Price dynamics and cointegration in the major markets of aquaculture species in the Philippines

Abstract

This study explored the interdependencies of aquaculture markets in the Philippines by establishing price cointegration between wholesale and retail prices of three major species commonly farmed in the country, i.e., milkfish, tilapia and shrimp. The co-movements of wholesale prices between and among key markets for each species were also investigated. Moreover, exogeneity in prices was established using Granger-causation model to determine the existence of price leaders among these markets. Such information are crucial in farm management decisions of producers and traders through better understanding of the efficiency in price formation across production and consumption centers which in turn defines the movements in prices and products among markets. Appropriate policies for the development of markets for the three aquaculture species were also identified. Such policies are expected to contribute towards the attainment of efficient pricing and distribution of benefits among market players and stakeholders. These benefits are expected to manifest through the system of grading standards for fish traded in local markets and in the choice of cost-effective technologies in grow-out and post-production practices.