Developing a Price and Trade Model for Salmon

The research proposal describes development of a price and trade model for the global salmon market. The proposed model accounts for risks associated with production, international trade and demand. The project owner will be Marine Harvest, the world larg est salmon farming company, with production facilities in several countries producing for different markets. The aim of the model is to assist the company in decision making facing risks as well as production and market opportunities in different parts of the world. The description is organized as follows: in the introduction there is a brief overview of the world production and trade of salmon, followed by a general description of problems related to price risks, transportation and to market access, faci ng the salmon industry. The problems are motivating development of a salmon price simulation model, and a salmon trade programming model to support in industry decision making and assess effects of different trade policies. The knowledge and technology fr ontier is addressed together with some model requirements, and a description of a prototype for a stochastic price and a trade programming model, including theoretical foundation and further work and data to develop the models. Both modelling approaches r equire computing elasticities of supply and demand in different production regions and markets and calculate the residuals to incorporate risks. The main research challenges are related to computing elasticities and combining them in the model and add ris ks. The models will be built in Excel and stochastic simulation conducted with Simetar, an Excel add-in. The project is organized with four partners Norwegian Agricultural Economics Research Institute, Kontali Analyse, (data), Øystein Myrland (elasticitie s) and the professors James Richardson and Bruce McCarl at the Texas A & M University (model construction and control). Finally there is a description of usefulness of the model for Marne Harvest.