of Vietnamese catfish have been increasingly displacing U.S. farm-raised catfish in the seafood market at alarming rates, prompting the catfish industry to push for a labeling law as a way to even the playing field. The labeling legislation in both Mississippi and Alabama mandates that only catfish produced by U.S. growers in fresh-water ponds may be labeled as farm-raised catfish.

15 Source: National Marine Fisheries Service (

16 Shrimp Market Shrimp imports continuously increases From , import volumes of shrimp increased from 466 million lbs to a 795 million lbs. Average unit value of shrimp imported fell $3.48 in 2003 from $5.12 in However, consumer prices increased from $8.99 to $10.13 during the period, indicating that the middleman makes more money.

17 MT SHRIMP $/lb Year SHIM SHDP SHRP Source: National Marine Fisheries Service (

18 Objectives Develop a practical means of determining the impact of a given import volume change on domestic prices Confirm the extent of substitutability between the domestic good, the imported good, and other related domestic and imported goods Account for any simultaneity between domestic demand and supply

19 Model Construction SUR used to improve the efficiency of estimation since the error terms of the individual model of each commodity assumed to be correlated Double log inverse functional form used for computational efficiency of estimating direct price flexibility

20 Model (1) LnP i = β 0 + β 1 LnQ i + β 2 LnM + ε i Where P i : domestic deflated price of good i Q i : sum of domestic production and imports of good i M : disposable personal income (deflated) ε i : random error of good i equation This model assumed that imported good is homogeneous with the domestic good

21 Coefficients z-value R-sq lncrrp lncarp lnshrp lncrtp lndpi cons lncatp lndpi cons lnshtp lndpi cons ** 3.18*** -2.43** *** 10.28*** *** 6.13*** ** Statistically significant at 0.05 *** Statistically significant at 0.01 Breusch-Pagan test of independence: chi2(3) = 26,572, Pr=.000

22 Model (2) LnP i = β 0 + β 1 LnQ im + β 2 LnQ i dp + β 3 M+ ε i Where P i : the domestic deflated price of good i Q m i : quantity imported of good i Q dp i : domestic production of good i M : disposable personal income (deflated) : random error of good i equation ε i This model assumed that imported good is imperfect substitute for the domestic good

23 Coefficients z-value R-sq lncrrp lncarp lnshrp lncrim lncrdp lndpi cons lncaim lncadp lndpi cons lnshim lnshdp lndpi cons *** 9.11*** *** 5.01*** ** Statistically significant at 0.05 *** Statistically significant at 0.01 Breusch-Pagan test of independence: chi2(3) = , Pr=.0003

24 Model (3) LnQ id = β 0 + β 1 LnP i + β 2 LnP sub + β 3 M + ε Where Q d i : domestic consumption of good i P i : domestic deflated price of good I P sub : prices of related goods (deflated) M : disposable personal income (deflated) ε i : random error of good i equation This model is intended to estimate the direct price elasticity of domestic consumption

25 lncrtc lncrrp lncarp lnshrp lncrp lnbrp lnprp lndpi cons Coefficients z-value R-sq ** * *** * *** *** *** * Statistically significant at 0.1 ** Statistically significant at 0.05 *** Statistically significant at 0.01

26 lncatc lncrrp lncarp lnshrp lncrp lnbrp lnprp lndpi cons Coefficients z-value R-sq * Statistically significant at 0.1 ** Statistically significant at 0.05 *** Statistically significant at 0.01

27 lnshtc lncrrp lncarp lnshrp lncrp lnbrp lnprp lndpi cons Coefficients z-value R-sq ** * * ** * * Statistically significant at 0.1 ** Statistiaally significant at 0.05 *** Statistically significant at 0.01

28 Model (4) LnP i = β 0 + β 1 LnQ i m + β 2 LnQ i dp + β 3 LnQ sub m + β 4 LnQ sub dp + β 5 M + ε i Where P i : domestic deflated price of good i Q i m : quantity imported of good i Q i dp : domestic production of good i Q sub m : imported related goods Q sub dp : domestically produced related goods M : disposable personal income (deflated) ε i : random error of good i equation This model is formulated to examine the effects of imported goods, domestically produced goods, imported substitutes, domestically produced substitutes, and income on price of good i.

29 Coefficients z-value R-sq lncrrp Lncrim Lncrdp Lncaim Lncadp Lnshim Lnshdp Lntrim Lntrdp Lnclim Lncldp Lnoyim Lnoydp Lnchdp Lnbeim Lnbedp Lnpoim lnpodp lndpi *** 4.01*** *** -3.18*** * -3.41*** -3.02*** 4.08***.6354

30 Coefficients z-value R-sq lncarp Lncrim Lncrdp Lncaim Lncadp Lnshim Lnshdp Lntrim Lntrdp Lnclim Lncldp Lnoyim Lnoydp Lnchdp Lnbeim Lnbedp Lnpoim lnpodp lndpi ** *** *** -1.86* *** *** ***.8596

31 Coefficients z-value R-sq lnshrp Lncrim Lncrdp Lncaim Lncadp Lnshim Lnshdp Lntrim Lntrdp Lnclim Lncldp Lnoyim Lnoydp Lnchdp Lnbeim Lnbedp Lnpoim lnpodp lndpi ** -2.78*** ** -2.58*** ** ** -1.97** 1.87* -2.23** 1.76* *** -5.37*** ***.7814

32 Conclusions Domestic price of Crawfish is shown to have a positive relationship with imports of crawfish while domestic prices of Catfish and Shrimp have a negative relationship with imports Imports of Crawfish stimulated by a domestic price increase caused by decreased domestic production

33 Conclusions (cont.) Crawfish, Catfish and Shrimp were shown to be normal goods Clam and Pork significantly related to domestic crawfish price Trout and Beef significantly related to domestic catfish price Clam, Oyster, Beef, and Pork significantly related to domestic shrimp price.

34 Questions?