Contracts in the Salmon Aquaculture Industry: An Analysis of Norwegian Salmon Exports

Abstract

Sales and distribution innovations have increased productivity in the salmon aquaculture industry. In this article, we investigate the use of fixed price contracts for Norwegian salmon exports to France based on all export transactions between the two countries. Our analysis shows that almost 25% of these exports were traded using fixed price contracts and contract prices were renegotiated at different intervals, including as infrequently as once a year. Some contracts allow the contracting parties to adjust contract prices when the export price moves significantly. Benchmark analysis, which shows a marginal 0.5% difference between average unit revenue for the year from spot sales relative to contract sales, indicates that contracts primarily change revenue time profiles. The use of contracts creates a wedge between salmon export prices and spot prices in periods of price volatility, which in turn reduces price transmission.Contracts, salmon aquaculture, International Relations/Trade, Productivity Analysis, Research Methods/ Statistical Methods, L14, Q22,