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
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?...
1. Market and concentration of the tuna industry
Concentration of the World Canned Tuna Industry
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cumulatedproduction
Cumulatedprocessingfirms
CR4 41%
CR5 46%
CR10 62%
FIRM Output 2003 (t)Star Kist 251400Thai Union (CoS) 194000Bolton - Trinity A 91500Sea Value 80000Bumble Bee 70500Isabel Garavilla 64000Salica Albacora 54000Jealsa 48000ONA 42500Calvo 35500Frinsa del Noroeste 34600Pescados Industrializados 30000Mitsubishi (Mauritius Tuna Fishing Canning Enterprise) 30000Hagoromo Foods Corporation (Aneka) 26320Palmera 15000Others 443760TOTAL 1511080
Global market
Concentration in EuropeCanned Tuna Oligopoly on the EU Market
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CR4 43%
CR5 50%
CR10 72%
FIRM EU SALES 2003 (mt)Bolton - Trinity A 88590Star Kist 82392Isabel Garavilla 62000Salica Albacora 52000Jealsa 48000ONA 40085Frinsa del Noroeste 34600Mitsubishi (Mauritius Tuna Fishing Canning Enterprise) 27770Calvo 19500Thai Union (Chicken of the Sea) 17277Others 188103TOTAL 660316
CR4 US = 80%
Number of canneries and trade of canned products in France
(1822-2005)
0
50
100
150
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250
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
0,1
1
10
100
1000
10000
100000
1000000
Nb Canneries Estimated number Exports (T) Imports (T)
LOG TNB
First sardine crisis 1880-1887
Second sardine crisis 1902-1911
World war I 1914-1918
World war II 1939-1945
Exploitation of tropical tuna fishery
1957 - …
Discovery of gold mines in
California 1848-1853
The EU supply chain 2003 (source : Oceanic Dev.)
EU fleet (89 purse seiners)France and Spain
Atlantic 24 vessels
Indian 48
Pacific 17
Traders
ACPcanneries
Loin plants abroadSouth Am., Thailand…
EU Loin plantsSpain, Portugal…
EU canneries
EU market(supermarkets) Export markets
290 kT
339 kT
78 kT 5 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,…
THAILAND
SPAIN+10
ITALY
FRANCE
SPAIN-10
JAPAN
YELLOWFIN
1995-1 : 2005-12
Legend:
Granger causality
LOP 5% (bivariate)
LOP 5% (multivariate)
2. Horizontal market integration2.1 Raw tuna
All series I(1,0) or so (JP)
All series bivariately cointegrated at the 5% level
THAILAND
SPAIN
AMERICASJAPAN
SKIPJACK
1995-2 : 2002-8
Legend:
Granger causality
LOP 5% (bivariate)
LOP 5% (multivariate)
Every series bivariately cointegrated at 5% but Japan with Thailand and Americas
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
THAILAND
SPAIN
ITALY FRANCE
SKIPJACK AND YELLOWFIN
1995-1 : 2005-12
SJ
SJ
YF
YF
YFYF
Legend:
Granger causality
LOP 5% (bivariate)
LOP 5% (multivariate)
0,00
2,00
4,00
6,00
8,00
10,00
12,00
France - Canned YFT, Retail Price (USD/kg) Italy, Canned YFT in Oil from Spain, USD/kg
2.2 Canned tunaYELLOWFIN
SKIPJACK
0,00
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2,00
2,50
3,00
3,50
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4,50
5,00
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France, Canned SKJ in Oil from Ivory Coast (USD/kg)
UK - Canned SKJ from Thailand (USD/kg)
Germany - Canned SKJ in Oil from Philippines (USD/kg)
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
3. Price-cost margins of the canneries
SKIPJACKCanned (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-GERMANYt - 0.88*LSJ-SPAINt - 0.86 = t
LCSJ-UKt - 0.52*LSJ-BANGKOKt - 0.99 = t
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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
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
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)