Fishing vessel efficiency, skipper skills and hake pricetransmission in a small island economy

Determinants of vessel efficiency and vertical/horizontal price transmissionsin consumer markets are key elements for assessing the viability of a fishery, particu-larly for a small fishery-dependent economy. An open issue also concerns whethervessel efficiency levels influence export prices. The paper sets off with a review ofevidence from other countries, followed by hypotheses for the Falkland Islands. To testthese hypotheses, the analysis first applies a stochastic frontier model accounting forlatent skipper skills, to a monthly 2008–2016 panel of fishing vessels operating in theIslands. Using estimated vessel inefficiency by licence type as a proxy indicator ofproduct quality and extra costs of transhipment, the study moves on to examine priceadjustments of Falkland hake and other finfish sold at Spanish ports vis-à-vis two majorsouth Atlantic hake supplier countries—Argentina and Namibia—and local traders.Lastly, based on full sample and rolling widow regressions on 2004–2016 monthlydata, the analysis formulates and estimates threshold autoregressive models for the hakevalue chain in Spain, as the largest European port-of-entry and market for fresh andfrozen hake, including from the Falklands. Once different output frontiers areaccounted for, vessels with licences for hake as their main target do not outperform,in terms of technical efficiency, less-valued finfish vessels. Besides evidence of in-creasing integration within supplier and consumer markets, econometric results suggest some degree of price‘leadership’by Namibian hake exporters and asymmetric behav-iour in short-run price adjustments by Spanish retailers. However, producer andconsumer markets turn out to be weakly interlinked.