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Setting Up a Market Information Service

Developing an efficient, relevant and sustainable MIS is far from easy. While the benefits of such services appear unarguable, the failure of many countries to operate reliable, accurate and lasting services does question the wisdom of promoting MIS in all circumstances. Attention needs to be paid to the capacity of the country and the counterpart organization to operate a service, both in terms of technical capacity and in terms of ability to meet recurrent costs. Institutional arrangements need to be closely examined and the potential for private-sector involvement should be investigated. Basic steps can be taken to avoid some of the obvious problems. The greater the level of research at the beginning, the more likely is the MIS to prove valuable to its target users. Tailoring the size and scope of the service to available budgetary resources is likely to result in greater sustainability. Ensuring that all operatives are fully trained should result in a more accurate MIS

An economic solution to the problems of sustainability many MIS face would be to oblige users to bear the costs by charging for the information. However, particularly in most developing countries, produce is mainly offered by farmers in small quantities. Such farmers lack information and are in a relatively weak bargaining position. It is neither feasible nor necessarily desirable to charge them for information. Thus, the vast majority of Market Information Services world-wide are run as free public services. Market information is seen as a public good, i.e. something like roads or clean water, which should be made available to all, not just those willing and able to pay.

While public services can, to a certain extent, go commercial by attracting advertisements and sponsorship, it is unlikely that many will be able to fully cover their costs, let alone make a profit. Thus, opportunities for private provision of market information, of the type described in this paper, are probably few. Private Market Information Services appear to work best when they are able to use already available information; dissemination costs being usually a good deal less than collection costs. Thus, as mentioned in Box 4, private services in South Africa can access the databases of the wholesale markets.

The FAO survey found numerous Market Information Services that had been established by donors, but had subsequently run into problems once the donors had left. Recognising the very real problem of low Government salaries in many countries, donors have often paid salary supplements to MIS staff. Unfortunately, when the donors leave so, if they can, do the staff who are unwilling to return to lower government salaries. Thus an efficient, donor-supported MIS can often be illusive, as salary supplements and other benefits are often the main reason for maintaining staff morale. Housing an MIS in an autonomous body not subject to government salary controls may avoid this, although the problem would still remain of how to generate sufficient funds to pay for its operation.

In theory, no MIS should be planned without a detailed understanding of how the marketing system works. Developing such an understanding does, of course, assume that there is a marketing system in place to understand, which in the case of some countries undergoing marketing liberalisation may not be the case. However, in normal circumstances a detailed survey of the marketing system should be undertaken in order to assess information requirements of each category of participant in the system. These include farmers, traders and commission agents, exporters, retailers, consumers, extension services and government departments. The survey should try to identify the type of information each category requires, the form in which the information should be presented, the frequency the information is required and the times of the day when dissemination should take place.

The role which an MIS can play will depend on the way in which the marketing system functions. Research is essential as there are almost as many marketing systems as there are countries and it is therefore not possible to specify a “model” MIS. It is necessary to have information about the flow of products between farm and market and between markets as well as about the functions of the various intermediaries. It is essential to know how prices are determined at each stage of the marketing chain and the qualities and quantities being traded. It is, of course, vital to know what weights and measures are being used, both to plan accurate data collection and relevant dissemination.

Products and Markets

The golden rule should be to start on a small scale and work up as resources permit. For instance, depending on the analysis of the marketing system, it may be desirable to initiate a service with information on prices in a few important wholesale markets, gradually expanding to include other wholesale centres and some assembly markets. When donor assistance is not used it is perhaps easier to avoid the trap of trying to do everything at once. When donor help is available, not only do the donors tend to want to develop impressive services but the recipients also want to take advantage of the assistance while it is available. This is understandable because, if a gradual approach is adopted, the donors may not be around when it is time for expansion.

Tanzania collected data for 27 commodities from 45 centres. Many of these prices were never used. Ghana collected prices from over one hundred markets. In responding to the FAO survey the Ministry of Agriculture reported that it had stopped training field staff in data collection, for lack of funds. It still has over one hundred full-time employees. Thus the more markets covered, the more likely it is that an MIS has an unmanageable amount of data to handle, staff whose salaries cannot be paid and whose training cannot be afforded.

Crops to be included in an MIS should be those which are commercially important. In some cases this will include more than one variety (e.g. red and white onions). The tendency to want to maximise the number of crops in order to build up a strong statistical database should be resisted. As the number of crops covered increases costs rise, with minimal extra utility, data collection becomes more complex, data transmission and processing becomes slower and information dissemination on the radio takes longer and, for the bulk of non-farming listeners, becomes more boring.

Market Information for Consumers

There is a school of thought that MIS should pay much more attention to the information needs of consumers than has hitherto been the case. Examination of the feasibility of this does need to be carried out but there are several reasons for believing that a consumer-oriented service would experience difficulty in providing useful information. Firstly, an MIS which is oriented to the needs of farmers and traders will concentrate on assembly and wholesale markets. Prices from such markets are of little interest to consumers and thus an MIS seeking to assist consumers would have to carry out parallel price collection activities in retail markets. This would significantly increase costs although, on the other hand, it may be easier to attract sponsors for retail price information provision.

Secondly, information collected from retail markets may not be of much use to the bulk of consumers. In a city of 10 million people, for example, there will usually be a large number of retail markets. Prices in these markets will vary according to the distance of the market from the source of supply (usually the wholesale market) and according to the quality standards in the particular market which will, in turn, be determined by the purchasing power of the neighbourhood. Moreover, many consumers do not buy at retail markets but make their purchases at local shops, which have different pricing structures to those of markets. Under these circumstances it is difficult to see how an MIS could broadcast useful prices for consumers, who would be far more likely to obtain information by comparing prices among local retailers than by listening to the radio.

Where an MIS could perhaps provide a useful service to both consumers and farmers is by occasionally highlighting products which are in glut and should therefore be good value. Low farmer prices caused by gluts are often fairly slow to translate into low retail prices. Publicity about crops which should be cheap may encourage retailers to reduce prices and thus increase consumption.

Collecting Information

In some circumstances it may be possible for the trade itself to take responsibility for price collection. It has already been noted that some markets make available information on daily transactions. Such information can either form the basis of an MIS operated by the market itself or used by a governmental, semi-governmental or commercial MIS. It is also feasible for information to be provided by market traders through, e.g., traders’ associations or chambers of commerce or agriculture. However, any MIS using such information from the private sector would need to build in checks for accuracy, given the possibility that some traders would wish to bias information to their perceived advantage. Nevertheless, the lack of resources experienced by many governments suggests that, in future, alternatives to the standard design of an MIS will need to be considered. One of these could be a service which does not collect primary data but receives information from a variety of sources for subsequent dissemination to users.

While in some countries grain market prices can change quite rapidly in, for example, situations where urban storage is lacking and roads are blocked, the normal pattern appears to be for relatively small daily price fluctuations. This is primarily because grains are harvested, processed and subsequently stored and thus daily supplies to the market are not subject to the vagaries of climate, perishability, etc. Prices of non-grain staples can, however, change more rapidly, particularly those of fresh cassava which is highly perishable.

Data should ideally be collected during the peak trading period for each market. In practice, many MIS will find it difficult to adhere to this rule. For example, paying staff overtime to work very early in the morning may increase costs unacceptably. Also, collecting data at the ideal peak time may cause problems with ensuring timely information dissemination. If the best time for disseminating information is early in the morning it may be preferable to broadcast the previous evening’s market prices rather than the previous morning’s. Where the peak market period varies according to location, it may also be necessary to make compromises with regard to the time of collection in order to accommodate radio schedules.

It was stated above that an MIS needs, at an early stage, to decide on the crops to be covered. It also needs to decide on the varieties which are to be reported on because in many cases there will be significant differences between prices for different varieties. In much of Africa, for example, there are many different types of bean available, all of which command different prices. An MIS which simply reported on the daily price of “beans” would have no significance for farmers or traders and would rapidly come to be viewed as irrelevant. If resource and other considerations limit the number of crops that can be reported on, then it is essential to select the most important varieties of each product, to the exclusion of the others, and name those varieties when the prices are disseminated.

In a large number of countries the marketing systems do not use standard weights expressed in terms of kilograms. Farmers sell, and traders trade, by the bag, carton, box, bundle or tin. At the retail level, sales are often made by the “heap” with supply and demand conditions leading to changes in the size of the heap rather than changes in its price. Under such circumstances the provision of accurate and meaningful market information can be very risky, particularly where participants in the marketing system have no concept of standard weights.

Attempting to change time-honoured marketing practices in order to facilitate the operation of a Market Information Service would probably be an exercise in futility. The adoption of weights for trading purposes is only likely to take place when the participants in the marketing system see a need for it. Where farmers and traders fully understand units of weight (i.e. kilograms) then it should be possible to disseminate information about prices on a per kilogram basis, although care must be taken to ensure that conversion rates from trading units to kilograms are accurate.

Disseminating Information

The media must be relevant to the user of the information. For example, confining information to newspapers is pointless if many farmers are illiterate. It is insufficient just to arrange for radio or television broadcasts or newspaper columns and then sit back and think dissemination is taken care of. Considerable attention needs to be paid to the way in which the data is presented. In newspapers, the layout is very important, and comprehension can be greatly improved with the use of graphics. On the radio, the reading of long, boring lists of prices can rapidly reduce the audience. Radio broadcasts could concentrate on the most important crops and/or on crops where prices have changed significantly. Newspapers can be used to give more comprehensive information. Price broadcasts should be interspersed with some analysis of market conditions and opportunities.

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