EX-VESSEL PRICE LINKAGES IN 

 THE NEW ENGLAND FISHING INDUSTRY 



Dale Squires 1 



ABSTRACT 



This study examines the direction of ex- vessel price linkages between the three New England ports of 

 Boston, New Bedford, and Gloucester. Within-sample, bivariate tests of Granger causality are applied 

 for monthly data from 1965 through 1981. It is found that cod and haddock prices are formed in New 

 Bedford, that pollock prices are simultaneously formed between Boston and Gloucester, and that a spurious 

 relationship exists for flounder prices between the three ports. The hypothesis is advanced that this 

 spurious relationship may be due to flounder price leadership from outside the region, most probably 

 the New York Fulton Fish Market. 



The direction of price linkages between various 

 market and production centers in an industry is im- 

 portant to studies of marketing and prices. Although 

 these spatial and hierarchical relationships are 

 generally well understood in domestic agriculture, 

 they have received little or no attention in natural 

 resource utilization and in the domestic commercial 

 fishing industry in particular. This study therefore 

 examines the spatial characteristics of round ex- 

 vessel price linkages of the most important species 

 in the New England fishing industry from 1965 

 through 1981. 



Three ports— New Bedford, Boston, and Glouces- 

 ter—dominate the New England fishing industry, 

 as both home ports or production centers and as 

 marketing centers. By both volume and value of 

 landings, New Bedford is the most important port, 

 followed by Gloucester and then Boston. The most 

 important species of groundfish in New England are 

 cod; haddock; yellowtail, winter, and other 

 flounders; ocean perch or red fish; and pollock. Sea 

 scallops and lobsters also provide a significant con- 

 tribution to the industry in both value and volume 

 of landings. This study accordingly focuses upon the 

 ports of Boston, New Bedford, and Gloucester, and 

 the species of cod, haddock, yellowtail and winter 

 flounders, and pollock. Additional attention is given 

 to ocean perch and sea scallops, though rigorous con- 

 clusions are not possible. 



In New Bedford and Boston, fishermen sell their 

 catches to the highest bidder in an open auction. The 

 New Bedford auction begins at 8:00 a.m. and ends 

 at 8:22 a.m. The Boston market begins at 7:00 a.m., 



and invariably overlaps with the New Bedford 

 market. There is significant communication between 

 the two markets during the auctions. The volume 

 and total value of fish harvested is substantially 

 greater in New Bedford than in Boston. Bidders pur- 

 chase an entire vessel's landings in New Bedford, 

 while in contrast, purchasers offer individual bids 

 for each species in Boston. In most of the ports other 

 than Point Judith in Rhode Island (where an impor- 

 tant fishermen's cooperative exists), the catch is sold 

 directly to fish processors or by prior arrangements 

 between individual vessels and purchasers. Further, 

 it is generally believed that Gloucester prices for 

 most fresh groundfish species are set in Boston, and 

 differ only by a transportation cost. 



Fishermen of all ports are free to land their 

 harvests at any port offering the highest prices, 

 which, however, must be balanced against steam- 

 ing time. Few vessels land exclusively at a single 

 port, since the distances between the three are not 

 great. A definite limit exists to port switching due 

 to the prevalence of market transactions costs. 

 Wilson (1980) indicated that personal and financial 

 relationships tend to bind particular fishermen and 

 fish buyers. In contrast to many other natural 

 resource and primary production industries, a 

 futures market does not exist for fresh fish. 2 



Different ports and markets have developed 

 singular reputations. These specializations are based 

 in large part upon proximity to resource stocks. New 

 Bedford has developed a reputation as a flounder 

 and sea scallop port, while Boston has become 

 known as a cod, haddock, and, to a lesser extent, 



'Southwest Fisheries Center La Jolla Laboratory, National 

 Marine Fisheries Service, NOAA, P.O. Box 271, La Jolla, CA 

 92038. 



2 Trading on futures markets involves buying and selling stan- 

 dardized contracts for the future delivery of a specific grade of 

 a commodity at a specific location(s). 



Manuscript accepted August 1985. 



FISHERY BULLETIN: VOL. 84, NO. 2, 1986. 



437 



