Estimating prices for "new" aquaculture species: A hedonic pricing approach

Assessing the potential economic and financial feasibility of a new aquaculture operation requires, amongst other things, an estimate of the price the product is expected to receive once produced. For new species, such prices may not be apparent in the market. In this study, we develop a hedonic pricing model to estimate the expected price of a species being considered for aquaculture, but which does not have a current market presence in Australia. The model includes information on a wide range of other species that are currently traded in the market, including low and high value species; farmed and wild caught, and domestically produced or imported. The characteristics of these species, including product form (e.g., whole, fillets, fresh, frozen, etc.) and taste characteristics (e.g., texture, moistness) are regressed against their price. Four different functional forms of the model are applied: log-linear, linear, semi-loglinear and the use of a Box-Cox transformation of the price variable. Sensory testing was undertaken to assess the characteristics of the new species, and the model was used to provide estimates of its likely market price if it is to be produced.