Transcript The Road to the Market

THE ROAD TO THE MARKET
Small scale farmers and cell phones in developing
countries
Bjorn Van Campenhout, IFPRI-Kampala
2nd Market Information Symposium
“Marketing Information as a Leverage in National Food Security Planning and
Regional Sustainable Trade”
September 15th – 16th, 2011 at Silver Springs Hotel, Kampala
There IS growth in Africa!
Importance of ICT for development
“The single most transformative technology
for development” – Jeffrey Sachs
<->
Africa has problems that need priority (eg.
Low productivity of small scale farmers,
basic health care, education,...)
Framework: technology threadmill
• Idea: productivity increasing technology is
no solution without a consumer market
• Effect of inovations is dependent on price
elasticity of demand:
– Inelastisc: quantity demanded increases
marginally with a given reduction in price
– Elastisc: quantity demanded increases
substantially with a given reduction in price
– > determines effects of innovation on wellbeing of innovator
Framework: technology threadmill
• Ag. Commodities, like eg. maize generaly
have low price elasticity
• Long run: supply increases and prices
collapse
• Innovating farmer is left worse off than
before inovation (<-> consumers)
– > condition: sufficiently integrated markets –
arbitrage: information is key!
Use
• In developed countries: social/status symbol
• In developing countries:
– First real broad based technological innovation
– Sector itself has substantial effect on the
(informal) economy:
• Public phone services
• Prepaid selling points, accessories shops,...
• Battery charging services,...
– Technology adapted to local circumstances (in
terms of power supply, ease of use,...)
Adapted services
•
•
•
•
•
•
M-pesa
MIS
Health monitoring
Prepaid – very small amounts
Flexiebele systemes to reload
Mobiel internet (tethering)
Impact
• Lots of anecdotic evidence in popular
press (technology quarterly of economist
magazine, BBC world,...)
– Fishermen in Zanzibar
– Taxi drivers in Dar es Salaam
– Butchers and producers of various other
perishable products
– Etc...
Impact
Impact - macro
• Roller and Waverman (AER 2001): impact
of telecom infrastructure – only for fixed
lines
• Fush, Meschi and Waverman (2005): 10
percent increase in cell phone adoption->
0.6 % increase in growth
• Qiang (2009): 10 increase in cell phone
adoption -> 0.8 % increase in GDP/capita
BUT: direction of causality?
Fishermen in India (Jensens 2007 QJE)
Fishermen in India
The man in the middle
• Middlemen are not liked – not productive,
parasites, liars,...
• BUT: very important function in economy!
• Study in Tanzania that focusses on the
negotiation process between farmers and
middlemen
Semi-subsistance farmers in Tanzania
• 1100 farmers interviewed, focus on maize
marketing
• Focus op onderhandelingspositie van de boer
• Economic as well as behavioural characteristics:
– Attitudes towards risk?
– Impatience of farmer?
– Knowledge of prices in other markets?
• Outcome variable:
– Difference between farm gate price and consumer
price (arbitrage over space)
– Difference between price at time of harvest and time
of sales (arbitrage over time)
Maize sold?
Sold to who?
Price expectations
Sold to who?
(Intercept)
to_soldlocal market
to_soldlocal trader
to_soldexternal trader
to_soldexternal market
Estimate Std. Error t value Pr(>|t|)
25709
5617
4.577 6.14e-06 ***
1411
38997
0.036 0.97115
38469
12476
3.083 0.00217 **
25850
9842
2.626 0.00893 **
4828
16485
0.293 0.76974
Owns mobile phone
Estimate Std. Error t value Pr(>|t|)
(Intercept)
13920.8
5971.8
2.331 0.02020
to_soldlocal market
-12881.9
38112.6 -0.338 0.73553
to_soldlocal trader
34318.2
12186.9
2.816 0.00508
to_soldexternal trader 26198.9
9591.4
2.731 0.00656
to_soldexternal market
-210.2
16096.8 -0.013 0.98958
own_phoneyes
43468.5
8803.6
4.938 1.12e-06
*
**
**
***
Access to mobile phones
Estimate Std. Error t value Pr(>|t|)
(Intercept)
13519
13068
1.034 0.30148
to_soldlocal market
2527
39101
0.065 0.94851
to_soldlocal trader
38200
12514
3.053 0.00241 **
to_soldexternal trader
25897
9878
2.622 0.00905 **
to_soldexternal market
3622
16561
0.219 0.82700
access_phoneyes
13843
13255
1.044 0.29688
Interactions
(Intercept)
to_soldlocal market
to_soldlocal trader
to_soldexternal trader
to_soldexternal market
own_phoneyes
to_soldlocal market:own_phoneyes
to_soldlocal trader:own_phoneyes
to_soldexternal trader:own_phoneyes
to_soldexternal market:own_phoneyes
Estimate Std. Error t value Pr(>|t|)
22138
6342
3.491 0.000531 ***
-8338
59153 -0.141 0.887964
18825
14908
1.263 0.207377
6996
11071
0.632 0.527805
-21041
20107 -1.046 0.295943
13166
12178
1.081 0.280233
9034
76896
0.117 0.906535
50146
25393
1.975 0.048922 *
72048
21477
3.355 0.000864 ***
62886
32998
1.906 0.057339 .
Conclusion/discussion
Should policy makers encourage marketing
cooperatives and empower farmers to
organise trade themselves?
Or does private price information
encourages trade by providing a “first
mover advantage” in a competitive
market?