Why are there two stages, wholesalers and intermediate wholesalers? Thoughts on the future of the fishing and seafood industry after reading the book 'The Man Who Made Fish Intermediate Wholesaling His Life's Calling'

You will misunderstand if you think of it as a job of buying and selling things. Wholesalers and intermediate wholesalers are private companies, but they are companies authorized by the public, and their purpose is distribution. It is not to sell more or at a higher price. Wholesalers are on the side of the shippers, and intermediate wholesalers are on the side of the consumers. The market is a sumo ring for both of them to wrestle. In other words, to protect fairness, they need to function as agents for shippers and retailers (consumers). Since this is difficult to understand, the market is putting effort into PR.

The reason why central markets have two stages, wholesalers and intermediate wholesalers, is mainly due to the following reasons.

**1. Bulk collection and efficient distribution:**
* **Wholesalers:** They play the role of collecting large quantities of fresh food from all over the country and overseas. This saves retailers and restaurants the trouble of searching for producers in various regions themselves and collecting items in small quantities.
* **Intermediate wholesalers:** They play the role of **breaking down**, **assorting**, and **processing** products purchased in bulk from wholesalers to meet the needs of retailers and restaurants. This allows them to efficiently supply the necessary quantities in the required form to buyers of various sizes and needs.

**2. Facilitating price formation and demonstrating expertise:**
* **Wholesalers:** By selling collected diverse products in public venues such as auctions and bidding, they promote **fair price formation** based on supply and demand.
* **Intermediate wholesalers:** They possess expertise as **connoisseurs** of each item and information regarding market **prices**. This allows them to assess the value of products and purchase them at appropriate prices. Also, because they understand the needs of retailers and restaurants, they can provide accurate information and advice.

**3. Risk diversification and stable supply:**
* By having wholesalers and intermediate wholesalers share roles, the **risk** of the entire market can be diversified. For example, wholesalers mainly bear the risk of collection, while intermediate wholesalers mainly bear the risk of sales.
* Through this two-stage distribution, a **stable supply** from production areas and **stable provision** to consumers are more easily ensured.

**4. Efficiency of financial and settlement functions:**
* By having wholesalers conduct transactions with numerous producers in bulk, **settlement operations** are streamlined.
* By having intermediate wholesalers consolidate transactions with numerous retailers and restaurants, settlement operations are further streamlined.
In this way, by going through the two stages of wholesalers and intermediate wholesalers, a mechanism is built to deliver large quantities of fresh food to consumers efficiently, stably, and at appropriate prices. By demonstrating specialized functions at each stage, the efficiency and functionality of the entire market are enhanced.

When the central wholesale market was first established, it was intended to deal with small retailers, and the main roles of intermediate wholesalers were distribution to buyers and fair evaluation of products, so the principles of highly transparent auction transactions and the prohibition of intermediate wholesalers purchasing from anyone other than wholesalers, which would disrupt distribution, were enforced. However, for supermarkets that conduct transactions through contract sales where prices and quantities are decided in advance, auction transactions where prices are decided at the time of the transaction, and the prohibition of purchasing from anyone other than wholesalers, which limits the source and quantity of arrivals, have become outdated and have been revised.

Memo: 'Fishing is conducted under business customs that have remained since long ago, and for outsiders, it is difficult to understand what kind of business can be established there if one has certain information about the fishing industry.'

Memo: 'In the past, fishing was a job that carried risks such as danger to life, but it was profitable enough to compensate for that. However, now that fish prices have fallen, it has fallen into a situation where no one wants to do it because it is both risky and unprofitable.'

Policy
・Revision of the Wholesale Market Act and the Act on Promotion of Improvement of Food Distribution Structure

Economy
・Decline in the rate of use of wholesale markets, increase in contract transactions, increase in purchasing and collection, increase in export opportunities
・Driver shortage, labor shortage

Society
・Demographic changes and changes in consumer consumption

Technology
・Lag in information and communication technology in wholesale markets and the emergence of new technologies
・Problem of information disconnection in the supply chain

Since the 200-nautical-mile issue and the establishment of the Law of the Sea, the state of affairs is that ocean fishing has been increasingly shut out of the 200-nautical-mile zones, which has shifted to imports.

Stagnant fish prices, declining catch volumes,

Once processed overseas to a certain stage, it is conceivable that the products might bypass the wholesale market and go directly to major supermarkets. I feel that if the central wholesale market continues with its current business attitude, it might be in danger as imports increase. What are your thoughts on this point?

You are exactly right. I have seen in China that various things are taken to Southeast Asia and China, where labor costs are low, and produced in factories that have cleared HACCP and ISO standards.

In the past, most fish were delivered with heads and scales intact; now, conversely, 80% are fillets or cut pieces → ready to be eaten immediately.

Since fresh fish comes in many varieties from many different production areas, it is inevitably inefficient if it does not go through the central wholesale market. On the other hand, for processed goods, frozen products, and so-called salted and dried products, I think the weight of non-market distribution will continue to increase. The reason for this, and what I think will be the biggest bottleneck for the Osaka main market from now on, is temperature control.

Major retailers have hygiene management offices, and they come to check several times a year. Also, sometimes people from hotels, including the head chef, will suddenly bring someone along to perform such checks.

In 1971, the law was revised into the 'Wholesale Market Act' to create a broader legal framework that covered not only central wholesale markets but also local wholesale markets.

There is an increasing number of people who are transferring their businesses and quitting, or who want to quit in the future.

Looking at Japan as a whole, it is said that for both fish and vegetables, wholesale businesses with annual sales of less than 20 billion yen are generally operating in the red and are in a precarious position.

Therefore, it is usually desirable to have a management team of 10 or more people. Consolidations and mergers are also in line with this way of thinking.

Based on the current 7th Basic Policy for Wholesale Market Development, the barriers between wholesalers and intermediate wholesalers will eventually disappear. We may reach a point where it is acceptable for intermediate wholesalers to act as wholesalers, and for wholesalers to act as intermediate wholesalers.