Kristin H. Roll

SALMON AQUACULTURE: LARGER COMPANIES AND INCREASED PRODUCTION

Salmon farming is among the most successful aquaculture industries with a production growth that is substantially higher than aggregate aquaculture production in recent decades. It is well known that innovations and productivity growth are the main sources for this development. In this article we look closer at two potentially important factors in production growth, development of farm size and company size directly through economies of scale and indirectly through capacity in R&D, innovation, sales and marketing. In Norway, production per license has increased from 26 tons in 1980 to 1,130 tons in 2010, suggesting a substantial intensification in the industry. In all five leading salmon producing countries, the degree of concentration has increased and the large firms have become bigger over time.

DETERMINANTS OF INEFFICIENCY IN NORWEGIAN SALMON AQUACULTURE

This article builds on the literature investigating productivity and efficiency in the Norwegian salmon farming industry. The objective of this article is to investigate the determinants of inefficiency. We use a stochastic frontier approach that allows the estimation of a production function and an inefficiency function. The sources of inefficiency can be separated into temporary shocks and factors that lead to permanent efficiency differences. The results indicate an improvement in technical efficiency over time. This improvement can partly be explained by a restructuring of the industry, with firms becoming bigger and more specialized, as well as by improvements in government regulations. The inefficiency that is still present is mainly the result of temporary shocks. Disease outbreaks seem to be the most important of these temporary shocks, as disease problems lead to early harvesting or destruction of the fish and thereby, obviously, increase inefficiency.

The Price Responsiveness of Salmon Supply in the Short and Long Run

Productivity growth and competitiveness indicate that salmon supply is price responsive. However, in the short run supply is likely to be constrained by the biological production process, regulations, and capacity constraints. In this article, we estimate a restricted profit function for Norwegian salmon producers, which allows us to examine the industrys short-run and long-run supply responsiveness separately. Using data spanning 1985 to 2004, we find that there is close to zero, own-price supply responsiveness in the short run. In the long run, this changes substantially as supply becomes elastic. This result can contribute to explaining the observed cyclical profitability in the salmon farming industry.

NEW AQUACULTURE SPECIES—THE WHITEFISH MARKET

Aquaculture production has increased rapidly during the last three decades. This is due to increased production of established species as well as a continuous introduction of new species. Productivity growth is the main engine for the increased production in aquaculture, and as the accumulated knowledge is applied to new species and in new regions, production is expected to continue to increase. Along with the production growth an increasing quantity of aquaculture products is being internationally traded. This is rapidly changing several segments of the global seafood market. While high value species such as salmon and shrimp were the first to be traded internationally, low cost species like tilapia and pangasius are currently transforming large parts of the whitefish market.

Technical Efficiency in a Heterogeneous Fishery: The Case of Norwegian Groundfish Fisheries

Abstract Most fish stocks are targeted by different fleets using different types of vessels and gear. Heterogeneous fleets can contribute to variations in vessel performance, as the potential of each vessel type and gear differs when it comes to harvesting fish. Different management regimes among vessel groups can amplify these variations. To explore this issue, this article investigates differences in efficiency between and within vessel groups in the Norwegian groundfish fleet. Whereas efficiency differences within a group of relatively homogeneous vessels reflect managerial abilities, efficiency differences between different groups of vessels reflect the use of different technologies and/or management regimes. Our results indicate the presence of significant inefficiencies. Given the substantial variation in technical efficiency both between and within vessel groups, both managerial skills and an inefficient management regime in the study fishery are documented. JEL Classification Code: Q22.

Drilling speed—the relevance of experience

Drilling expenses have increased sharply in recent years. The productivity of drilling operations – in terms of meters drilled per day – significantly influences exploration costs. Hence it is important to understand the factors that determine drilling productivity. In this study we analyze the effect of different types of experience or learning on offshore drilling productivity. The econometric analysis employs a large data set on exploration wells from the Norwegian Continental Shelf, covering most of its 45year drilling history. Many other industries have a steep learning curve. A central question here is if learning effects also contribute to increased productivity in petroleum exploration drilling. Furthermore, to what extent do diseconomies associated with reservoir depletion effects and limited acreage counteract learning effects on productivity?

Profiting from Agglomeration? Evidence from the Salmon Aquaculture Industry

Asche F., Roll K. H. and Tveteras R. Profiting from agglomeration? Evidence from the salmon aquaculture industry, Regional Studies. Even though most celebrated clusters seem to be in high-cost areas, many econometric studies represent agglomeration externalities as increased primal productivity or reduced cost. While this certainly can be consistent with some observed agglomeration effects, it may be insufficient for the growth of a cluster. The key condition for this is that profitability is higher. The paper tests for agglomeration effects using a profit function approach. This may be particularly important for firms in high-cost clusters, where revenue effects can be as important as productivity and cost effects. The paper tests for both intra- and inter-industry agglomeration externalities using firm-level data.

Non-stop flights and tourist arrivals.

Most travellers from key tourist markets find it too expensive and time consuming to visit destinations far from their origin country. However, improved international air connectivity can help to attract more visitors to these exotic tourism destinations. The objective of this study is to quantify the degree to which an increasing number of non-stop flights can promote tourist arrivals at long-haul destinations. The authors estimate a dynamic demand model using panel data of tourist arrivals at Peru and flight connections from 75 origin countries from 2004 to 2009. They find significant positive direct and indirect effects of non-stop flight routes on demand for air travel to Peru.

Production Risk in a Subsistence Agriculture

Abstract Purpose: In this article we illustrate the importance of understanding the risk profiles of new technologies, in addition to the changes in productivity, to be able to determine strategies for agricultural development. Design/methodology/approach: The analysis is based on data obtained from a 2002 survey of subsistence farmers in the Kilimanjaro region of Tanzania, and a Just and Pope (1978) framework is used for modeling risk. Findings: We find that even if extension services do not increase the mean production, it may reduce production risk. Practical implication and originality/value: During the past decades, agricultural extension and subsidized conventional inputs such as high-yielding seed varieties, fertilizer and pesticides, have become important components of agricultural aid programs in developing countries. However, outcomes of this type of aid are somewhat ambiguous, and many donor countries have reduced their support in response. For the most part, evaluation of these programs employs total factor productivity analysis to estimate the changes in productivity resulting from investment in aid programs. However, risk-averse, small-scale farmers will consider both the variance in output and the expected mean. They may therefore choose input levels that differ from the optimal input levels of risk-neutral producers, who consider only the expected mean. Programs can therefore have a positive effect because they reduce risk, even if the direct impact on production is limited.

Innovations and Productivity Performance in Salmon Aquaculture

Since the 1980s a large number of innovations have radically transformed the production process in salmon aquaculture. Increased degree of control with the production process, increased scale of plants, and more intensive use of farm locations are some of the consequences. Until the mid 1990s the industry also experienced rapid productivity growth leading to production costs to be reduced to 1/3 of their initial levels in Norwegian salmon aquaculture. But thereafter productivity has been stagnant. This paper analyses the innovation process and productivity growth in the Norwegian salmon industry, and discusses the challenges for the future.