China Squeeze: What Happens When
Your Largest Customer Says “No!”
Presentation to
NAAFE 2015
Jonathan King
May 21, 2015
In the beginning…..
And then…….
Photo Source: Port of Seattle, 2011
Chowder one minute, high-end nightclub the next….
And then one day the party is over…
And they pull the punchbowl…
So Why This Presentation?
 Data on the geoduck market is notoriously poor.
 No in-country market data.
 Data sources are limited to NMFS FTI data (monthly) and
Washington Fish & Wildlife Aquatic Farm reports (quarterly).
 Setting out I wanted to answer 2 primary questions:
 Do we see the effect of the five-month trade ban in either
dataset?
 Do we see differential effects on farmed product and wildharvest product?
NMFS Foreign Trade Information Data
 Monthly Data Collected by the Department of Commerce
 Foreign country, total value ($), volume (Kg), exporting district.
 Exports, imports, and re-exports
 Reported value frequently less than farm gate price….
 FTI data has been documenting a transition away from
exporting via Canada to direct exports to China and exporting
via Hong Kong.
Table 1. US Direct Exports (M Pounds)
Year
2010
2011
2012
2013
Canada
3.3
2.3
1.2
1.1
China
1.8
2.9
3.7
4.1
Hong Kong
1.7
2.4
3.8
4.3
All Others
0.0
0.0
0.0
0.7
Percent CCHK
99.8
99.7
99.8
93.2
Monthly US Exports of Geoduck
1600
1400
Export Volume (000s of lbs)
1200
1000
800
600
400
200
0
Volume
Seasonality
Increasing
Volume
Trend
5-Month
Trade Ban
9
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
Average Monthly Value ($ per Pound)
What About Reported Value?
10
Price
Seasonality
Price
Dip?
Price
Recovery?
8
7
6
5
4
3
2
1
0
What Does Time-Series Analysis Tell Us?
 ARIMA results show statistically significant and correct signs for
export volume, the ban, and the exchange rate.
 Estimated drop in value per pound because of the ban is $0.88 per pound.
 A one-percent increase in export volume at the mean knocks a penny or so
off the price.
Real Story is in Trade Flows: Hello Vietnam!
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010
2011
All Others
2012
Canada
2013
China
2014
Hong Kong
2015
Vietnam
Importers/Exporters traded this….
For this…
On to Quarterly DFW Data
 Aquatic Farms Reports
 Filed quarterly
 Volume
 Value
 Farmed, Non-treaty wild,
Treaty wild
 Really significant
differences between
Farmed, NT wild and T
wild.
Grade Matters…….
Large Differences in Reported Prices
$25.00
$20.00
$15.00
Farms report
farm gate
Tribes
report
exvessel
$10.00
$5.00
NT wild report auction values
$0.00
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014
Farmed
Treaty, Wild
Non-Treaty, Wild
A Closer Look at the Ban Period
$20.00
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Farmed
Q1
2013
Q2
2013
Treat, Wild
Q3
2013
Q4
2013
Q1
2014
Non-Treaty, Wild
Q2
2014
Q3
2014
Q4
2014
Was Farmed Geoduck in a Commodity Bubble?
$25
Popped by
“reforms”?
Farmgate per Pound
$20
$15
$10
$5
$0
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014
Farmed
Similar Pattern in Treaty Geoduck Prices
$25.00
Treaty Ex-Vessel ($ per lbs)
$20.00
$15.00
$10.00
$5.00
$0.00
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014
Treaty, Wild
Conclusions
 Within the monthly NMFS data you can find a statistically
significant value effect of the December 2013-May 2014
import ban.
 However, the far larger stories are:
 The collapse of the bubble seen in the DFW data and the
effects of the “war on luxury”;
 The long-term effects on trade routing.
 The significant reduction in price premium for farmed product.