Economic Analysis of Japanese Household Demand for Salmon

The recent glut of both wild and farmed salmon in world markets has forced producers to become aware of the need to expand their marketing efforts to ensure that demand is not outpaced by supply resulting in a further decline in prices. Japan has been a major market for wild salmon, particularly sockeye salmon from North America, since the introduction of the 200 mile Exclusive Economic Zone. As farmed supplies have continued to increase, exporters such as Norway and Chile have turned their attention to this market as well. Up until now, most of the farmed salmon exported to Japan has been targeted to the restaurant market. If exporters wish to expand their market in Japan, they may focus also on the retail market. Prior to any assessment of the potential of the retail market for fresh farmed salmon, it is useful to understand the role that salmon plays in Japanese household seafood consumption. This paper examines household consumption patterns of salmon in Japan. An econometric model is presented which estimates household demand for fresh and salted salmon focusing specifically on the effects of seasonality, regional location, and prices of other seafood products. Two systems of demand equations, one for each of two regions of Japan, are specified and estimated using monthly data on prices and expenditures to capture the effects on household demand for 12 seafood products. Results indicate that seasonality plays a significant role in the demand for many seafood products, particularly fresh and salted salmon. In addition, these seasonal effects are not necessarily the same between regions of Japan. Salmon competes with different seafood products during different times of the year. A rich variety of factors should be considered when marketing fresh aquacultured salmon in the Japanese retail market.