Grahame Dixie , Agribusiness & Marketing Specialist South Asia Agriculture & Rural Development

1. Agricultural Market Information & Technology What are the benefits ?, Can it be financially sustainable? Grahame Dixie, Agribusiness & Marketing Specialist South Asia Agriculture & Rural Development

2. Farmers incomes are extremely sensitive to market issues—i.e. price, volume & diversification. 70,000 Net Return Marketing Costs Production costs 60,000 +64% 50,000 +29% +10% 23,000 40,000 15,400 18,000 14,000 -64 % 30,000 5,000 20,000 10,000 0 10% yield increase 10% price increase Base Scenario - 30% sold Alt Enterprise

3. Road Map • Overview of Market Information • Case Studies • Cell Phones • Internet • SMS messages • Summary of Main Points

4. Not yet consensus on the real impact of Agricultural Market Information Systems on producers, meanwhile the technology changes apace Believers Radio/Newspapers Technology Money Transfers Cell Phones Sales Platforms Land Lines SMS Internet Government Operators PPP/ Private Sector BENEFITS SUSTAINABILITY Non- Believers

5. Access to Market Information Case Studies Agricultural Market Information: Instant Message Medium Enterprise Development Market & product Knowledge Market IQ: Strategic; Longer Term Buyers and Businesses Input & Support services Product Details; production, & PH advice

6. What Agricultural Information do producers need ? • Local weather forecasts, • Technical advice • Inputs – seeds, crop protection • Cost of production • Market prices, & supply/demand By phone – organizing logistics, selling arrangements; detailed of market requirements

7. The Message Prices - typical range Volumes – supply/demand Locations –experience shows just few majors Mkts needed The Lessons Accuracy – frequent criticisms of system Timely – frequency product dependent Simple & relevant Local languages Often works best with higher value – less perishable crops Market Price Information Information is not enough on its own– generally verified by farmers on phone

8. How farmers use Market Information to Improve prices & profits Improved Strength in Negotiation Reduced Mkt info asymmetry Modify date of marketing/ sales Greatest Benefits with higher value storable products Switch to alternative Markets Mobility & access to options

9. Alternative Mediums Disadvantages Advantages Passive, simplified Radio Cost effective Internet/ Web Cost, limited few, electricity & connectivity Complex info, Updatable Literacy, Local Language for SMS Widespread, Voice & SMS, real-time Mkt Info, logistics Cell phone/ SMS

10. Case Study 1 : The impact of the Cell phone on Fish Marketing, Kerala, South Western India by Jenson Phoning in from off shore

11. Mobile phones coverage rolled out in three phases

12. Fishermen ‘off shore’call different beach auctions to decide the best market. 1/3 of fishermen take fish to more distant auctions. Rapidly learned equation of transport cost viz. likely additional sales price. Wastage down from 5-8% to 0%

13. Fishermen and consumer were winners, as the market become more efficient and rational. Price volatility down dramatically Fishermen prices up by 8%, Consumer prices down by 5%,

14. Case Study 2 : ITC EChoupal using Internet and Web based information Costly $ 4-6 K, Mkt info, weather info plus selling interface. Info channeled few thru gatekeepers. Increasing range of products, enables company to buy specific qualities for particular buyers

15. The Experiment Compared Farmers’ Soya prices in Traditional Markets – with & without EChoupal in Madhya Pradesh Location of E Choupal Locations of Regulated Mandi Markets

16. Farmers’ Market Prices were about 2% (1% - 5%) better in the areas with IE Choupals (i.e. Market prices widely known) . This increased price is margin transfer from the traders margin. E Choupal areas No E Choupals

17. What might that mean in additional farm income –in MP + $ 5 to $ 2.5/tonne savings as traders dropped mal-practices to compete with ITC

18. Text messages cost a fraction of US 1 cents @, standard 50:50 split between phone & content provider. Phone company’s key driver is revenue – manager discretion to forgo short term SMS profit for long term talk time income. Regulator v. important Phone Co 5 cents, Content provider 2.5 cents, MIS service 2.5 cents MNET, US1 cent TNS/Tradenet US 3 cents Subsidy 50:50 Split Phone & MIS

19. Case Study 3 : REUTERS – SMS in Maharashtra + 100,000 subscribers – needs + 500,00 sustainable. • Push – Tailored Service • 100 - 75 SMS/month in local languages, across all phone networks • Mkt Prices & supply – 20 products in chosen 3 Markets nearest handset High, Low and Average price + • Local area Weather forecasts • Market Briefs • Crop Advisory Services • Issues • Costs – aprox $ 1.5/month, or US cents 1.7 c @ • Info gathered by paid, knowledgeable local observers who phone in daily • Mainly subscribers are younger, literate, commercial farmers – initial field finding –enthusiastic about the service.

20. Farmers liked the REUTERS SMS service because: • perceived as an enhancing livelihood product • the farmers feel empowered – greater control • receiving the message in the field in local languages • Weather info for crop activity planning, better yields & harvest timing • Mkt info for decisions of when to store/sell & where to sell, and help in negotiation • concern on authenticity of source/data – called Mkt to verify • Many disseminated information to others

21. Supporting the Start Up: bulk purchase of service for Line Dept Field Staff, lowering costs of dissemination & selling Reduced cost thru. volume; Regulator Phone company - likely positive effect on voice phone income Cost / SMS 1.7 US Cent Est. Cost for collecting and organising data + Overheads& Margin 1 US Cent 0.5 US Cent 0.7 US Cent Est. Cost for selling Service Potential for reducing cost of sales by PPP with line Depts’ Service Providers Margin sending SMS Cost of Sending SMS

22. Bulk Buying of SMS Agri-Info Service for Field Extension Staff & Farmer Trainers Key Subscriber Farmers Small Framers Field Staff / Farmer trainers Reuters

23. Main Points • Cell phones are the most powerful marketing tool; Mkt info, real time Mkt research, co-ordination of logistics, followed by targeted SMS and Internet – but the technologies are converging • Future holds – cells phones delivering internet, sales platforms and money transfer • Government collection of Market information systems suffers from lack of incentives to provide accuracy & timeliness, to understand & deliver service matching farmers’ needs • Its not just Prices that is useful, weather, input benchmarking, timely technical advice and Market IQ all have varying degrees of utility • Although we don’t have economically sustainable business model yet for Market Information , a number of promising trials are in the pipeline

24. Main Points • Examples are REUTERS – SMS messages, TRADENET – integrated internet sales platform & SMS messages, cell phone companies wishing to stimulate rural market • Few numbers available on farmer price impact – suggestion is about + 2% improved negotiation, switching to better priced market for v perishable products + 8% • Paid for services are taken up by younger, literate and better off farmers - ? Smaller scale producers • Costs can be reduced regulation, PPP on marketing • Subscriber costs reduced by adverting, platforms for traders, cess on sales • Scope for delivering Agri Info services to field staff for onward distribution to smaller scale producers

25. And if you have been . . . Thanks, for listening