This paper proposes that, given the liberalization of agricultural products imports, agricultural cooperative marketing turn attention to commercialization of lower-grade produce. Due to the opening of Japan to apple-juice imports, the market for lower-grade apples has been shifting from a processing market to a fresh apple market. This makes fresh apple prices fall. Moreover, when local producers ask only the wholesale market price for these lower-grade apples, this contributes to the creation of a depressed fresh-apple market. It is therefore necessary to find new commercial outlets (niches) for these lower-grade apples. In Aomori Prefecture, the quantity of apples sold through the agricultural cooperatives is increasing. In addition, lower-grade apples tend to gather in the hands of the agricultural cooperatives, thus affecting their competitive position vis-a-vis private brokers. Therefore, it is clear that one of the challenges facing agricultural cooperative marketing today is finding new markets for lower-grade apples. The example of the Tsugaru Hiraka Agricultural Cooperative is taken up as a case study in the second part of the paper. The Hiraka Cooperative has strengthened its physical distribution function, and by moving lower-grade apples into various markets, has brought about advantageous results for its growers. This shows that it is possible for an agricultural cooperative, by adapting an assertive strategy, to find new commercial outlets for lower grade agricultural products, and thereby bring about realization of profits for the grower. The paper concludes by noting that in this era of import liberalization, agricultural cooperatives should not neglect the commercialization of lower-grade agricultural products, and should commercialize all grades of goods to the advantage to producers. This, in turn, will help agricultural cooperatives realize greater profits for their member growers.
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