AN ANALYSIS OF THE UNITED STATES DEMAND FOR FISH MEAL 



D. D. HUPPERT^ 



ABSTRACT 



As fishery management plans are developed under the Fishery Conservation and Management Act of 

 1976, economic evaluation of management procedures will be necessary. To adequately address the 

 economics of optimum yield, for instance, research will be required in the traditional economic 

 subjects of demand, production and costs, industrial organization, and international trade. This paper 

 addresses the domestic demand for the primary industrial fishery product — fish meal. In developing 

 the demand model the important points are: 1) choice of empirical variables for inclusion in the 

 model, 2) determination of appropriate functional form of the demand equation, 3) treatment of the 

 "simultaneity bias" problem, and 4) choice between a static (or equilibrium) model and a dynamic 

 model. The paper presents maximum likelihood estimates of both the static and dynamic models. 

 With either model the price elasticity of demand is high when fish meal price is low, and is low when 

 price is high. 



Analysis of prices and market demand relation- 

 ships for fish is of increased importance since the 

 enactment of the U.S. Fishery Conservation and 

 Management Act of 1976 (FCMA^). The new law 

 not only establishes a zone of Federal control over 

 fisheries from 3 to 200 mi offshore, but it also 

 establishes national standards for fishery man- 

 agement plans which include economic and social 

 aspects. A key concept is that of "optimum 

 yield" — that rate of annual catch "which will 

 provide the greatest overall benefit to the Nation" 

 (FCMA, Sec. 3(18)). Economic benefits to the na- 

 tion accrue primarily through the consumption of 

 fishery products which are sold in more-or-less 

 free and competitive markets. Market prices can 

 be expected to vary in response to changes in the 

 annual yields permitted under fishery manage- 

 ment plans. These price impacts, along with 

 associated changes in real income, cannot be 

 neglected in the development of appropriate man- 

 agement methods. The demand analysis present- 

 ed in this paper will assist in the determination 

 of optimum yield for fisheries which contribute to 

 the U.S. fish meal supply. 



Fish meal is a primary product of the Atlantic 

 and Gulf of Mexico menhaden fisheries and the 

 California anchovy fishery. It also appears as a 

 byproduct of groundfish and tuna processing. It 



is used as a high protein supplement most com- 

 monly mixed with corn, soybean, or cottonseed 

 meal; meat byproduct meal; and vitamins and 

 minerals for feeding to broilers, layers, and tur- 

 keys. According to J. Vondruska,^ fish meal is 

 also used in feeds for mink and other fur-bearing 

 animals, farmed fish, laboratory animals, live- 

 stock, and household pets. About 80% offish meal 

 consumed in the United States goes into poultry 

 feed. A high level of metabolizable energy and 

 such nutritional elements as riboflavin, panto- 

 thenic acid, niacin, choline, and several amino 

 acids are contributed to animal feed by the addi- 

 tion of fish meal (Karrick 1963). Most of these 

 constituents are available in high protein vege- 

 table meals, but fish has a particularly high con- 

 centration of the amino acids lysine and 

 methionine. 



Because the lysine and methionine are neces- 

 sary for fast growth in chicks, feed mixers gener- 

 ally seek to include between 2 and 8% fish meal in 

 broiler rations. With >8% fish meal, the poultry 

 tends to pick up a "fishy" flavor. With <2% fish 

 meal, further substitution of vegetable protein 

 meals for fish meal will result in slower growth 

 because the fixed quantity of feed eaten per day 

 per chick cannot contain the ideal mix of amino 

 acids. When fish meal is extremely high priced or 



'Southwest Fisheries Center La Jolla Laboratory, National 

 Marine Fisheries Service, NOAA, La Jolla, CA 92038. 



^Public Law 94-265, 94th Congress, 2d Session 13 April 

 1976, 16 use 1801 et seq. (Suppl. 1977). Hereafter, FCMA. 



Manuscript accepted November 1979. 

 FISHERY BULLETIN: VOL. 78, NO. 2, 1980. 



3J. Vondruska. 1979. Postwar production, consumption, 

 and prices of fish meal. Unpubl. manuscr., 66 p. National 

 Marine Fisheries Service, 3300 Whitehaven St., N.W., 

 Washington, DC 20235. 



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