European seaweed prices: The influence of major seaweed-exporting countries and substitute commodities

Uncertainty in price formation hinders European seaweed farmers from attracting investments for scaling. This study analyses the impact of seaweed prices in four major exporting countries (China, South Korea, Chile, Ireland) and the prices of three substitute commodities (guar gum, gelatin, pectin) on the price of seaweed in Europe. Using an autoregressive distributed lag model with algae export prices for the years 2016 to 2023, we identified short-run relationships between European seaweed prices and prices of major seaweed-exporters (spatial price transmission) and substitute commodities (cross-commodity price transmission). Our results reveal positive and negative price transmission effects, varying across countries and time lags. Seaweed prices in almost all European countries are affected by at least one of the major exporters or substitutes. Estimated short-run elasticities indicates partial and heterogeneous price transmission. The statistically significant relationships indicate that the European seaweed market shows evidence of short-run integration with global seaweed markets and, to a lesser extent, with hydrocolloid markets. This suggests that the European industry faces international competition and price effects of substitute commodities. We highlight the need for better data collection of seaweed prices, specifically more detail on species and processing forms, to better understand the price relationships identified.