Asymmetric price volatility transmission in the fresh sardine value chain: the case of Spain

Abstract

This paper investigates the transmission of price volatility along the Spanish fresh sardine (Sardina pilchardus) value chain. Examining prices from the first-hand sale, wholesale, and retail markets using an asymmetric multivariate GARCH model reveals the retail market exhibits the lowest volatility. Therefore, only a small portion of the volatility from the first-hand sale and wholesale markets is transferred to consumers. Additionally, asymmetries are identified in the transmission of price volatility along the fresh sardine value chain. These suggest that information is not instantaneously transmitted along the supply chain, indicating imperfect market efficiency. Additionally, the wholesale market seems to exert market power, leading to less transparent price formation and potential anti-competitive practices. To reduce price volatility, several policy recommendations can be considered. These include promoting profitable sardine aquaculture to stabilise supply despite technological challenges and implementing sustainable fisheries management practices with improved regulation and more transparent individual transferable quota systems, particularly in the Gulf of Cádiz. Greater market transparency through improved traceability and a simplified supply chain may lead to a more competitive market, reducing volatility in first-hand sales. This volatility fuels the competitive race to exhaust quotas rapidly, resulting in lower prices and reduced fishers’ income. Lastly, it is crucial to consider how external factors, such as online sales platforms, climate change, and recruitment variability in small pelagic species, affect fish landings. Identifying the causes and transmission mechanisms of price volatility can support targeted management and transparency interventions to stabilise revenues and ensure fair competition, benefiting both consumers and fishers.