Wholesalers of agricultural and marine products are being squeezed by a growing trend among retailers to procure foodstuffs directly from producers in addition to the general downturn in wholesale transactions caused by the COVID-19 outbreak.
Although the government is pursuing official measures to boost demand, future prospects for wholesale markets remain unclear.
In direct procurements, major supermarkets and other retailers purchase directly from producers without going through a wholesale market. In the wholesale market system, middle traders set prices through auctions and other means for products that wholesalers have bought from producers, then sell them to retailers.
According to the Agriculture, Forestry and Fisheries Ministry, the transaction volume at central wholesale markets operated by prefectures and other entities decreased more than 40% to 3.9 trillion yen in fiscal 2017 from a peak of 6.89 trillion yen in fiscal 1991. This situation is partly the result of moves by major supermarkets and food service companies to increase purchases directly from producers they contract with.
"At wholesale markets, where many vendors conduct transactions, purchasing costs have become higher as commissions are included," said an official of a supermarket in the Tokyo metropolitan area.
Aeon Retail Co., which has been buying seafood from the fishermen's cooperative JF Shimane, started purchasing from the Fukushima Prefectural Federation of Fisheries Cooperative Associations in 2018 as well.
Oisix ra daichi Inc., which sells organic vegetables online and elsewhere, has signed up with about 4,000 farmhouses and boasts a membership of about 340,000 customers.
The rate of fresh fruit and vegetables handled via wholesale markets decreased by 23.6 percentage points, while the rate for marine products fell 24.7 percentage points, over the 25 years to fiscal 2016.
Wholesale markets also have been hard hit by the COVID-19 crisis.
At Tokyo's Toyosu market, the transaction volume for marine products in May decreased more than 20% year on year, due mainly to the drop in demand for luxury foodstuffs used at restaurants.
Middle trader Izukyu Shokuhin Co., which was looking for ways to sell its products outside the market, started selling tuna sashimi and other products from a food van at locations close to condominiums in central Tokyo and elsewhere in late June. Izukyu gained cooperation for starting the mobile operation from Mellow Inc., a Tokyo-based company that supports mobile sales.
If wholesale markets decline, small and midsize greengrocers and fresh fish stores will find it more difficult to procure products -- which could increase the influence of major supermarkets on price formulations.
The revised Wholesale Market Law, which came into force in June, allows wholesalers to sell products to retailers without going through a middle trader. While the law was revised to invigorate transactions, there has been a wait-and-see attitude among those related to businesses handling agricultural and marine products.
At local wholesale markets, which have less regulation, wholesalers have started opening shops in the evening rather than the morning so that they can sell freshly picked vegetables.
"Wholesalers need to rethink their transaction strategies in order to fit the needs of both consumers and producers," said Prof. Masayuki Ono of Setsunan University, who is well versed in the distribution systems for vegetables and other items.
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