Vol. 11, No. 3 / Economic Recovery Paths of the Northern Gulf of Mexico Shrimp Fisheries

Abstract

In this issue, Dr. Posadas shows the long-term monthly landings of the Northern Gulf of Mexico region commercial shrimp landings since 2015. He developed and estimated economic models of the shrimp fisheries in the region. Using these models, he estimated the individual and combined direct impacts of disasters, recessions, trade-war, and Covid-19 on the shrimp fisheries.

Suggested Citation

Posadas, B.C. Economic Recovery Paths of the Northern Gulf of Mexico Shrimp Fisheries. Mississippi MarketMaker Newsletter, Vol. 11, No. 3. Mar. 30, 2021.  http://extension.msstate.edu/newsletters/mississippi-marketmaker.

Introduction

I received several inquiries for estimates of what the commercial fishery impacts of the prolonged and twice opening of the Bonnet Carre Spillway since February 2019. The livelihoods and way of life of the fishing households, businesses, and communities dependent on the shrimp industry were threatened by lingering effects of the man-made disaster associated with the Bonnet Carre's prolonged and twice opening spillway (BCS) from Feb. to April and May to July 2019. To save lives, properties, and the way of life in New Orleans and surrounding communities, the Bonnet Carre spillway was opened to release floodwater into Lake Pontchartrain and eventually into the Mississippi Sound.

Similar requests were also received in early 2020 when the COVID-19 pandemic was declared a national emergency in the U.S. on Mar.13, 2020. With severe disruptions in seafood sales to eating and dining places, producers developed ways to sell their products to consumers directly. As a result, the U.S. economy was in recession from Feb. to June 2020.

The commercial fishery impacts consist of losses of wild shrimp harvests by commercial shrimpers due to the prolonged freshwater intrusion and disruptions of Gulf shrimp's domestic markets. The US-China trade war started in July 2018 when the U.S. imposed tariffs on $34 billion worth of Chinese goods. China reciprocated by imposing equivalent tariffs on U.S. exports.

To estimate the individual and combined direct impacts of disasters, recessions, trade-war, and Covid-19 on the shrimp fisheries, economic models of the shrimp fisheries in the region were developed and estimated using time-series data compiled from secondary sources. 

Economic Determinats of Shrimp Landings

The assumption of the economic models of the shrimp fisheries in the region is that the following factors significantly influenced monthly shrimp landings:

• year,
• month,
• disasters, including harmful algal bloom, BCS opening, and significant hurricanes
• covid19 pandemic,
• recession,
• U.S. trade war with China,
• dollar index,
• unemployment rate,
• fuel price,
• Gulf shrimp dockside prices,
• Gulf shrimp wholesale prices,
• imported Asian shrimp wholesale prices.  

These models were estimated by using ordinary least square (OLS) regression. The coefficients and properties of the models were estimated by using Stata 16 as follows:

regress landings time timesq timecube i.month i.bcsopening i.covid19 i.recession i.tradewar ngevp  gwp iawp urate diesel, vce(r),

where:

• monthly shrimp landings = headless pounds,
• time = year,
• month = 1, if Jan.; = 2, if Feb., … ,
• bcsopening = 1, if Bonnet Carre spillway was opened,
• Covid19 = 1, if Covid-19 occurred,
• recession = 1, if recession occurred,
• tradewar = 1, if U.S.-China trade war occurred,
• dollar index = weighted average of the foreign exchange value of the U.S. dollar against the currnencies of a broad group of major U.S. trading partners,
• ngevp = Northern Gulf dockside prices ($/lb),
• gwp = Gulf wholesale prices ($/lb),
• iawp = imported Asian shrimp wholesale prices ($/lb),
• urate = unemployment rate (%),
• diesel = Gulf diesel price ($/gal).

The sources of raw data used in the economic modeling are the following:

• The Federal Reserve Bank of St. Louis is the source of the dollar index.
• The source of the consumer price index is the Bureau of Labor Statistics.
• The source of wholesale prices of selected shrimp products is Urner Barry Comtell.
• The source of dockside prices of Gulf shrimp products is NOAA-Fisheries.
• The source of the U.S. unemployment rate is the Bureau of Labor Statistics.
• The source of Gulf diesel retail price is the U.S. Energy Information Administration.

Northern Gulf of Mexico Economic Shrimp Model

• The estimated OLS equation showed a good fit for the actual shrimp landings (Fig. 1).
• The estimated equation explained more than 92 percent of the variations in monthly shrimp landings.

Summary

• Significant differences were observed over time and between months.
• Shrimp landings were significantly higher from April to December. 
• As expected, disasters, including harmful algal bloom, BCS opening, and significant hurricanes, negatively affected shrimp landings.
• The covid19 global pandemic adversely affected shrimp landings.
• The U.S. trade war with China continued to have unfavorable effects on shrimp landings. 
• The combined total direct losses in 2019 exceeded 30 million pounds (headless).
• The combined total direct losses in 2020 were more than 50 million pounds (headless).

My Economic Outreach on COVID-19 Global Pandemic

1. Posadas, B. C. Economic Recovery Paths of the Northern Gulf of Mexico Shrimp Fisheries. Mississippi MarketMaker Newsletter, Vol. 11, No. 3. Mar. 30, 2021.  
    
2. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach.” Direct Losses in the Northern Gulf of Mexico Shrimp Fisheries,” Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Mar. 26, 2021). 
    
3. Posadas, B. C. Shrimp Price Margins from Dockside-Wholesale-Retail Markets. Mississippi MarketMaker Newsletter, Vol. 11, No. 2. Feb. 23, 2021.  
    
4. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach.” Shrimp Price Margins from Dockside-Wholesale-Retail Markets,” Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Feb. 9, 2021). 
    
5. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, " 2021 Covid-19 Impacts on Tuna Industry," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Jan. 5, 2021). 
    
6. Posadas, B.C. Economic Impacts of the Global Covid-19 Pandemic on U.S. Retail Prices of Selected Shellfish Species. Mississippi MarketMaker Newsletter, Vol. 11, No. 1. Jan. 6, 2021.  
    
7.  Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, " Economic Impacts of the Global Covid-19 Pandemic on U.S. Retail Prices of Selected Shellfish Species," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Jan. 5, 2021). 
    
8.  Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, "November Commercial Landings and Direct Losses in the Northern Gulf of Mexico Shrimp Fisheries," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Jan. 1, 2021). 
    
9. Posadas, B.C. Economic Impacts of the Global Covid-19 Pandemic on U.S. Retail Prices of Selected Fish Species. Mississippi MarketMaker Newsletter, Vol. 10, No. 11. Dec. 8, 2020.  
    
10. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, " Economic Impacts of the Global Covid-19 Pandemic on U.S. Retail Prices of Selected Fish Species," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Dec. 8, 2020). 
     
11. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, "Potential Direct Economic Impacts of the Global Covid-19 Pandemic to the Mississippi Commercial Fisheries," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Nov. 10, 2020). 
     
12. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, "September Commercial Shrimp Landings in the Northern Gulf of Mexico," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Oct. 28, 2020).1.    
     
13. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, "Economic Impacts of Covid-19 on Tilapia Imports, Retail and Wholesale Prices," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Sept. 30, 2020).
     
14. Posadas, B. C. (Author & Presenter), Horticulture, Marine, and Disaster Economics Outreach, "Direct Economic Impacts of 2019 BCS Openings and Covid-19 on U.S. Blue Crab Wholesale Prices," Mississippi State University, Coastal Research and Extension Center, Virtual Presentation. (Sept. 18, 2020). 
     
15.  Posadas, B. C. (Author & Presenter), Horticulture and Marine Economic Outreach, "Economic Impacts of 2019 BCS Openings and Covid-19 on U.S. Blue Crab Wholesale Prices," Mississippi State University, Coastal Research and Extension Center, Virtual Conference. (Sept. 11, 2020). 
     
16. Posadas, B. C. (Author & Presenter), Horticulture and Marine Economics Outreach, "Economic Impacts of Covid-19 on Catfish Production, Imports and Farm-Gate and Wholesale Prices," Mississippi State University, Coastal Research and Extension Center, Virtual presentation. (Aug. 28, 2020).
     
17. Posadas, B. C. (Author & Presenter), Horticulture and Marine Economics Outreach, "Economic Impacts of 2019 BCS Openings and Covid-19 on Northern Gulf Shrimp Landings, Prices and Imports," Mississippi State University, Coastal Research and Extension Center, Virtual presentation. (Jul. 31, 2020).