6.1 Purchasing power
Purchasing power gauges ability to command goods. Arithmetically, the purchasing power of the peso is measured in terms of the real value of the peso relative to the peso value in the base period. Table 21 shows the consumers' price index (CPI) and the purchasing value of the peso. The National Capital Region (NCR) represents the urban areas, while outside NCR represents the rural areas of the country. From 1988 to 1998 (1988 = 100), the country's CPI increased substantially at a rate of 9.42% annually. The CPI for NCR and outside NCR posted higher and lower annual CPI growth rates at 10.62% and 8.94%, respectively, than the country's CPI. Overall, this indicates an increasing trend in the prices of goods and services in the country. An inverse relationship exists between purchasing power and CPI. Therefore, we expect that the purchasing power of the peso will decline. This means that, as prices of goods and services increase, consumers can purchase or consume less and less for the same amount of money. Or, for consumers to maintain 1988 levels of consumption, for example, they will have to increase the amount of money compared to what they had to spend in 1998. From 1988 to 1998, purchasing power for the country as a whole, NCR and outside NCR, decreased at an annual rate of 9.42%, 10.62% and 8.94%, respectively. In 1998, the purchasing power of the peso was 62% lower than its 1988 value; NCR and outside NCR were 65% and 60% lower, respectively.
6.2 Price trends for products from aquaculture
6.2.1 Farm-gate prices
Quarterly farm-gate prices from 1993-97 of selected aquatic products (milkfish, prawns, tilapia and carp species) are presented in Tables 22-26. From 1993-97 farm-gate prices of milkfish, prawns and tilapia posted positive yearly growth rates of 6.18%, 9.31% and 2.12%, respectively, whereas the growth rate of carp species registered a negative 2.17% (Table 22). Farm-gate prices of milkfish, prawns and tilapia increased from P 43.43/kg, P 181.42/kg and P 43.98/kg in 1993 to P 55.59/kg, P 285.02/kg and P 46.39/kg in 1997, respectively. During the same period, farm-gate price of carp species declined from P 29.10/kg to P 22.42/kg. These figures show that no established market exists yet for carps, as buyers (fish brokers or wholesalers) prefer to market traditional aquatic products such as milkfish, prawns and tilapia. It must also be noted that milkfish and prawns are produced mainly in brackish water, while tilapia and carp species are reared in freshwater. Historically, products from brackish-water aquaculture have commanded higher farm-gate prices than those from freshwater aquaculture. This is mainly due to consumers' preference for brackish-water species over freshwater species. In recent years, however, farm-gate prices for tilapia have been only slightly lower than those for milkfish, indicating that tilapia has an established place in the market due to consumers' high acceptance of the fish.
Tables 23-26 suggest only slight differences in farm-gate prices for the above products from aquaculture by culture systems (ponds, cages and fish pens) and environments (freshwater and brackish-water). The data indicate that fish buyers are not willing to pay premium prices for products from different culture systems.
Based on quarterly prices from 1993-97, quarterly seasonal indices of farm-gate prices for milkfish, prawns, tilapia and carp species are presented in Table 27. Farm-gate prices of these fish species vary considerably. The farm-gate price of milkfish peaked in the first quarter, while farm-gate prices of prawns, tilapia and carps peaked during the third, second and fourth quarter, respectively. Farm-gate prices for milkfish prawns and carp species were lowest during the second quarter, whereas the price of tilapia was lowest in the first quarter. The figures illustrate production patterns for these aquaculture products. Production of milkfish, prawns, tilapia and carp species were lowest during the first, third, second and fourth quarter, respectively, whereas production of milkfish, prawns and carp species was substantial during the second quarter and that of tilapia in the first quarter.
6.2.2 Wholesale and retail prices
In the Philippines, fish brokers and/or wholesalers buy fish directly from fish farmers on a cash or consignment basis or from each other. Any amount of fish in their possession is sold to fish retailers or vendors at wholesale prices. Quarterly wholesale prices of milkfish, prawns and tilapia are listed in Table 28. As expected, wholesale prices of these fish species vary considerably according to farm-gate prices. From 1993-97, average wholesale prices for prawns were consistently higher than those for milkfish and tilapia. The yearly growth rate of the wholesale price for prawns at 8.10% was higher than that for milkfish and tilapia, which posted annual growth rates of only 5.56% and 2.22%, respectively, during the same period.
Fish retailers or vendors sell the fish directly to consumers at retail prices. Retail prices of milkfish, prawns and tilapia are shown in Table 29. As is the case for farm-gate and wholesale prices, retail prices of these fish species differ substantially. From 1993-97, tilapia had a considerably lower retail price than milkfish and prawns. At a retail price of P 56.11/kg, P 70.29/kg and P 274.04/kg for tilapia, milkfish and prawns, respectively, tilapia was the most affordable species for most consumers in 1997. Several factors affect the retail prices of fish in the country. For tilapia in particular, its price is mainly determined by consumers' preference of size for the fish and available market outlets (Molnar, 1996).
6.2.3 Price margins
Price margins for selected aquatic products were measured at two outlets, i.e. in wholesale (difference between wholesale and farm-gate price) and in retail (difference between retail and wholesale price) markets (Tables 30-31). Quarterly price margins in wholesale markets of milkfish, prawns and tilapia from 1993-97 are presented in Table 30. From 1993-97, fish traders, who dealt in prawns in wholesale markets, had negative average price margins. Wholesalers of tilapia also had negative average price margins from 1993-97, except for 1995. Dealers of milkfish had positive average price margins from 1993-97 at wholesale level. These results show that fish dealers can lose money, contrary to the usual assumptions about their trade. Several factors may have contributed to their negative earnings such as, for example, difficulty in forecasting correctly the movement of prices of fish at wholesale markets. Some difficulties are inherent to the nature of fish products. As fish deteriorates fast, it becomes increasingly difficult for fish traders to move their products from one wholesale market to another that may offer better prices without incurring additional losses. Nevertheless, the price margins listed only pertain to a limited number of fish species. Anecdotal data show that, if we consider overall operations, fish traders generally earn more money at wholesale markets than our figures indicate.
At the retail market, however, fish traders' average price margins for milkfish, prawns and tilapia were positive from 1993-97 (Table 31). Their average price margins ranged from P 11.54-16.59/kg, P 18.84-53.47/kg and P 13.65-17.10/kg for milkfish, prawns and tilapia, respectively, during the same period. These data show that retail trading of fish is a lucrative business in the Philippines (ICLARM, 1998). It must also be noted that fish retailers who dealt in tilapia, had slightly higher average price margins than those who traded in milkfish. Data consistently show that tilapia has gained considerable acceptance among consumers as a food fish.
However, at these average price margins at retail markets, even tilapia is getting more expensive for most consumers. This increase in price for tilapia has considerable implications for consumers' access to fish products. If the upward trend continues, as anecdotal data indicate it may, most of urban poor consumers will no longer be able to afford to buy tilapia. In general, products from aquaculture are beyond the purchasing power of most consumers.
6.3 Price trends of competing substitute-products
In the Philippines, cattle (beef), hog (pork) and poultry (chickens) are other sources of protein that compete with fish products. Price trends for these competing substitute-products are examined below.
6.3.1 Farm-gate prices
Quarterly farm-gate prices from 1993-97 of cattle, hog and poultry (chickens) are presented in Table 32. Farm-gate prices of beef slightly increased from P 39.36/kg in 1993 to P 43.59/kg in 1997, a yearly growth rate of 1.61%, whereas farm-gate prices of pork increased substantially from P 35.32/kg in 1993 to P 43.48/kg in 1997 at a yearly rate of 8.14%. On the other hand, farm-gate prices of chickens slightly decreased from P 50.57/kg in 1993 to P 49.90/kg in 1997 posting a negative growth rate of 2.40%. At these levels, farm-gate prices of cattle, hog and poultry were slightly lower than those for milkfish and tilapia, but they were substantially higher than prices for carp species as presented earlier. These figures indicate that animal products are priced competitively at the farm level with fish and other aquatic products.
6.3.2 Wholesale and retail prices
Quarterly prices at wholesale and retail markets from 1993-97 for cattle, hog and poultry (chickens) are listed in Tables 33-34. Wholesale prices of beef and chicken increased slightly from P 89.32/kg and P 41.36/kg in 1993 to P 90.41/kg and P 44.40/kg in 1997, posting a yearly growth rate of 0.54% and 2.33%, respectively (Table 33). Wholesale price of pork increased substantially from P 40.86/kg in 1993 to P 51.02/kg in 1997. Although, the price per kilogram of beef was comparable to that of tilapia at the farm level, the price of beef at the wholesale market was, more or less, twice that of tilapia. It must be noted that cattle are butchered and sold as beef at the wholesale market, while tilapias are sold as they were obtained at the farm-gate. Prices for pork and chicken were closer to the price for tilapia, but were lower than the price for milkfish at the wholesale market. These data show that tilapia competes closely with pork and chicken at the wholesale market.
At retail markets, prices for pork and chicken posted a positive yearly growth rate of 6.59% and 2.14%, respectively, from 1993-97 (Table 34), whereas the retail price of beef posted a negative yearly growth rate of 0.69% during the same period. Prices of pork and chicken were slightly higher than those for milkfish and tilapia at retail markets. Historically, meat products are generally priced higher than fish products at the retail markets in the country. This shows that consumers are starting to consider protein from fish as a substitute to protein from meat in their dietary intake.
6.3.3 Price margins
Quarterly price margins from 1993-97 for traders selling beef, pork and chickens at wholesale and retail markets are given in Tables 35 and 36. Meat wholesalers who dealt in chickens, had negative average price margins from 1993-97 (Table 35), whereas those that dealt in beef and pork had positive average price margins from 1993-97. However, meat traders secured bigger price margins by selling beef rather than pork. Average price margins for beef ranged from P 45.02/kg to P 49.97/kg during 1993-97, while margins for pork ranged from only P 3.54/kg to P 11.37/kg during the same period. Apparently, meat products generated higher average price margins than fish products at wholesale markets.
Average price margins for beef, pork and chicken at retail markets are shown in Table 36. Meat traders obtained bigger price margins for beef than for pork and chicken. Average price margins for beef ranged from P 41.81/kg in 1993 to P 48.14/kg in 1997, whereas price margins for pork and chicken ranged from P 33.79/kg and P 23.40/kg in 1993 to P 45.11/kg and 26.45/kg in 1997, respectively. Thus, traders are obtaining bigger price margins by dealing in animal products (beef, pork, chicken) than in fish products (milkfish and tilapia) at retail markets. Anecdotal data reveal some limited activity among traders switching from dealing in meat to dealing in fish and vice-versa, as they tend to specialize in their marketing endeavours. Hence, the wider spread of price margins for animal products is not expected to greatly affect the availability of fish products at retail markets, as these items are marketed independently, at least in the short-run, by two sets of traders i.e., meat and fish traders.
6.4 Fish supply, demand and income elasticities
Data on the supply of fish, demand and income elasticities estimates are obtained mainly from the research studies of Estrada and Bantilan (1991); Bouis (1991) and Gomez (1986) supplied data on the responsiveness of production (supply) and consumption (demand) of agricultural commodities, including fishery products in relation to changes in prices and incomes.
6.4.1 Supply elasticities of selected fishery products
Supply elasticities of selected fishery products by regions in the country are shown in Table 37. At the national level, the supply of aquatic products (tilapia, milkfish and prawns) was generally more responsive to changes in prices than that of capture fishery products (tuna and roundscad). This is as expected, as production from aquaculture is within the control of fish farmers to some extent, while catches from capture fisheries are often beyond the control of fishermen. Improved market prices of products from aquaculture are enough of an incentive for fish farmers to expand their operations and to determine the desired level of production. Fishermen may be able to increase fishing efforts when market price are favourable, but they do not have the flexibility of fish farmers. Supply elasticities of tilapia, milkfish and prawn, tuna and roundscad were 0.50, 0.60, 0.63, 0.21 and 0.21, respectively. Thus, a 10% increase in the prices of tilapia, milkfish and prawn will result in an increased market supply of 5%, 6% and 6.3% at the national level, whereas a 10% increase in the price of tuna and roundscad will increase market supply by only 2.1%.
We found a substantial variation in the supply elasticities of tilapia, milkfish, prawn, tuna and roundscad at the regional level, which ranged from 0.30-0.65, 0.30-0.80, 0.45-0.90, 0.10-0.30 and 0.15-0.35, respectively. Clearly, supply elasticity was higher for products from aquaculture than for products from capture fisheries. Supply elasticities of tilapia, milkfish and prawn were highly responsive to changes in prices in regions where these products were produced and where they commanded better prices. Supply elasticity for tilapia was 0.65 for Ilocos, Cagayan Valley, central Luzon and southern Tagalog. Although tilapia production is concentrated in central Luzon, tilapia prices were relatively higher in Ilocos and Cagayan Valley compared to prices for other fish species in those regions. Milkfish had a supply elasticity of 0.80 in Ilocos, central Luzon, southern Tagalog and western Visayas. High responsiveness in supply of milkfish in central Luzon, southern Tagalog and western Visayas to changes in prices can be attributed to the fact that these regions are major producers of milkfish in the country. High supply elasticity for milkfish in Ilocos can be attributed to consumers paying better prices for milkfish relative to other fish species in that region. Production of prawns is concentrated in central Luzon, southern Tagalog and western Visayas; hence the high supply elasticity of 0.90. Similarly, supplies of tuna and roundscad were highly responsive to changes in prices in regions where these products were being produced or achieved higher prices. The supply elasticity of tuna at 0.30 was highest in western Mindanao, southern Mindanao and central Mindanao. These regions supply the country with tuna. For roundscad, the supply elasticity was highest in southern Tagalog, where it commanded a relatively better price compared to in other regions.
6.4.2 Demand elasticities of selected fishery products
Demand elasticities of selected fishery products by regions of the country are shown in Table 38. At the national level, the demand for high-value products (prawns and tuna) was highly elastic or more responsive to changes in their own prices than that of moderately- (milkfish and tilapia) and low-valued (roundscad) fishery products. In absolute terms, demand elasticities of prawns, tuna, milkfish, tilapia and roundscad were 1.52, 1.50, 0.65, 0.63 and 0.41, respectively. Own price elasticity estimates of more than unity for prawn and tuna simply means that the change in consumption is proportionately greater than the corresponding change in the own price for these species, whereas the opposite can be expected for milkfish, tilapia and roundscad. Thus, a 10% increase (or decrease) in the price of prawns, tuna, milkfish, tilapia and roundscad would result in a 15.2%, 15.0%, 6.5%, 6.3% and 4.1% reduction (or increment) in the consumption of these fish species, respectively. In the case of milkfish, tilapia and roundscad, consumers' intake of these commodities is not expected to change as much as their prices, possibly because consumers have already established a certain level of consumption as a result of their continued preference for these species.
At the regional level, although demand elasticities for tilapia, milkfish, prawns, tuna and roundscad varied within regions, patterns and magnitude of the species' elasticities were similar to those at the national level. The demand for highly valued products (prawns and tuna) was highly elastic or more responsive to changes in their own prices than that of moderately- (milkfish and tilapia) and low-valued (roundscad) fishery products.
6.4.3 Cross-price elasticities of selected fishery products
Cross-price elasticities indicate the nature of the relationship between two products, whether the related good is a substitute for or a complement to the other. Substitute commodities have positive coefficients, whereas complementary products exhibit negative coefficients.
The cross-price elasticities of selected fish products and related commodities are presented in Table 39. Estimates for cross-price elasticity for milkfish showed that only tilapia had a negative coefficient, indicating a complementary relationship between milkfish and tilapia. This could be due to the tendency of consumers to buy more than one kind of fish, as they pursue a greater variety of products in their diet. This complementary relationship between tilapia and milkfish may also be indicative of consumers' generally low purchasing power. Due to low prices of milkfish and tilapia relative to other food products, consumers were purchasing more fish compared to other high-priced food items, such as meat products. However, as tilapia is becoming more acceptable to most consumers, it may likely become a substitute, rather than a complement, to milkfish. Roundscad is considered a substitute for milkfish. However, change in the price of roundscad resulted in a highly inelastic adjustment of the demand for milkfish (cross price elasticity = 0.46). Nevertheless, substitution between milkfish and roundscad was minimal in contrast to other substitute-goods. Change in the price of pork had a greater effect on the demand of milkfish than the change in price of beef. Milkfish consumption, however, was only slightly affected by changing prices of poultry.
For tilapia, all cross-price elasticities were positive, indicating substitutions between tilapia and related commodities. Within the fish group, change in the price of roundscad had the largest effect on demand for tilapia (cross price elasticity = 2.24). On the other hand, demand for tilapia was sensitive to changes in the price of beef (1.13) and poultry (1.07) and least sensitive to changes in the price of pork (0.32). This means that a change in the price of beef and chickens may cause an elastic change in the consumption of tilapia, whereas a change in the price of pork may have a minimal effect on the demand for tilapia.
All cross-price elasticities for roundscad were positive, indicating substitutions between roundscad and other related commodities. Among substitute commodities, roundscad consumption was very sensitive to changes in the price of tilapia. With a cross-price elasticity of 1.98, tilapia can be considered a close substitute for roundscad. The demand for roundscad was inelastic to the change in the price of milkfish (cross price elasticity = 0.90). We also noted that the demand for roundscad was inelastic to changes in the price of beef, chicken and pork.
6.4.4 Income elasticities of selected commodities
Changes in consumer demand for selected agricultural and fish products with respect to changes in income of urban and rural consumers by quartile are depicted in Table 40. Consumers in all quartiles, both in the urban and rural areas, considered rice, corn, wheat and vegetables as necessities, since the percent change in quantity for these commodities, associated with a given percent change in income, was less than unity.
All income elasticities for fish had positive signs indicating that a change in consumers' income changed the level of demand in the same direction. However, the percent change in quantity of fish demanded, associated with a given percent change in income, was less than unity, as consumers' income increased. In other words, a relatively large change in income results in a correspondingly smaller change in the level of consumption of fish products. For the poor, however, as their income increases, their demand for fish increases also. There was no difference in the direction of change in the consumption of fish as incomes of urban and rural consumers increased. However, the magnitude of change in all quartiles for urban people (1.20, 0.99, 0.71 and 0.43) was somewhat smaller than for rural consumers (1.61, 1.27, 0.98 and 0.57) as their incomes increased, except for the 4th quartile. This can be attributed mainly to the difference in lifestyles between urban and rural dwellers. Anecdotal data show that, although rural and urban consumers are spending more in the 4th quartile on items that improve their social status as their income increases, people in urban are consuming fewer fish products than those in rural areas. We also observed that consumption of fish increased for urban consumers in the 1st quartile and for rural consumers in the 1st and 2nd quartiles as their incomes increased. This shows that fish is considered a luxury item and is becoming more expensive for all groups of consumers. However, some groups of consumers in urban and rural areas considered fish a necessity, since they had an income elasticity of less than unity. For these groups of consumers, fish is a necessity and a nutritional complement to the staple of cereals.
Coefficients of income elasticities for meat (pork, beef and chicken) and eggs were positive, as were the coefficients for fish products. That is, changes in consumers' incomes altered the level of demand in the same direction. Although the magnitude of income elasticities for these commodities varied, patterns were similar to those we saw for fish products. Hence, consumers showed a relative elastic change in their demand for meat products for 1st and 2nd quartiles as their incomes increased, whereas consumers showed inelastic demand in the 3rd and 4th quartiles. However, demand pattern for pork and eggs was elastic in the 3rd quartile for rural consumers.
6.5 Role of women in fish production and trade
Marketing is the most visible activity of women in fishing and fish-farming communities. In most cases, wives of small-scale fishermen and fish farmers sell their husbands' catches or productions within the community or in nearby markets. Stereotypically, men are considered to be the main players in the fisheries sector, despite the fact that 50-85% of post harvest activities, such as handling, processing and marketing of fish, are carried out by women (Legaspi, 1997). In some cases, women also participate in culturing fish and in fish operations. Fish processing activities are assumed either individually or as a family enterprise, whereas individuals perform the task of marketing the fish, usually the wives of fishermen or fish farmers. In urban communities, women are mostly involved in marketing either as brokers/wholesalers and/or as retailers. However, the roles women play in fisheries are not documented. For this reason, most government policies and programmes before the 1980s were geared toward men. During the 1980s, especially with the development of the Philippine Development Plan for Women, policy makers and government planners started to integrate women's issues in their policies. Projects now involve women, either as implementers or as targeted beneficiaries.
