Modelling Risks in the Salmon Industry and Markets

The paper proposes developing a trade model for salmon to assist in discussions and negotiations of current international salmon trade issues and major risk problems facing the salmon industry. Two modeling approaches are discussed: 1) developing a traditional equilibrium trade programming model designed to maximize total welfare across all model regions by solving for a medium-term price that balances the amount of salmon supplied by the world region to the among processed and consumed by this region; and 2) developing an econometric stochastic simulation model based on linear or non-linear equations. Some disadvantages and weaknesses of the programming model are discussed, whereas the econometric model needs further exploration and consideration. The main use of the models will be to study the effects of problems related to market interventions, transportation, and competition in different exporting, processing or consuming regions.