Spatial distribution of fresh vegetable prices in Japanese wholesale markets under a nationwide vegetable distribution system of monopolistic producers: Case study of summer Chinese cabbage produced in Nagano prefecture

Abstract

This paper examines how the nationwide distribution system for summer Chinese cabbage produced in Nagano prefecture influences the spatial price difference in wholesale markets. Macro data analysis yielded two main results: 1) There is a strong correlation between transportation cost and the regional average price. 2) Within a region, if the costs of transporting goods from Nagano to the wholesale markets are the same, Chinese cabbage prices in large markets are close to the regional average. However, the prices in small and medium markets are negatively correlated with quantity. These results can be explained using three points, which were derived from interviews with wholesalers and JA Zenno Nagano, which is a major economic agent within the distribution system. 1) JA Zenno Nagano provides a pricing guideline applied to all transactions in the nation. Therefore, the average wholesale price within a region is strongly correlated with the cost of transporting goods from Nagano. 2) Small and medium markets refer to prices in the large markets. Therefore the prices in large markets are closer to the regional average price. 3) The negative correlation between wholesale price and quantity among small/medium wholesale markets is caused by two factors: higher costs of transporting goods raise prices in small-scale markets if they do not have direct access to JA Zenno Nagano: and small markets tend to deal with relatively high-quality Chinese cabbage to sell to local supermarkets. Therefore, the average Chinese cabbage price in small markets is higher than that in medium-scale markets.