grahame dixie , agribusiness & marketing specialist south asia agriculture & rural...
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Agricultural Market Information & Technology. What are the benefits ?, Can it be financially sustainable?. Grahame Dixie , Agribusiness & Marketing Specialist South Asia Agriculture & Rural Development. - PowerPoint PPT PresentationTRANSCRIPT
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