Analysis of the Distribution System for Northwest-Originated Fresh and Frozen Salmon

This study discusses the description and analysis of the distribution system for fresh and frozen Pacific salmon. It is concerned not only with the identification of the product movement, the types of firms involved and their functions in the distribution channel, but also the reasons for the specific form of development that the channel has taken. This frist part of the analysis identifies the size and trends of the catch of the specific species which enter the fresh and frozen product market, primarily coho and chonook salmon. It then measures the allocation of the catch by product form whether fresh, frozen, canned or appearing in other forms. As a final unit of the analysis, the trends of world consumption of Pacific salmon are estiamted. The second part of the analysis describes the actual distribution process of salmon, measuring first the volume of flow of product to market, then examining the actual structure of the distribution channel, and finishing with an analysis of price-making behavior within the channel. The impression of structure which emerges is one of an openly competitive arrangement among firms, although there are some contractual links between firms at succesive stages which place limited restriction on the ability of firms to move from one market to another. From observations of price-making within the industry, channel performance appears to be reasonable competitive but the degree to whihc this is true could not be directly ascertained from the available data. The third part of the analysis describes the channel arrangements for the physical movement of salmon to market. The physical distribution channel for salmon involves other sets of firms than the exchange channel, where the actual buying and selling takes place. These firms operate under different constraints than those in the exchange channel, necessitating specialized decisions and channel relationships. The succeeding setions of the analysis describe the specific inputs necessary for the development of a,simulation model: the physical processes which take place by species: and stage, and the related description and analysis of costs of channel operation. Costs and revenues were developed both .by stage and for the channel as a unit. This analysis requires the identification of both the direct costs and those which cannot be assigned to any species or product form. The culmination of this project was the development of a simulation model to. describe channel processes and operations in a form suitable for analysis. While there were many possibilities for the actual form of the simulation, the actual choice was dictated by the area of potential interest to the greatest number of potential users. As a result the market allocation process vas selected because it dictates the flow of product to market. While the model thus developed is limited to this task, it permits . interaction with the market environment through changes in relevant parameters. Further, the structure of the model permits development toward greater complexity. The model thus developed is a profit-seeking (but non- ; optimizing) deterministic FORTRAN computer model of the pricing and distribution of fresh and frozen salmon for the industry as a whole. Supply, assumed to be entirely dependent on catch volume, interacts with demands in several markets to achieve an allocation' of product, involving two species in three sizes and a separate frozen product which in a second version is considered to interact • with the fresh market. Prices paid to fishermen, the length of the season, margins to sell to different areas, and the demand schedules. for these areas are assumed and can be exogenously varied.. The .model will generate information on total volume over the season or. by week by area, species and product form in both weight and dollar value. The model was run using experimental data testing the effects.. of both demand shifts (such as those which might be attributed to either changes in taste or to the effectiveness of promotional campaigns) and variations in 'channel margins. It has demonstrated - • its capability to reflect parameter changes as they affect product. flow, measuring the gross impact of fundamental shifts in environmental conditions. This research began in the latter part of 1968 and was completed by the middle of 1970.


Issue Date:
1971-09
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/233398
Total Pages:
199
Series Statement:
File Manuscript
95-1




 Record created 2017-04-01, last modified 2017-08-29

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