Competitive strategy

<Lecture> 

Competitive strategy 

 

Session 3 : July 8 (14:30 - 16:30) 

Subject: 

Competitive strategy 

Case for the class discussion: 

"Mizuho Farmers Market" 

Assiqnments 

1. Mizuho is often described here as one of success cases. 

Supposing you accept notion, find out evidence that shows you the success. 

2. Analyse the backgrounds for Mizuho's success. 3. What do you think is a good strategy? 

Tsuneo YAHAGI ,Ph.D. 

Professor Emeritus, Keio University 

The Overseas Human Resources and Industry Development Association 

HIDA 

In Japan, it is said that there are about 16,g00 direct sales shops for agricultural products that are operated by various types of entities. One of their features that attract consumers is "selling fresh agricultural products at a cheaper price" and it is a common image of the direct sales shops among consumers. Under such situation, "Mizuho Farmers Market"; hereinafter referred to as "Mizuho") has achieved continuous growth of sales over 20 some years since its establishment in October 1990 despite their extraordinary high price setting. 

Mizuho is a direct sales shop for agricultural products operated by Agricultural Corporation Mizuho K.K. in Tsukuba City, Ibaragi Prefecture. 

The price of agricultural products mainly fresh vegetables sold at Mizuho's direct shops is 20 to 30% higher than the price at supermarkets located nearby, not to mention other direct sale shops for agricultural products. Even with such high price, annual total of 300,000 people have visited the tiny shop with its space of 300 sq meters. Additionally, as shown in the fact that 10% of the users come from the Metropolitan Tokyo, their repeated customers are not only local people in the same city or the neighborhood but also people from other prefectures. It is even included in a sightseeing bus tour. Thanks to the strong support from consumers as described abovc, Mizuho's sales have been in an upward trend from 100 million yen in the first• year (ending every July; the same shall apply hereinafter) to 700 million yen in 2010 (Figure 1). 

However, if we only see the amount of sales, there are other direct sales shops for agriculture products whose sales are larger. For example, "Ito Saisai" that is operated by JA Itoshima at Itoshima City, Fukuoka succeeded to be the first or second largest shop in terms of sales in only two years from its opening in 2007 with annual sales of more than 2.8 billion yen. However, when we look at producers who supply agricultural products to be sold at the shop, "The farmers who have supplied agricultural products to the shop do not always receive benefit from such sales. The number of suppliers is approximately 600 formers per day and some of them complain that 'sales volume per day is limited.' 'Ihe price competition is severe. The situation is clearly indicated by the comment from a man who supplies vegetables (aged 

62), saying with bitter smile 'Even if I make my best efforts, it is impossible to have the 

 

annual income of over 2 million yen a year"' (The Nikkei on October 7, 2009). 

Mizuho is different from other direct sale shops in this point. Agricultural products are sold at a high price at Mizuho and producers (Mizuho calls them as agricultural business managers) do not need to face the price competition. Average sales per producer (in 2010) were near 8.5 million yen and some of them reached sales of more than 20 million yen or more. This figure has continued increasing since the opening of Mizuho. It means that sales by producers have increased in tandem with the growth of the direct sales shop. The reason why many people involved in the management of agriculture business and corporate business have visited Mizuho every day may exist in this point. "In an era when farmers cannot live only with the agricultural income, it is amazing that sales by producers have increased" (by Nikkei Business, July 30, 2007 edition). 

Why can both the direct sales shop and producers grow together without having the price competition at Mizuho? The point everyone is focusing on is a unique business system called "Mizuho model" that is based on the management concept of President Hisao Hasegawa who is also the founder of Mizuho. 

1. Channel to Consumers 

• Features of shop 

Tsukuba City is located in Ibaragi Prefecture and known as a research and university town. The shop of "Mizuho Village Market" is located in suburbs with ample paddy fields and cultivated fields, about 10-minute drive from the central area of the city. The total floor area of the shop is 4,040 square meters and the shop area is about 300 square meters. It also has a greenhouse for flowers (shop), office, training center, and a soba noodle restaurant that used to be an old farmer's house in 160 years ago. The business hour is from 9 A.M. to 6 P.M. (or 7 P.M. in the summer season) and the shop opens 7 days a week except for two New Year holidays. Three main products sold at the shop consist of agricultural products (vegetables and fruits), flowers (flowering trees and seedlings), and natural foods under the slogan used since its establishment "Flowers are nutrition for mind, agricultural products are nutrition for body„ and non-additive-free foods are safe." Breakdown of sales is as follows (in 2010): 53% of agricultural products, 17% of flowers, and 11% of natural foods. Other sales such as those come from the soba noodle shop accounts for 19%. 

The shop for agricultural products that are the main part is a simple one-story building that was constructed at not more than 100,000 yen per tsubo (approximately 3.3 square meters) with waste lumbers. After parking a car in a parking lot, you can find a message with large characters "We Are the Producers and Have Pride and Passion as a Farmer" and a series of pictures of more than 50 producers are at the entrance of the shop. All the floors are earthen and the left side of the entrance is a room partitioned by a glass window that is a food processing kitchen where dumplings are made from brown and white rice. The right side is a cash desk where the POS system was introduced in 2005. 

Facing back to the front side and moving a little inside, you are now in the sales floor: natural foods are at the left side and vegetables are in the right side. As there is no high shelf, you can look over the entire shop; but you feel that the shop is not so large. Beyond the agricultural products shop is a greenhouse where flowers and seedlings are sold and you can see them through the glass. 

In the agricultural products sales floor, vegetables are located on a simple flat table rapped with a transparent bag having the "Mizuho Village Market" logo. There are no refrigerator shelves there that are common in an ordinary supermarket, which suggested that the vegetables at Mizuho are so fresh. 

Each agricultural product is sold with the name of the producer. For example, there are "Kataoka-san's Tomatoes," "Hirashima-san's Tomatoes," and "Iwasaki-san's Tomatoes." The price is 480 yen or higher per bag that include about 5 big tomatoes. As mentioned above, the price is higher than the market average. And in front of each tomato, bite-sized pieces for tasting are there. Customers can actually eat tomatoes to check whether it is delicious or not and also compare among Kataoka-san's, Hirashima-san's, • and Iwasaki-san's before choosing which tomatoes they buy. 

Other agricultural products are also sold under the same system: several producers, higher price, and tasting are the major features of Mizuho's sales floor. 

In general, when choosing vegetables at a super market, the only thing a consumer can evaluate is the extemal appearance such as size, color, shine, and freshness. On the other hand, consumers can try almost all the agricultural products at Mizuho before they buy, root vegetables that are hard to be eaten raw are simply cooked for tasting not to hinder their natural taste. The food processing kitchen located in the left side of the entrance also functions as a place for preparing a large amount of pieces for tasting.  

• 

•  Shop that chooses customers 

As President Hasegawa told at a TV program ("Cambria Palace" broadcasted on August 10, 2009 at TV Tokyo) that "Until now (consumers have) chosen agricultural products by price and volume, not their preference or quality. At Mizuho, we would like them to choose them by quality," users of the direct sale shop support the quality of the agricultural products, more concretely, taste. Vegetables at Mizuho are delicious. Although lotus roots and burdocks provided for tasting are simply cooked, just steamed and put with soy sauce. However, some of the customers ask shop staff members how to cook them. Even if the price is a little bit higher, provide high quality vegetables that the customer believes "only available here" and give an opportunity of choosing vegetables to consumers by supplying

the same type of agricultural products by several producers and by supplying trial pieces to obtain the understanding of the consumer; that is a style at Mizuho. 

Of course, not all consumers put emphasis on quality. Regarding this point, Mizuho's stance is that it only wants people who understand its concept and are willing to buy, and that it is not necessary for people to buy products at Mizuho with complaint. In other words, Mizuho's target is people who like the agricultural products sold at Mizuho, which is the reason why. there is no overlap regarding customers at a supermarket and other direct sales shops. 

Even with such a style, many people asked Mizuho to discount the price. In response to such request, Mizuho introduced the consumer membership system. "If we intend to deal with everyone, the quality of our produces would be down and farmers would start a discount competition. To avoid such situation, we had an idea to welcome only customers 

 

who did not complain about our price. (Snip) In other words, our basic policy is that it is the shop that chooses customers" (Hasegawa [2004]). 

More concretely, Mizuho issues a rewritable membership card to consumers who pay an annual membership fee of 1,000 yen and put the point equivalent to 10% of the purchase price in every shopping. The accumulated points can be used for the discount. Although it substantially means 10% discount, Mizuho does not do any discount other that this system, as it believes that treating consumers equally and fairly leads to the credibility.  

While it sounds arrogant to say that the shop chooses customers, the background is an attitude seeking to establish a trustworthy relationship. The membership system attracted repeaters and the number of consumer members increased from 300 at the start to 14,000 (Figure I), and the value of sales to the members accounts for 60% of the total sales. Mizuho also sends a direct mail to the members three times a year to announce events and a sales schedule, and also provide a premium service such as preferable treatment at the event and a present of seedling, which works as an effective promotional tool. 

•  Exchange with consumers 

In 1994 that was one year after Japan faced rice shortage, Mizuho set up a paddy field in Ginza, Tokyo for the purpose of increasing the public awareness of rice cultivation, which became a popular topic at that time. It also opened the direct sales shop at Ginza then, but its sales of vegetables were very sluggish with almost zero sales in the first two months. It was because the consumers in Tokyo had very. few knowledge on the freshness of vegetables. In the third month when the consumers in Tokyo gradually understood the deliciousness of fresh vegetables after eating the vegetables produced by Mizuho, sales skyrocketed. It means that even if a farmer provides high quality vegetables, these cannot sell well if consumers do not understand the value. For Mizuho, it is very important to have understanding and credibility of consumers. 

Although the best way to establish such relationship with consumers is through the products. and shops, Mizuho also provides other opportunities for exchanging with consumers. One of such opportunities is a seasonal event such as a rice production experience, a sunflower labyrinth in the summer season, and 'Narase-mochi" a traditional event in the New Year's holiday. 

The largest event is the "Mizuho Village Festival," a harvest festival in October. In this event, various programs are held such as the eating comparison between Mizuho's vegetables and imported ones, beef barbecue, and Soba flower picking. Such exchange event can be an opportunity for consumers to experience the agriculture and for producers who participate in such event as a staff member to hear a real voice from consumers. 

Additionally, Mizuho introduced the "Consumer monitor system" to obtain more directly the voice of consumers. 20 consumer monitors who are selected from the consumer members with two years tenure exchange opinions at the "Consumer monitor conference" meetings held four times a year with the producers, participate in the production field visit tour, and participate in the "Mizuho Village Festival" as a staff member. The Consumer monitor conference is a place not only for the producers to hear requests from consumers but also for consumers to learn about agricultural products and agricultural knowledge from the producers, functioning as an educational opportunity for both the producers and consumers. 

Evaluated for "their history of accumulation of trustworthy relationship between consumers and the producers and improvement of the awareness through close communications," Mizuho received the award for excellence at the 37th Agicultural Award Special Section 'the 4th Bridging Through the Foods Award" in 2008 that was sponsored by NHK and JA-ZENCHU (Central Union of Agicultural Co-operatives). The relationship between Mizuho and consumers is described as follows: "It is a unique group of the producers and consumers: using the direct shop as a place to meet people, the producers know the needs of consumers and consumers understand what the producers seek, and both of them nourish the trustworthy relationship through agricultural products at 

the direct sales shop, monitor conference, agricultural field visit tour of consumers, and various events" (Agricultural Corporation Mizuho [2010]). 

When the "Harmful rumor" on agricultural products spread due to the Fukushima First Nuclear Power Plant accident following the East Japan Great Earthquake on March 11, 2011, Mizuho quickly cooperated with Ibaraki University to conduct self-checking of the radiation dose of all the products, and took other measures such as public measurement and announcement of the measurement result at the shop and on its web page to obtain understanding and trust of consumers. As a result, although its sales were down by 60% compared with the average for a while, sales recovered in September, exceeding the performance from the year earlier. 

2. Channel with producers  

•   Management policy 

Management policy of Mizuho consists of the following three concepts (Agricultural Corporation Mizuho [2010]): 

1. The direct sales shop is a place where professional agricultural business managers compete for the "quality" of agricultural products; 

2. The direct sales shop is a place where the "Products" are sold at a price that enables the producers to re-produce the products; 

3. The direct sales shop is a place where the producers meet and exchange with customers who seek the true thing. 

Mizuho is the direct sales shop that strongly reflects the concept on agriculture held by

Hasegawa who is the president and also the founder of Mizuho. These concepts come from his own agricultural experience that "Farmers cannot make a living out of only agriculture" and his strong belief "to make the agriculture the industry." It means that Mizuho was established not only for succeeding in as a direct sales shop but also for fostering the producers who "can make a living only out of the agriculture" and revitalize the agricultural products. Thus, different from other many direct sales shops for agricultural products where most suppliers are farmers with a side job and small-scaled farmers, all the producers contracting with Mizuho are full-time farmers. 

When calling the member producers, Mizuho initially asked people who were famous as good vegetable farmers locally, not friends and colleagues. Why Mizuho focused on products, not people at the solicitation was that it had a strong belief "To protect the real thing." number of contract producers that was just eight at the start increased to more than 50, but it still accepts new member producers, especially those who produces items for which the number of contract producers are still small for the purpose of maintaining proper competition. 

Whether a new member producer is accepted or not is determined at the interview with president. In his judgment, it seems that he checks not only the quality of agricultural products brought at the interview but also the backbone and will that enable the producer to understand and follow Mizuho's policy and system. 

The price of agricultural products is determined by the producer at Mizuho. Although it is usually for industrial products, it is not common for agricultural products, as the price is usually determined at the wholesale market (auction) or by retailers. "Ihe price of agricultural products is set without considering costs although any agricultural products have a certain level of costs. That is the reason why the income of producers is not stable. Hasegawa insisted that ''Farmers cannot decide on the price of agricultural products and just supply them. It is- like an annual tribute, not merchandise" (Apicultural Corporation Mizuho (20101)." "Therefore, it cannot be an occupation" he added (Hasegawa [2004]). On the other hand, Hasegawa said "Many traditional farmers can do agriculture but cannot do the business" (Hasegawa [2004]) and asked the producers to have a management viewpoint, saying "For changing the situation, it is necessary to change the mind of farmers to that of managers" (Weekly Toyo Keizai, January 30, 2010 edition). 

Due to such reasons, Mizuho calls producers as "Agricultural business managers." Mizuho asks the producers to set a price that can generate an appropriate level of profit and to manage the agriculture business that enables "Re-productive" agriculture by investing the obtained income in the next harvest. 

•  Three rules 

"Mizuho Village Market" is a direct sales shop that sells high quality vegetables to consumers who seek the real thing at a price that enables the re-production. For this purpose, Mizuho asks the "Agricultural business managers (producers)" to comply with important three rules for the purpose of promoting the quality competition, not a price competition. 

(i) Pricing 

The price should be set by the producer based on the cost calculation. However, there is a rule that "A producer who starts newly providing a product that has already sold should not set a price that is lower than the price of existing products." In other words, if the first member producer of eggplant set the price at 300 yen, a new participant is required to set the price higher than 300 yen. It is to prevent a new participant from doing the price destruction and triggering the price competition. It is a rule established at the establishment of Mizuho. 

Mizuho intentionally invited several producers for one item. As they differentiate themselves not by price but by quality, they have to make efforts to improve the quality. If we describe it from the reverse side, as producers are not forced to reduce the cost excessively to win a severe price competition, they can make investment for better quality.While the price is almost the same among producers, some of them dare to set even a higher price. For example, in early summer 2012, six producers supplied tomatoes: Four set the price at 480 yen per bag, one at 540 yen per bag, and the other at 580 yen per bag. As indicated in the above example, Mizuho can provide high quality agricultural products at a price that is high but acceptable by consumers through friendly competition among ucers. 

2. Key money and penalty/reward 

The producers have to pay the key money annually depending on the sales period of the year. It is a rule established in 1998 and the amount of key money is 300,000 yen if a producer sells products throughout of the year. It should be paid at the beginning of the year and returned at the end of the year. The purpose of key money is to improve the awareness Of producers. According to Hasegawa's comment, "The awareness of one producer who pays the key money of 300,000 and sells products, and that of other producer who pays nothing and sells products have a large difference. The difference is more than 300,000 yen" (Weekly Toyo Keizai, January 30, 2010 edition). Producers who do not have a pride and preparation to pay 300,000 yen cannot participate in Mizuho. 

Additionally, another rule is attached to the key money. The annual minimum sales value and sales target are set depending on the key money. If the producer fails to achieve the minimum sales value, 15% of the shortfall amount should be paid as a penalty. On the other hand, if actual sales exceed the sales target, the producer can receive 15% of the excessive amount as a reward. As of 2011, the minimum sales value is 3.6 million yen for producers who sell products throughout of the year (key money of 300,000 yen), and the sales target is 11.5 million yen. Although "It is a severer system in terms of selling compared with other general direct sales shops" (Ohsawa [2009]), setting a clear target encourages producers to make more efforts and to find better ways, and train them to have a management sense by planning p10duction and sales based on the sales target. As a result, many producers have significantly increased their sales after this rule was introduced. 

3. Penalty on product management 

The producers at Mizuho are obligatory to recall agricultural products by themselves that are not suitable as merchandise. Most of them are unsold goods and actually lose their freshness. As Mizuho acquires the support from consumers by supplying the high quality agricultural products, it is not allowed to display such products at the shop. If producers fail to recall such products by themselves and the shop staff members recall it, the producers must purchase such products at a showroom price although these were produced by themselves. 

This rule was established in 2000 to prevent defective products from being sold to Consumers. Due to this rule, producers are very careful about the condition Of their products and give strong consideration on quality maintenance, leading to fewer claims from consumers. 

•  Face-to-face competition 

 

Mizuho organizes the "Mizuho Agricultural Management Conference" of which members are Mizuho itself and the contract producers (54 people as of 2011) where detailed rules and the adjustment of products for shipment and sales are discussed. The Conference has five sections ((i) Root crops, (ii) Vegetables/green vegetables, (iii) Fruits/fungus, (iv) Rice, and (v) Processed foods/stock breeding/flowers) and the members belong to a section to which their supplied products belong. If a member supplies two or more products that

categorized into several sections, the member belongs to such several sections. As the Agricultural Management Conference is not just a liaison organization but involved in the management and operation of various businesses such as the exchange event with consumers as described above, it helps to deepen the horizontal relationship among the producers who are rivals at the direct sales shop. 

The general meeting is held in June annually where the annual shipment and sales plan of the year is announced for all the producers, under which the producers produce the agricultural products. The plan is prepared based on production plans submitted by individual members and adjusted by discussion and arrangement in advance at each section not to experience stockout at the off-season. In Mizuho side, as it can know the plan in advance, it may easily respond to inquiries from consumers. In the producers' side, it enables them to landscape the agricultural management from a longer viewpoint and can

be used as a decision-making factor when preparing a new strategy. 

As the shipment and sales plan includes the expected shipping products, agicultural product type, the size of planted area, shipment period, and sates target of all the producers, it is clear who plans to sell what and when. More surprisingly, not only the sales target but also the sales performance of all the producers is disclosed. Every member knows who increased sales and who paid the penalty due to failure of the target achievement. 

On the other hand, while each producer was responsible for making an independent effort to improve the cultivation management technology of agricultural products, it became a more important issue to produce the best product efficiently as the sales at Mizuho expanded. As a result, producers have made an organizational effort to improve the production technology that is led by Mizuho. 

In 1999, the compost center was established to make original compost and to improve the soil itself in the field, and the soil analysis and the fertilization plan based on the analysis started in 2003 to introduce more scientific viewpoint. Furthermore, Mizuho was the first direct sales shop in Japan to obtain the JGAP group certificate in 2008 that is a safety certification system of use and management of agrichemicals and process management such as handling of seedling, soil and post-harvest. Mizuho also introduced the technology for analyzing the growth level of the products as well as take various measures to achieve the improvement of comprehensive cultivation management. 

As mentioned above, producers at Mizuho do the "face-to-face competition" for jointly brushing up their skills in an open atmosphere where information on each other .is completely open. 

3. Growth of producers 

•  Direct sales shop where producers can make profits 

As shown above, various rules and strong quality competition are imposed on the producers at Mizuho. It looks very hard to be a producer at Mizuho. In spite of the above, why do the producers still supply products to Mizuho? One of the producers answered clearly, saying "It is more profitable to sell at Mizuho." 

Table 1 shows the difference between the case where agricultural products are shipped under the "Market distribution" that is the most common dis&ibution system of agricultural products, and the case where agricultural products are sold at Mizuho. If sold at Mizuho, the producer pays 15% of the sales price to Mizuho as a sales commission fee and also incurs the cost that is equivalent to the points given to consumers. Remaining 75 to 80% is a profit received by the producer.

 

On the other hand, if a producer sells products to a wholesale market through the Agricultural Cooperatives, the producer receives only 20 to 50% of the retail price. Furthermore as the price at Mizuho is 20 to 30% higher than the market price, the profit obtained by the producer is extremely higher than that under the market distribution system. 

For example, if a product is sold at 100 yen at a retail shop under the market distribution system, the profit received by the producer is 20 to 50 yen. On the other hand, if the producer sells the same product at 125 yen at Mizuho, the profit obtained by the producer is 93 to 100 yen. Additionally, while the price fluctuates depending on the market condition under the market distribution system, as the price at Mizuho is fixed throughout the season in principle, sales are stable and the producer can easily make a plan. 

The market distribution puts emphasis on a stable supply and adopts the "Joint Selection and Joint Sale" system that is based on the size and shape. Thus, even if a farmer produces a vegetable that is remarkably superior to the "A-ranked (top rank)" product, the price is the same as other A-ranked product. On the other hand, as clearly shown in the tasting system at the shop, "Taste" is the most important factor for evaluation at Mizuho, and the Product can be sold even at a higher price if it is very delicious. Therefore, producers hope to make many high quality agricultuial products and sells as much as possible at Mizuho. It is in contrast with some cases of other direct sales shops where the shop is used as a distribution channel to sell non-standard products that cannot be priced at the market distibution system such as bad shaped vegetables. 

Some of the producers at Mizuho use a unique fertilizer made from sea weed and coral, and others sprinkle expensive deep ocean water or wood vinegar liquid for improving the quality. It means that they are rewarded even spending such a huge cost. As shown in the fact that the producers at Mizuho sometimes stop supplying products if they are not satisfied with them, their pride in the quality is also very high. 

However, the awareness among the producers was not so high from the beginning. Hasegawa told us that "1t was very hard to make farmers understand that they could price and sell the products" and ''It took-five to six years for this system to be understood" (Saga Shimbun on November 9, 2011). "It is very hard for people who have sold products under the market distribution to understand the 'Mizuho Quality' and a new participant is often wondering why their A-ranked products did not sell well at Mizuho." This episode symbolizes the fact how the Mizuho system and the market distribution system are different for producers. 

The rules to raise the level of producers through quality competition would be regarded as too stringent if the producers cannot understand the background concept, and it would be 

very hard to make them understand the significance. Honestly speaking, when the key money system was introduced in 1998, some of the producers left Mizuho with anger. However, one Of the farmers who left at that timing "re-entered Mizuho after three years. When the farmer competed with its rival under the key money system, the annual income increased to 4.2 million from 3.2 million. The annual income of the rival was also up to 8.5 million yen from 5.6 million yen" (Weekly Toyo Keizai, January 30, 2010 edition). 

The reason why the direct sales shop and the producers together have developed is a step by step effort by Mizuho: Mizuho encourages competition with a good balance of rules that are strict for but cannot be deeply opposed by the producers, leading to a good performance, and gradually improves the awareness of the producers. To achieve the success under the Mizuho system, a skillful control between rigidness and softness is required. 

• From producers to business managers 

As sales at Mizuho increased, awareness and action of the producers changed: "The agricultural structure of each producer also changed and we have seen that some of them 

have shifted to a model that enables to increase sales more efficiently as a system jointly linking production and sales" (by Ohsawa [2009)). 

For example, while producers at a general direct sales shop for agricultural products tend to produce various types of products with small lot, the producers at Mizuho tend to concentrate on a fewer types of products as their sales increase. If one producer produces several tens of products and also tries to increase sales, the quality of individual product may deteriorate, leading to a decline of sales. Based on that fact, the producers focus on a few major items and improve the cultivation skill for better quality or stable production. It is a so-called "Choice and Concentration" system to seek better efficiency. 

Additionally, as Mizuho adopts the POS system that enables to check the number of Products sold and sales value of each producer. Such data is reported it 4 times a day to a mobile phone of the producers. If the producers wish, the fax is also transmitted at 4 P.M. every day. Although the POS system was established to prevent stockout, some of the producers do not check the information so frequently. One of the producers said that as he had shipped to Mizuho for a long period of time, he could estimate the supply-demand trend. Even if his products are sold out at an early hour, he does not supply additional products. Actually, many popular vegetables are often sold out at around 3 P.M., the producers knows that the total performance is better if they continue harvesting and supplying products as planned rather than shipping additional products by harvesting more than planned. As mentioned above, the producers at Mizuho have grown to the "agricultural business managers" from farmers, leading to further quality improvement and establishing the ''Mizuho brand." 

In the general retail system of agricultural products, products shown in a shop are chosen by a retailer and price is also set by the retailer. The retailer is responsible for what kind of

product is bought, how the products are managed, and how much it is sold. On the other hand, it is a responsibility of producers at Mizuho to make a sales plan, do quality 

 

management, and determine the price. It is consumers' discretion to determine what product they buy from which producer. What Mizuho does is not to choose high quality agricultural products at a market but to foster producers who can produce high quality agricultural products and attract consumers who can distinguish such high quality agricultural products. 

As shown in Figure 2, the role of Mizuho is to intermediate such producers and consumers. In other words, Mizuho provides the best "stage" where the top-class "agricultural business managers" compete for the quality of agricultural products and meet consumers who seeks the real things. 

 

However, as the profit gained by Mizuho seems not so large. As described above, if a producer exceeds its sales target, of such exceeded amount is paid as a reward. Although the target is set a level that cannot be achieved easily, it means that Mizuho exempts the sales commission fee of 15% that is a major profit source for Mizuho for the products that are sold in excess of sales target. Hasegawa said "Mizuho does not seek the profit. Our benefit is how many farmers can be a business manager" (Weekly Toyo Keizai, January 30, 2010 edition). 

•  Toward Further Development 

Mizuho opened a franchise shop at Ushiku City, Ibaragi in October 2010, and a direct shop at Mito City in November 2011. The important thing is to share the "Policy" of Mizuho. Of course, agricultural products in each new shop are supplied by not the producers at Tsukuba but local producers. Although Mizuho has accumulated Imow-how at Tsukuba, it needs to teach the "Mizuho quality" to local producers from thé start. Sales target at Mito 

 

shop is 100 million yen in the first year and 300 million yen later. 

On the opening day at Mito shop, although a huge number of customers visited there in spite of rain, many of them did not buy products even after checking them; and result was dismal as sales were 60% of the target. In two weeks after the opening, sales targets were achieved only two days. Local producers were urgently called for the meeting where the agricultural technology instructors at Mizuho pointed out the quality of the agricultural

products. With unripe green tomatoes and Japanese radish with a worn-eaten spot, consumers who expected Mizuho's quality were not satisfied with them. However, Hasegawa assumed such a situation. After one month from the opening, he said that "It is very hard to give the farmers 'the pride that does not come from sales volume.' One month is too short to have some results" (NHK On-Line "SakidoriP'). 

Mizuho has a yeat plan to "Expand the (Mizuho's) system to nationwide and develop the agriculture as an 'Industry' that is responsible for production and distribution of agricultural products mainly with the efforts by direct sales shops" (Agricultural Corporation Mizuho (2010)). If Ushiku and Mito shops make success, these will be a bridgehead for Mizuho. Is it possible to expand the business system that has been established and developed in a regional area, Tsukuba, beyond its area and organization? The challenge of "Mizuho Village Market" now enters in a new stage. 

(Hidetatsu Kikuchi)