Hokusho.jpg 
16
BUBBLE PHENOMENON IN THE FISH MARKET

The story must go back a little bit.
I suppose that I should mention about the Hokushou
bankruptcy in more detail. The reason why I thought like this
is because the Japanese fish business world has always been
in a state of depression ever since I had started to work there,
and the Hokushou scandal was quite important to understand
the causes.

Nevertheless, fish distribution works by market prices.
As I wrote before, perishable fresh fish or processed food
like herring fillets are put on auction everyday and their daily
market prices get determined.
Frozen fish products don't depend much on daily auctions.
Situations like the season's whole fishing catch, the economical
state of the market, are the major causes of the market prices
or prevailing prices throughout the market.
Intentional movements of stocking and distribution also
make up market prices.
Besides these three market prices mentioned here, there
are fixed prices relied upon different types of distributions.
The "delivered-straight-from-the-sea" type of sales which
connects producers directly to consumers takes advantage of
the copy that they eliminate profits of middlemen. This is the
main strategy of supermarkets and Co-ops in Japan. Though,
the fact should not be forgotten that this kind of price deciding
system is also under the influence of the market price system.
Not any type of fish price deciding system exists only by
itself. They all have influence on each other.
For example, let's forget about the prices for a moment
and talk about the fish itself. At first, fish were all fresh. It's
the producers option to sell the fish in any type of production:
fresh, salted, dried, frozen. At the same time, it's the con-
sumer's option to choose any type of production. Producers
and consumers can both choose the distribution they want to
sell fish to, or buy fish from: that is, sell to or buy from
supermarkets; Co-ops; small retailers; and so on.
So, there are many possibilities of prices for one fish to
have.

The Hokushou scandal would not have happened if not for
the speculation in herring roe stocks. But it is also true that it
would not have happened if not for it's failure. If not for it's
failure, it would have ended in just plain business.
The herring roe sales at the end of 1979 had been strange
already since October.
There was a lack of No. 1 grade herring roe, which was a
price leading factor for high prices, but not too serious. In
October, major Japanese department stores start showing
samples to their customers, preparing for the December New
Year's gift season. At that point of time, herring roe prices
boomed up rapidly.
The price at that point was 12 thousand yen per kilo.
The price was high but in contrast, the sales were not
actually active at all, so everyone thought that no such level of
price would survive until the main season of consumption,
December.
The majority of people involved in the fish business waited
for a fall.
But against their expectations, market prices started to rise
up higher.
From the nature of the case, there had to be some trading
for prices to rise, but no one in sight seemed to be active about
herring roe. The seller and buyer were invisible. Only the
price alone was going up.
If the year had been an usual one, herring roe prices
probably should have been about 4-8 thousand yen per kilo in
December, when the demand is strongest.
But in 1979, it climbed up to 20 thousand.
Even now, it is still the highest price recorded so far.
At the Tukiji Wholesale Market, all the middlemen were
astonished. It was not a game that they had played -- but only
one middleman was deeply involved in the high prices. The
middleman was Tukudaichu (Tuku-big-faithful). After the fall,
Tukudaichu believed that everyone had tricked him but that
was not the truth.
Most of the other middlemen protected themselves from
an unpredictable fall that would have happened at any moment.
They bought only the herring roe they needed temporary, on
daily bases.
The cause of the up-going of herring roe was a corner made
by Hokushou, Mitsubishi and Dougyoren.
Although, the speculation ended up in an absolute failure.
Herring roe met a boycott by consumers in December,
triggered by a scandal of Dougyoren that there had been
financial fake tradings concerning herring roe.
December is the one and only big sales chance for herring
roe since the food is a very seasonal item. Hokushou, Mitsubishi
and Dougyoren ended up with a huge dead stock of herring
roe at the end of 1979.
In January, 1980, as soon as the New Year's holidays ended
and business started moving again, Hokushou failed to pay a
business check and went bankrupt.
This bankruptcy influenced all the Japanese fish business.
Not only herring roe, but prices of all other kinds of fish
dropped. No one in the fish business was able to avoid the
influence of this depression.

The Hokushou bankruptcy seems to me very similar to the
recent burst of the Japanese bubble economy. Let me compare
both in four of the following stages.
At first, there were major causes of prices to rise between
both of them: the so-called Great Sea Grab of the 1970s (many
nations unilaterally extended their territorial seas to 200 miles),
which had shut out Japanese fishing boats from many fishing
grounds and lessened the Japanese supply of fish than before;
and money flooding into the stock market, which was derived
from the Japanese world largest trading surplus.
Secondly, there were intentional movements in both of
them to skyrocket the prices: Herring roe cornering; and high
prices made up by stockjobbers to invite many amateur
investors in the stock market.
Thirdly, a collapse occurred: the scandal of Dougyoren
managing fake trades led to consumer boycotts; and the scandal
of stockbroking companies making up major customer losses
led to withdrawal of amateur investors.
Finally, prices dropped : piling-up of huge herring roe dead
stocks led to the Hokushou bankruptcy and fall of entire fish
market prices; stock market prices started to fall endlessly.
Trading in fish and common stocks are similar because
they are close to nature. Both are dubious trading of the
capitalist economy, but speculation in fish is more sinful since
bonds are made of paper, but fish are raw and perishable.
Naturally, a good fish dealer hates to speculate in fish.
Although, in cases of intentional price leading, which are
derived by adjusting delivery, are hard to tell wrong or right.
Even today, Toyo Reizo, a subsidiary of Mitsubishi, hold
large amounts of frozen tuna in super high potential refrige-
rators, and depending mostly on market prices, they decide
daily amounts of delivery. This has a large influence on the
whole tuna market and brings them the power of leading the
prices among the market.
Whether this kind of function is useful for society or not is
a question hard to answer. Whether price making is for profit
or stabilizing prices, depends on the situation of the market
and the way people look towards it.
Speaking generally, worlds of businesses are small ones.
You walk around and meet the same faces; hear about familiar
names. Furthermore, today, the long economic depression has
made systematization of enterprises and concentration of
business a social trend.
Under this situation, exclusive business behaviors have
become easy to be born. Up-going delivery costs work favour-
ably for big businesses.
The question is, how the market prices would be decided
when a monopoly type of society is realized. I suggest that
we will have to keep an eye to what may happen.

[back