Transcript Agricultural Market Information & Technology

Agricultural Market
Information & Technology
What are the benefits ?, Can it be
financially sustainable?
Grahame Dixie,
Agribusiness & Marketing Specialist
South Asia Agriculture & Rural Development
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
14,000
15,400
18,000
30,000
-64 %
5,000
20,000
10,000
0
Base Scenario
10% yield
increase
10% price
increase
- 30% sold
Alt Enterprise
Road Map
• Overview of Market Information
• Case Studies
– Cell Phones
–
–
Internet
SMS messages
• Summary of Main Points
Not yet consensus on the real impact of Agricultural
Market Information Systems on producers, meanwhile
the technology changes apace
Believers
Radio/Newspapers
Land Lines
Government
Technology
Internet
Money Transfers
Cell Phones
Sales Platforms
SMS
Operators
Non- Believers
PPP/ Private Sector
BENEFITS
SUSTAINABILITY
Access to Market Information
Agricultural Market
Information: Instant
Message
Medium
Case
Studies
Enterprise Development
Market & product Knowledge
Market IQ: Strategic;
Longer Term
Buyers and Businesses
Input & Support services
Product Details; production, & PH
advice
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 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
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
Reduced Mkt
info asymmetry
Modify date of
marketing/
sales
Greatest Benefits
with higher value
storable products
Switch to
alternative
Markets
Mobility &
access to options
Alternative Mediums
Disadvantages
Advantages
Passive,
simplified
Cost effective
Internet/
Web
Cost, limited few,
electricity &
connectivity
Complex info,
Updatable
Cell phone/
SMS
Literacy, Local
Language for
SMS
Radio
Widespread,
Voice & SMS,
real-time Mkt
Info, logistics
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
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%
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%,
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
2002-3 2.7 mn
Value @ $ Added Farm
300/MT Income 2% for
2/3 crop
$ 810 mn
$ 10 million
2003-4 4.7 mn
$ 1410 mn
$ 19 million
+ $ 5 to $ 2.5/tonne savings as traders dropped
mal-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
Phone Co 5 cents,
Content provider 2.5
cents, MIS service
2.5 cents
MNET, US1 cent
TNS/Tradenet
Subsidy
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:
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•
•
•
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
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
1 US Cent
0.7 US Cent
Cost of Sending
SMS
0.5 US Cents
0.5 US
Cent
0 .5
US Cent
Cents
0.2 US Cents
Cost / SMS 1.7 US Cent
Est. Cost
for selling
Service
Service Providers
Margin sending
SMS
Est. Cost for
collecting and
organising data
+ Overheads &
Margin
Potential for
reducing cost of
sales by PPP with
line Depts’
Bulk Buying of SMS Agri-Info Service for Field
Extension Staff & Farmer Trainers
Key
Subscriber Farmers
Reuters
Small Framers
Field Staff / Farmer
trainers
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