Transcript Market information services - Xavier Institute of Management

Designing Market Information Services
Prof. Sanjeev Kapoor
Indian Institute of Management
Lucknow
Agenda for Discussion
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Present Agri-business Context
Need for Market Information in Present Agri-business
Scenario
Market Information Services – Concept and Uses
Using Market Information for Production Planning
and Higher Price Realization
Designing Market Information Services – National &
International Experiences
Promoting Market Information Services - Issues
Need for Market Information
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Existence of competitive market
economy after the globalization and
liberalization
One of the pre-condition for a
competitive market economy is that
correct information on market
conditions must be available to all
stakeholders in the market system
Need for Market Information
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Information related to
- prices
- demand of product
- Quality of product
- Transaction cost
- Intermediaries involved in the market
Information on these variables over time and
across space
Market Information Services
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Collection of price and non-price information,
on a regular basis, related to widely traded
agricultural products
Dissemination of this information on a timely
and regular basis through various media to
different players in the marketing system
Use of this information by recipients for
increasing the production and marketing
efficiency and transparency of the system
Market Information Services
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Facilitate efficient allocation of productive resources
Bargaining power of the farmers with traders can be increased
Reduces transaction costs by reducing risks. Which market the
farmers should send their produce, or whether to send their
produce to market at all.
Availability of information encourages new entrants into the
marketing system as lack of information is an entry barrier to
both production and trade.
It provides opportunity to farmers to plan and diversify the
production in lines with market demand.
It can be a valuable input into Early Warning System for food
security by identifying areas of possible shortages as reflected
by higher prices.
Market Information Services
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Current information
Historical information
- complied over time, often several
years
Use of these two different information is
different
Market Information Services
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Current information
- reducing market cost by reducing the risk of loosing
the money on a market transaction
- channel selection (selling at farm gate, or to local
market, or to wholesale market or selling directly to
consumers)
- higher price realization due to increased bargaining
power
- harvest decision
- Marketing strategy – individual or group
Market Information Services
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Current market information and spatial
Arbitrage
- Arbitrage is a process of buying at
lower price and selling at higher price
with the objective of taking advantage
of price differences in two markets that
exceeds transaction cost.
Market Information Services
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Historical market information
- storage decisions
- production decisions
- entry in the trade
- selling decision (when to sell)
Use of Market Information for
Getting Better Price
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Is the wholesaler getting a good price for us?
Is the wholesaler being honest?
What other reasons could be for the price
less than reported by MIS?
Am I getting the same price or better than
other farmers?
I can negotiate with the present trader based
on the reported price
With knowledge of marketing costs, farmers
can find out realistic farm gate price.
Use of Market Information for
Production Planning
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Whether to grow new crops?
- based on net profit analysis
Whether or not to store?
- based on seasonal price fluctuations and
storage cost
When to plant and when to harvest the crop?
- based on technical feasibility and seasonal
price fluctuation
Market Information Services –
Indian Experiences
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Directorate of Marketing and Inspection
- DMI is an attached office of DAC, MOA
- Initiated a project “AGMARKNET” during
March 2000
- Aims at networking 2810 APWMs by the
year 2007
- Reporting of daily wholesale prices and
arrivals
- Covers about 300 commodities and 2000
varieties of agriculture produce
Market Information Services –
Indian Experiences
- Information is disseminated through
the internet (agmarknet.nic.in)
- Information is accessible in eight
regional languages besides English
Market Information Services –
Indian Experiences
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National Horticulture Board
- Initiated market information service in 1985
- collect daily wholesale market price and arrivals of
seasonal fruits and vegetables from 36 markets
- International price of fruits, vegetables and flowers
are also collected
- Brings out a weekly bulletin and a monthly bulletin
- disseminate information through web
(hortibizindia.org)
Market Information Services –
Indian Experiences
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Department of Economics and Statistics
- collects daily wholesale price of important
varieties of foodgrains from 140 markets
- Weekly wholesale prices of 130 agriculture
commodities from 530 markets
- farm harvest prices for 19 crops from
district level on sample basis
- daily retail prices of vegetables, fresh fruits,
livestock products and foodgrains from 90
centers
Market Information Services –
Indian Experiences
- Collects these prices through State
Agricultural Statistical Agencies and State
Agricultural Marketing Boards and its 14
Market Intelligence Units
- Generally there is time lag of 2-3 weeks for
reporting and disseminating the data
- major thrust is providing inputs for
generating weekly wholesale price indices
by ministry
MIS - Components
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Target audience
Purpose of information
Which information to be collected
How the information should be collected?
Dissemination of information
- mode
- frequency
Utilization of the information
Cost of MIS
Charging for information from the users
Institutional structure for setting MIS
S.No.
Feature
Indonesia
Zambia
South Africa
1.
Target Audience
Small Farmers
Traders
Farmers/Traders/Support
Industries
2.
Purpose of Information
Negotiating with traders
Entry into Trade
Market selection,
Enterprise selection using
historical information
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Commodity
Vegetables
Maize
Poultry
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Nature of Information
Daily wholesale price in
morning and afternoon
Daily wholesale and
retail price
Highest and lowest price,
quantity, unsold volumes,
trends in prices
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Dissemination of Information
Radio/Newspapers/Noti
ce Board
Market bulletins/ Radio/
price boards
Computer
6.
Cost
Donor Govt. and agency
Donor Agency and
sponsorship by bank
Private Company
7.
Charge from user
Nil
Nil
Yes
Market Information Services Issues
1. Accuracy
- Price related to a particular variety
and for a defined quality
- It should be consistent over time
- Price related to which type of
transaction in the market
- unit of information
Market Information Services Issues
2. Availability
- Information to be available timely
- Mode of dissemination
- Radio, T.V, Phone, Fax, Internet
3. Analysis
- Interpretation of the information
Market Information Services Issues
4. Sustainability of system
- Funding for collection of information
- Charging the cost from users
5. Scale of Information
- How many products should be covered?
- How many location or markets?
- frequency of data collection?