Changing Values Served By the Wholesale Market System: A Case Study of Japan's 2018 Wholesale Market Law Amendment
- Background
Japan's modern wholesale market system was first established by the “Central Wholesale Market Act” (old law) in 1923. In 2018, a new law was enacted that fundamentally transformed the wholesale market system.
- The system and farmers
The old law of 1923 was enacted in response to the inflation and food riots that accompanied WWI. It was seen that wholesalers were making exorbitant profits, and that producers and consumers were suffering as a result. For this reason, the old law aimed to balance public interests such as stable food supplies, fair trade, producer protection, supply and demand adjustment, trade facilitation, and the efficiency of food distribution. Wholesale markets were established and managed by local governments, and the transactions of wholesalers operating in the markets were subject to certain regulations stipulated by law. The two-tiered system that strictly divided wholesalers into two phases within the market, the emphasis on auctions, and the existence of powerful agricultural cooperatives were all measures that contributed to the protection of Japan's generally small-scale farmers. Since the 2000s, there has been a movement among organic vegetable producers and others to penetrate wholesale markets to expand distribution, and it is thought that this is because the wholesale market mechanism, which is suitable for small-scale farmers, is also suitable for alternative foods.
- Impact of the new law
This report describes the characteristics of Japan's wholesale markets (which are similar to those of South Korea and Taiwan), including the two-tiered wholesale system and the auction system, and analyzes how the new law, which focuses only on economic benefits and ignores the wholesale market's nature as a public infrastructure, will affect the values of the old law.