Function of Japan Vegetable Markets(Part2)

Several changes for market system

As times go by, there are several changes made for market system.We will see rather big changes here.

1.The role of Oh-oroshi and commission rate for Oh-Oroshi
Oh-Oroshi specializes in consignment sales and was not allowed to trade for its own sake.
Now, Oh-Oroshi can buy vegetables under its own risk to trade.Oh-Oroshi can also sell 3rd party outside market.However their trade counterparties are mainly Naka-Oroshi, though.
Their commission rate was fixed,8.5% for vegetable trades and 7.0% for fruit trades, which has been deregulated.However it is said that they keep almost same rate yet.

2.The role of Naka-Oroshi
Naka-Oroshi needs to purchase vegetables from Oh-Oroshi , but now they can directly buy from farmers or other Naka-Oroshi in other markets.

3.Trade system
Principally,they needed to run auction in the market, though Over-the-Counter trade(off-line negotiation) has been allowed, then 90% of trades are done through Over-the-Counter trade now.

4.Vegetables need to be in place when auction
This has been also operated flexibly now, so Oh-Oroshi do not have pick vegetables into the market if some conditions are met.

Our view for these changes

There are several reasons to these changes,but these changes have happened to meet the back end(retail stores,sustomers) requirements.

We think the back end expects good value for the market as a whole regardless Oh-Oroshi or Naka-Oroshi.
For example,both Oh-Oroshi and Naka-Oroshi have been expexted consultative sales for farmers and the back end.
Supermarkets need big lots with varieties of vegetables but retail stores or restaurants need some vegetables for their own customers’ specific requirements, which is not so feasible for each wohlesaler to respond.

We also think the legacy system does not meet the business model of mass retail stores such as supermarkets landed in 1950s .
This is also a example,they need vegetables as soon as possible to send their branches to display so that they can not wait for auction starting AM6.50 in Tokyo Ohta market.

We can’t overlook the various technnological progress can make this happen, of course.

 
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