Codfish Market and Fish Farming - Essay Example

Codfish Market What was the approximate worldwide catch of cod, in metric tons, in 1968 and in 2008? which sources you used. The approximate worldwide catch of cod in the 1968 was 810, 000 metric tons (Myers et al 1997). This value was triple the previous years’ catch and was as result of the introduction of the super trawlers. The approximate worldwide catch of cod in 2008 was 750,000 metric tons (Fao.org 2014). Norway, Iceland and Russia contributed more than 73% of this catch. 2. What was the approximate market (wholesale) price of cod block, in 1968 and in 2008? State which sources you used. The market price of cod block in 1968 was 26 cents per pound in January of that year (Parsons 1993). While the market price of a cod block in 2008 was $1.51 per pound in the US (Seafoodbusiness.com 2014). 3. Plot the data from the first two questions as two points in a supply and demand diagram for cod block. Based on those two points, what (if any) conclusions can you safely draw about shifts in supply and demand in this market between 1968 and 2008? There has been a decline in the production of codfish from the staggering 810,000 in 1968 to the 750,000 of 2008. The pricing per block of codfish has increased over that period because of the decreased supply of cod fish in the market. 4. Based on the (limited) information available in the posted sources, and your general economic knowledge, what factors have probably shifted the demand (curve) for cod, up or down, between 1968 and 2008? The demand of cod has been affected by the Canadian government policy on its production. The 1992 ban that closed the Northeast fishing beds affected the availability of cod in the fish market ultimately becoming inexistent until two decades later. 5. Based on the data in Figure 3 in the 1973 article, identify years in which the demand for cod must have shifted (compared to the year before) and which way it must have shifted. Looking at the entire twelve-year period, rather than year-by-year, is it clear what happened to demand between 1960 and 1971? The years where demand shifted include 1960-1962 the demanded of cod shifted upwards. From 1963-1965 the demand shifted upwards while 1965-1967 the demand shifted downwards. From 1969-1971 the demand for cod shifted upwards. Over the period ranging from 1960 to 1972, the demand for cod increased at a gradual rate. 6. In 1968, about what fraction of the worldwide cod catch came from the Newfoundland fishing grounds? In what year did production from Newfoundland collapse almost to zero? Newfoundland, in 1968, produced 810, 000 metric tons of Atlantic cod. This figure represents the world’s total of cod at the time. The area produced 100% of all the Atlantic cod in the world. In 1992, Newfoundland produced almost zero metric tons of Atlantic cod. 7. One normally expects a competitive market to generate efficient levels of production. Do you think Canadian cod production was efficient from 1948-68? If a single firm had owned exclusive rights to the fishing grounds, then would this have likely led to the same or different levels of production? Would that solution have been more or less efficient? Which market failure(s) apply to this market? The Canadian production prior to the 1968 peak was inefficient as it rose year after year until its peak. Cod is a natural resource that is prone to exhaustion and depletion. In the case, a single firm owned exclusive rights to the Canadian fishing grounds; the production would not have reached such astronomical levels. The firm, being a monopoly, would have to dictate the supply of cod in the market and ultimately its price. Despite the firm being beneficial to the fishing grounds, the consumers of cod would have been at the mercy of the firm because it would dictate the pricing. Therefore, the presence of a monopolistic firm in the cod market would lead to the efficient production of cod. The market failure that characterizes this market is a productive and allocative inefficiency due to the nature of cod as a resource. 8. In what year did the Canadian government ban cod fishing in its Northeast fishing beds? Do you think that the Canadian government, from 1968 on, followed a sensible policy in its regulation of these fishing beds? How did politics likely affect the government’s decisions? The Canadian government banned fishing in the Northern Cod Fishery in 1992. The Canadian government did little to monitor the decline in fish harvests since 1968. The government took a wait and see attitude fishing matter despite being warned by stakeholders. This approach is attributed to the influence large corporations had on the government. Politicians, also, contributed to the collapse of the cod industry. The previous success of the fishing industry blinded the politicians causing them to make short-term decisions oblivious to their effects on the fishing grounds. 9. What do cod eat? Based on the historical experience related in the posted sources, how has the cod population responded to changes in the availability of its food supply? Cods feed on forage fish and other plankton. The forage fish, after the collapse of cod fishing, have thrived and have undermined the growth cod. Furthermore, the forage fish in turn eat juvenile cod limiting their regeneration in the fishing grounds. 10. Was the ban effective in restoring the cod population? In the Scientific American article, what is the explanation for slow cod recovery? Is this explanation convincing, based upon all the evidence in the article? The ban was not effective in restoring the cod population. The cod population was already depleted after the 1992 collapse and the rise of the forage fish destabilized the ecosystem. The forage fish fed on the juvenile cod ensuring they never thrived again. The forage fish, which are the primary predators in the fishery, have increased their population to 10 million. The ecosystem could not handle this increase in population and the forage fish started to slowly decline. Their decline has allowed for the revival of the cod population. This rise, however, is at a slower rate than people expected. 11. How would you expect the events in the cod market to affect the markets for other fish species, during the period 1968-2008? The events of the cod market since 1968 – 2008 have affected the market of other fish species. During the prime of the cod catch, the other fish markets were almost inactive due to the abundance of cod. Cod served as the best alternative or substitute for fish in the market at the time. The slow decline that followed afterwards led to the other fish markets to become active as the cod population decreased. In 1992, the other fish markets experienced their best years due to the collapse of cod production. However, following the gradual but steady increase of the cod population the fish market is slowly regaining balance and equilibrium. 12. Some fish species, notably including salmon, are substantially grown through aquaculture (fish farming in a controlled and contained environment). How does aquaculture address the market failure that has affected the cod market? How is aquaculture likely to affect prices, compared to species that are caught only in the wild? Fish farming is an initiative that helps in preventing overfishing in the world’s fisheries. Aquaculture limits the catch of a certain breed of fish and helps in maintaining balance in the ecosystem. The fish market, as stated earlier, faces a productive and allocative inefficiency and aquaculture keeps this inefficiency in balance. Aquaculture maintains the demand and supply of fish, which in turn regulates the price of fish in the market. References Myers, R., Hutchings, J., & Barrowman, N. (1997). WHY DO FISH STOCKS COLLAPSE? THE EXAMPLE OF COD IN ATLANTIC CANADA. Ecological Applications, 7(1), 91-106. Retrieved from http://www.esajournals.org/doi/abs/10.1890/1051-0761(1997)007%5B0091:WDFSCT%5D2.0.CO%3B2 Fao.org,. (2014). FAO Fisheries & Aquaculture Gadus morhua. Retrieved 25 April 2014, from http://www.fao.org/fishery/culturedspecies/Gadus_morhua/en Parsons, L. S. (1993). Management of marine fisheries in Canada. Ottawa: National Research Council of Canada [u.a.. Seafoodbusiness.com,. (2014). SeaFood Business Magazine - SeaFood Business.com. Retrieved 25 April 2014, from http://www.seafoodbusiness.com/articledetail.aspx?id=4295000300 Read More