Handing selling to Mitsui, and forming a joint sales association with Nisshin (1930)

The five years in which the counterparty setting prices moved from the market to the association

Of the ¥200,000 funding the milling joint sales association, Nippon Flour Mills’ share came to only ¥50,000. That is half of Nisshin Flour Milling’s, and the same amount as Mitsui & Co., which handled the sale of its own products. While the two firms split more than 80% of the industry’s capacity between them, the company’s standing within the joint-selling framework was not equal. It entrusted selling to Mitsui in May 1927, agreed prices with its competitor in October 1928, and joined a joint selling body in April 1930. All three steps whittled away its own room to set prices, and at that point there appears to have been no path left to absorb excess capacity through its own selling strength.

But the five years in which the association supported market conditions were not five years in which Nippon Flour Mills recovered competitiveness. What led the association to dissolve was not a rebuilding of its own sales but external change — the rise in prices after the Manchurian Incident and the surge in exports to the continent. That Masuda Flour and Osaka Flour in Kansai never joined also shows that this framework could not discipline the whole industry. The era of voluntary agreement ends too, with the ministry’s notice setting a maximum selling price in January 1940. This decision can be placed at the entrance to a process in which the counterparty that set prices moved from the market to the association, and then to the state.