Discussions of world food prices in the media and among policy makers usually focus on a few select commodities (e.g., maize, wheat, rice, etc.).
Though this obviously omits many other food staples, the underlying assumption is that various kinds of food are substitutes (imperfect ones, but substitutes nonetheless) for one another.
In cases where a more refined notion of food prices is used for discussion, the food price measure used is often the Food and Agriculture Organization (FAO) of the United Nations’ food price index, which encompasses five categories of food: cereals, dairy, meat, oils and fats, and sugar.
The FAO’s food price index, however, does not include fish and seafood. But since fish and seafood are a key source of protein for almost half of the world’s population, this is an important omission that can lead to making the wrong policy recommendations.
Some of my coauthors thus developed a fish price index similar to the other food (i.e., cereals, dairy, meat, oils and fats, and sugar) price indices already used by the FAO. We recently wrote a paper discussing this new fish price index, which the FAO will incorporate in its food price index sometime this year.
Here is the abstract of our resulting PLoS ONE article on the FAO’s fish price index, titled “Fish Is Food: The FAO’s Fish Price Index,” which was published this week:
World food prices hit an all-time high in February 2011 and are still almost two and a half times those of 2000. Although three billion people worldwide use seafood as a key source of animal protein, the Food and Agriculture Organization (FAO) of the United Nations — which compiles prices for other major food categories — has not tracked seafood prices. We fill this gap by developing an index of global seafood prices that can help to understand food crises and may assist in averting them. The fish price index (FPI) relies on trade statistics because seafood is heavily traded internationally, exposing non-traded seafood to price competition from imports and exports. Easily updated trade data can thus proxy for domestic seafood prices that are difficult to observe in many regions and costly to update with global coverage. Calculations of the extent of price competition in different countries support the plausibility of reliance on trade data. Overall, the FPI shows less volatility and fewer price spikes than other food price indices including oils, cereals, and dairy. The FPI generally reflects seafood scarcity, but it can also be separated into indices by production technology, fish species, or region. Splitting FPI into capture fisheries and aquaculture suggests increased scarcity of capture fishery resources in recent years, but also growth in aquaculture that is keeping pace with demand. Regionally, seafood price volatility varies, and some prices are negatively correlated. These patterns hint that regional supply shocks are consequential for seafood prices in spite of the high degree of seafood tradability.
