Grahame DixieGrahame Dixie, Agribusiness & Marketing Specialist

South Asia Agriculture & Rural Development

What are the benefits ?, Can it be financially sustainable?

Agricultural Market Agricultural Market Information & TechnologyInformation & Technology

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Base Scenario 10% yield increase

10% price increase

- 30% sold Alt Enterprise

Net Return Marketing Costs Production costs

Farmers incomes are extremely sensitive to market issues—i.e. price, volume &

diversification.

5,000

23,000

18,00015,40014,000

+10% +29%

-64 %

+64%

Road Map

• Overview of Market Information

• Case Studies– Cell Phones

– Internet – SMS messages

• Summary of Main Points

Believers

Non- Believers

Internet

Radio/Newspapers

Land Lines

Cell Phones

SMS

Money Transfers

Sales PlatformsTechnology

Not yet consensus on the real impact of Agricultural Market Information Systems on producers, meanwhile

the technology changes apace

Government PPP/ Private SectorOperators

BENEFITSBENEFITS

SUSTAINABILITYSUSTAINABILITY

Market IQ: Strategic; Longer Term

Buyers and Businesses

Input & Support services

Enterprise Development

Market & product Knowledge

Product Details; production, & PH advice

Access to Market Information

Agricultural Market Information: Instant Medium

Message Case Studies

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

Market Price Information

The Message• Prices - typical range • Volumes – supply/demand• Locations –experience shows just few majors Mkts neededThe Lessons• Accuracy – frequent criticisms of system• Timely – frequency product dependent• Simple & relevant• Local languages• Often works best with higher value – less perishable crops

Information is not enough on its own – generally verified by farmers on phone

How farmers use Market Information to Improve prices & profits

Improved Strength in Negotiation

Modify date of marketing/

sales

Switch to alternative Markets

Reduced Mkt info asymmetry

Greatest Benefits with higher value storable products

Mobility & access to options

Alternative Mediums

Radio

Internet/ Web

Cell phone/ SMS

AdvantagesDisadvantages

Cost effective

Complex info, Updatable

Widespread, Voice & SMS, real-time Mkt Info, logistics

Passive, simplified

Cost, limited few, electricity & connectivity

Literacy, Local Language for

SMS

Case Study 1 : The impact of the Cell phone on Fish Marketing, Kerala, South Western India by Jenson

Phoning in from off shore

Mobile phones coverage rolled out in three phases

Wastage down from 5-8% to 0%

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.

Price volatility down dramatically

Fishermen prices up by 8%,

Consumer prices down by 5%,

Fishermen and consumer were winners, as the market become more efficient and rational.

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

The Experiment Compared Farmers’ Soya prices in

Traditional Markets – with & without EChoupal in

Madhya Pradesh

Location of E Choupal

Locations of Regulated Mandi

Markets

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

What might that mean in additional farm income – in MP

MT/ Soya

Value @ $ 300/MT

Added Farm Income 2% for

2/3 crop

2002-3 2.7 mn $ 810 mn $ 10 million

2003-4 4.7 mn $ 1410 mn $ 19 million

+ $ 5 to $ 2.5/tonne savings as traders dropped + $ 5 to $ 2.5/tonne savings as traders dropped mal-practices to compete with ITCmal-practices to compete with ITC

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

Subsidy

SMS User Costs & Apportioning of Income

0

2

4

6

8

10

12

Uganda Mozambique India - demand India - contract

MISContentPhone

Phone Co 5 cents, Content provider 2.5 cents, MIS service

2.5 cents

MNET, US1 cent TNS/Tradenet

US 3 cents

50:50 Split Phone &

MIS

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

1.Mkt Prices & supply – 20 products in chosen 3 Markets nearest handset High, Low and Average price +

2.Local area Weather forecasts

2.Market Briefs

3.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.

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

0.5 US Cents

0.2 US Cents

0 .5 US Cent

Cents

Cost of Sending SMS

Service Providers Margin sending

SMS

Est. Cost for selling

Service

Est. Cost for collecting and

organising data + Overheads &

Margin

Supporting the Start Up: bulk purchase of service for Line Dept Field Staff, lowering costs of dissemination & selling

0.7

US

Cen

t

1 US

Cen

t

Reduced cost thru. volume; Regulator Phone company -

likely positive effect on voice phone income

Potential for reducing cost of

sales by PPP with line Depts’

0.5 US

Cent

Cost / SMS 1.7 US Cent

Bulk Buying of SMS Agri-Info Service for Field Extension Staff & Farmer Trainers

Key

Subscriber Farmers

Small Framers

Field Staff / Farmer trainers

Reuters

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

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

And if you have been . . .

Thanks, for listening