Construction of the FPI:Is More Data Better?

Frank Asche, Kristin Lien and Sigbjorn Tveteras

UN Food and Agricultural Organization (FAO), University of Stavanger (UiS) and the Norwegian Seafood

Council (NSEC)

Ponza, 18-19 Sep. 2014

Current issues in FPI development

• Simplification and automation of updating FPI

Challenges:1. Constructing a representative index

– Is an index including numerous seafood prices from around the world more representative than an index made up of a smaller selection of seafood prices

2. Avoid errors when updating FPI– The more trade categories involved in FPI construction the more

potential sources of errors when updating the index. This is a nontrivial issue.

Price indices per species

Expanding the Index

• Currently the index includes seafood imports to three markets (EU15, Japan and USA) and six major species groupings (salmon, whitefish, other fish, cructaceans (shrimp), small pelagics, and tuna)

• Including seafood imports to emerging markets will make the FPI truly global in scope– Brazil– China– Corea– Russia– Thailand

Squids

Squids

Mussels

Mussels

Mussels

Scallops

Scallops

Abalones

Abalones

Abalones

FPI - Capture species groups

The challenge with new categories appearing in trade data when updating FPI

Comparing the official FPI with an alternative based only on 14 prices

Comparing the official FPI with an alternative based only on 14 prices

Comparing the official FPI with an alternative based only on 14 prices

Comparing the official FPI with an alternative based only on 14 prices

The FAO food price index methodology can also be applied to the FPI

Current FPI is not greatly affected by choice of index number formula

Composition of seafood imports to EU27, Japan, USA, Brazil, China and Corea

Suggestion for a roadmap ahead

1. Develop expanded indices including new species and new markets

2. Develop “stripped down” price indices using less data and that are comparable to those developed in 1)

3. Norwegian seafood council makes algorithms to automatically update indices developed in 2)

4. Trial period with new system