Question 4: Market information - data on impact

Michael,

You raise a really important question.  Given the proliferation of m-based agricultural MIS in many countries, we should be asking:  What is the impact of these services on people's lives?  (Traders, farmers and consumers?)  ?  And what do we mean by impact?

There are now four rigorous (independent) studies that try to address these very questions.  The studies span the globe, with two from India (Fafchamps and Minten; Mitra, Mookherjee, Torero and Visaria); one from Colombia (Camacho and Conover); and one from Niger (Aker and Fafchamps). Overall, three of the four studies measure the impact of mobile phone (SMS) based market information systems on farmers' well-being (prices received, crops), as compared to farmers who do not have access to the service.

While the programs and results differ across the studies, in general, the bottom line is the following:  1) access to price information via mobile phones reduces price differences across markets; 2) this reduction in prices doesn't necessarily translate into higher (farm-gate) prices for farmers; but 3) in some cases this allows farmers to have fewer losses or face less price variation over the year.  So, in general, these projects make markets work better (which is good for development), but they aren't always leading to improved well-being for farmers in terms of higher incomes (which is okay, unless the primary objective of the project is to increase farmers' incomes).  

Why do the authors see these effects?  The reasons vary across the studies and contexts, but in general, they are due to a variety of potential reasons, depending upon the context -- low take-up of the service; non-competitive markets (so even if farmers know the prices, they don't have much bargaining power); and 3) credit constraints (again, even if farmers know the prices, they are credit constrained and need to sell anyway).

Overall, I am not too surprised by the results of these studies.  We know that mobile phones can really reduce communication costs, which is wonderful in contexts that have limited infrastructure (power, roads and landlines).  And while providing information via mobile phones can overcome an important constraint for many farmers, information is necessary but not sufficient to improve farmers' well-being.  Other things -- like credit, more competitive markets -- are required.

As we move forward, I encourage us all to continue asking whether our m-based MIS projects are having a positive impact upon people's lives as compared with the traditional way of doing things.  If they are, great.  If they aren't, then we need to understand why and improve such projects.  But in order to answer these questions, we need to have a good monitoring -- and evaluation -- system in place, at least in the first few years, to ask (and answer) these hard questions.

 Allow me to introduce myself as Kiringai Kamau, Value Chains Analyst and Knowledge Specialits at VACID Africa Institute (www.vacidafrica.or.ke).

The challenge of data on impact is a subject that has been close to me for sometime. I have studied and researched on it. I have developed techologies to fit to my thinking that what we lack are systems to measure produce collection but it was not until I figured out that the owner of the produce collected needs to aggregate the data as they aggregate the produce that my modeling changed.

Now I am wiser and I have started a journey that I need partners to walk. I decided that what I need to create are data aggregation centres which are themselves consumers of the same data. The centres have come to be dubbed Value Addition, Agribusiness and Knowledge (VAAK) Centres. I intend to create a network of VAAK Centres comrising of service providers who will be housed at the VAAK centres. The service providers will then act as the data aggregators and can be tasked to enumerate the impact of the respective value chains.

This of course is only starting and needs to be supported. I am currently doing some work on aquaculture, and bananas in a World Bank supported project of the Kenya government and will use this as the basis of gathering more data for use. 

Are mobile devices going to be used to collect data? Yes. Indeed. We intend to use the mobiles to mobilize the producers for meetings, for training, for information on the market and on payment when the prodeuce has found a buyer or when a bidder seeks to collect produce.

At the end of the day, we intend to show that with the right organizational framework, you can map processes and systems which will help in measuring impact. 

If you are interested in this effort...drop me a mail at [email protected]

As Jenny Aker says, there's more data than you might think on the impact of agricultural market information systems. In Module 9 of the ICT in Agriculture Sourcebook, on page 208 (see: http://www.ictinagriculture.org/ictinag/sites/ictinagriculture.org/files/final_Module9.pdf) there is an aggregated summary of around a dozen different impact studies, showing the impact on prices for farmers, traders and consumers.

But there is a bigger issue here which I would summarise as "Why are mobile agricultural information systems not scaling up as expected?" The reasons for this are complex, but I think they have to do with fragmentation of the market -- by mobile operating system, by crop type, by system, by periodicity of information etc. These type of fragmentation issues are typical of relatively less mature markets and I think we will see better growth prospects once consolidation in the marketplace occurs

In writing the chapter on ICT and agricultural marketing in the source book, we were determined to really focus on results, as to date the sector appeared to be operating on assumption rather than knowledge. We needed to, firstly, better understand whether these technologies were actually delivering the results that their exponents believed, and secondly to provide a sense of what technologies appeared to be the most effective.    As Tim has pointed out earlier,   we did unearth a number of studies which have demonstrated a range of both quantitative and qualitative impact, especially of market information.  My take aways were that the effects were patchy but mainly centered on the use of cell phone for real time market research. In particular, probably the main beneficiaries to date have been traders with cell phones. More recently producers have started to benefit.   But when the level of competition is sufficiently raised, lowering   transaction costs   there is some evidence that the consumer can become the ultimate beneficiary through lower food prices.    The potential positive effect on producer prices is greatest when sales is based on negotiation, but understandably has little impact when the sale is made via public auction.   This explains Fachamp and Minterns' results in India, which showed no effect on prices in a State where the vast majority of produce is sold at public auction, but an 8 to 9% increase in prices when product was sold through negotiation at the farm gate.  There are also strong suggestions that the impact differs across products.   For staple products when the prices is relatively stable and well known, market information probably has little effect.  At the other end of the spectrum with highly perishable products with very rapidly changing prices,  the market price informal systems, whether formal or informal  are not nearly fast and accurately enough to have much effect.   A vivid example were the leaf salad crop traders in Bangladesh who bemoaned that since the advent of the cell phone that price volatility had become further exaggerated because producers would rapidly swap high priced markets with additional supplies, crashing the price.   It does seem that market price information is likely to have a more positive impact on higher priced but less perishable crops, such as onion, potatoes, pulses etc. This is likely to be because improved price transparency coupled with the benefits of a product with an extended shelf life gives producers’ marketing flexibility (e.g. the ability to delay or accelerate sales or shipping to more distant markets).   What we are often seeing on the ground is farmers and producer groups setting up their own market information systems.  IFPRI work in South and South East Asia demonstrated that most farmers with cell phones phoned up multiple traders to establish prices, market opportunities and carry out sales, Farmer groups in as diverse places such as India, Georgia and Ethiopia are paying representatives working in wholesale markets, to phone in price information to better inform their sale strategies and negotiation positions. One of the most intriguing impacts of cell phones reported by farmers was an increase in the level of trust that they held with their traders. Presumably because they now felt that the playing field was flatter and they were far less likely to be duped. It  also seems that the benefits of  using the cell phones were greater with younger farmers, and that it would often take a couple of years for users to really learn how to really use ICT technology as a marketing tool, but that younger people  learned faster 

My own sense is that the development community probably puts too much emphasis on formal market information services, possibly because of a wish to be able to be proactive and to be seen to take direct action.   I believe, at least at present, that the bulk of the benefits are being delivered through informal real time market research that the cell phone enables.    The formal market information services have, in my view, a marginal utility.   They act as a reference point for producers in their negotiations and enable conversation about price to start with a greater degree of confidence.   Ultimately they can only function as background information to multiple individual and specific deals. There is some evidence that the cell phone, again, is a key new conduit for Market Intelligence. This is the information that is used to help better inform diversification strategies into higher value and potentially more profitably enterprises.   Much more knowledge is needed. Specifically around what information are the most important, the preferred medium for communicating market intelligence and stronger evidence of how this longer term market knowledge impacts on diversification and farm profitability. One vitally important area where I can find very little impact analysis is at the nexus between ICT and distribution costs.   With staple crops in Africa the cost of delivery to urban market is typically in the range of 10 to 20% of the wholesale price.   Nearly have that cost is incurred over the first 25% of the journey. Given the increased issue of keeping food prices down for the urban poor, we need to understand how ICT is impacting on logistic costs. And how through better understanding and/or though specialist applications, ICT can be used to facilitate aggregation, enable more efficient collection routes and the encourage the better utilization of backhauls, as a way of taking out unnecessary transaction n costs out of food distribution.   This could be a win: win situation, enabling producer to receive better prices   as well as lowering cost for urban consumers.

Thanks all for excellent contributions.

The past experiences, mainly if we see the pilots, there are many successful initiatives at pilot phase but during scaling up, we dont see those in action after the pilot phase is over. Specially, the fancy use of ICT in market information services created lot of hype and only market driven approaches and government led initiatives sustained in the long run. There might be couple of challenges which never considered in many of the mobile based information services, like, information and advisory services in production (input, pest management) related issues are fairly possible to provide appropriate or near-appropriate information. But in case of Market price, it is very crititcal, in case of persihable agriculture produces under traditional marketing / trading system, small farmers have limited role to play with the price info. Rather, traders and bulk buyers are sometime more benefitted by using the mobile network. It has been experienced that even if the farmers have information on better price but due to many issues including logistics like storing facility, transport or due to need of cash etc. farmers have to sell produces at 'low' price than the 'original' price.

Based on our e-krishok experience, we consider that "framing" of the service in mobile based market information proposition is very important. And it depends fully on the local dynamics and eco-system of the market.

Considering these, in Bangladesh, we (BIID) are working with both farmers as well buyers & other value chain actors to ensure benefits of mobile based information services for the farmers. Our e-Krishok project, in collaboration with Grameen Phone (Telecom Operator), ACI Limited (Agro Business) and Katalyst (Market Facilitator) extending the existing mobile based information service to market linkage. Interestingly, government is also now showing their interest to introduce this service (e-Krishok) in the ICT centres (managed by local government) after seeing the benefits, scale and sustainability of the initiative.

Thanks