SECTION 3

Assessing Markets and Value Chains

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Module 9: STRENGTHENING AGRICULTURAL

MARKETING WITH ICT

GRAHAME DIXIE (World Bank) and NITHYA JAYARAMAN (Consultant)

IN THIS MODULE

Overview. A growing body of evidence suggests that market information services, especially those based on mobile
phones, reduce asymmetries of information between traders and producers, reduce transaction costs, enable farmers
to purchase inputs, and enhance farmers ability to fine-tune production strategies to match the accelerating rates of
change in consumer demand and marketing channels. The latent utility of the technology is still being discovered, and
the scale of its impact is still being understood. It is difficult to anticipate the eventual balance between privately run agri-
cultural information services and government services, but it is very likely that the optimum configuration could involve
some kind of public-private arrangement.

Topic Note 9.1: Mobile Phones as a Marketing Tool. Farmers use mobile phones to build a network of contacts and
draw on this wider experience and expertise to obtain critical information more rapidly. Essentially the mobile phone, its
special applications, and the Internet (although to a lesser extent currently) are becoming management tools for farmers,
specifically in relation to marketing. Greater access to information seems to help farmers make better decisions around
transportation and logistics, price and location, supply and demand, diversification of their product base, and access to
inputs.
Topic Note 9.2: ICTs Improve Logistics, Lower Transaction Costs. Information communication technologies (ICTs)
improve logistics and reduce transaction costs by improving supply-chain management. The benefits largely reside with
traders, so the key question for development practitioners is how to design ICT interventions that enable producers to
improve their returns and/or help urban consumers to buy food at lower prices. Combined investments in roads, tele-
phone communications, and electricity have a greater aggregate benefit compared to separate investments.
In South Asia, Mobile Phones Amplify Investments in Extension and Infrastructure to Bring Farmers to Markets
Across Africa, Mobiles Ease Market Logistics

Topic Note 9.3: ICTs Facilitate Market Research. Market information strengthens farmers position in their day-to-day
trading and, over time, market intelligence enables them to focus on satisfying consumers and buyers demands and
on developing relationships with stakeholders in the next stage of the value chain. The key development challenge lies
in assembling and disseminating this information in a timely manner, not just to traders or larger-scale farmers but also
to smallholders.
Evidence of the Impact of Immediate Market Information in Asia and Africa
Web Portals Offer the Big Picture on Markets in Africa, Europe, and Asia

Topic Note 9.4: ICTs Facilitate Access to and Delivery of Inputs. ICTs can enable farmers to make more informed
decisions about which inputs are better or cheaper to buy, when and where to best obtain them, and how to use them.
ICTs can also ensure that subsidized inputs are sold to the intended beneficiaries.
Agribusiness Advises Indias Farmers through e-Choupal Kiosks
Zambian Farmers Buy Subsidized Inputs via Mobile Phone

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OVERVIEW
One of the best definitions of marketing is that marketing
involves finding out what your customer wants and supplying
it at a profit. Probed more deeply, this deceptively simple
sentence manages to encompass most facets of marketing.
It is also a convenient structure around which to explain the
expanding role of ICT in strengthening agricultural marketing.
marketing, focusing on lessons from the field. The main themes
include: mobile phones as a marketing tool (Topic Note 9.1);
evidence that ICT is changing logistics and transaction costs
(Topic Note 9.2); the use of ICTs for market research (both for
acquiring immediate market information and acquiring market
intelligence over time) (Topic Note 9.3); and the use of ICTs to
make input supply and use more effective (Topic Note 9.4).

The phrase finding out what your customer wants empha-

Farmers Changing Information Needs and Sources
sizes the role of communications in agricultural marketing.
Studies of farmers information needs paint a mixed picture.
It encompasses two kinds of information: (1) the immedi-
Information needs differ significantly between countries and
ate information required on the markets demand for spe-
within countries for farmers producing different products.
cific volumes and quality of agricultural products and (2) the
Farmers differ in their perceptions of the information they
longer-term information on market trends (referred to here
require (as revealed by market research) and in their priorities
as market intelligence) required to make future plans for
when they come to access information. The primary mes-
the farm. ICTs, especially mobile phones, facilitate the provi-
sage underlying these disparities appears to be that farmers
sion of both types of information. ICTs are used for real-time
require a package of information and that their needs and
market research to obtain current information and help users
priorities change throughout the production cycle.
gradually accumulate market knowledge and insight.
Farmers information sources outside their immediate
Supply emphasizes the critical role of transport and logis-
network have not always been reliable, but the situation is
tics in moving products efficiently and effectively from rural
changing (box 9.1). Very often farmers primary source of
production areas to consumption points, which increasingly
information continues to be progressive farmers (figure 9.1
are located in distant urban markets. The management of
presents an example from India). Farmers give more cred-
supply chainsthe aggregation of product, organization of
ibility to information provided by other farmers considered to
transport, and consolidation of loadsis increasingly improv-
have a similar status and cultural profile.
ing through the use of ICTs.
According to market research by a private company in India,
The phrase at a profit has as a subtext the multiple issues
farmers information priorities include accurate local weather
surrounding the reduction of costs and improvement of
forecasts, technical information sequenced according to the
prices. Reducing costs can involve, for example, reducing
stage in the crop cycle, data on the costs of production, and
transaction costs, reducing losses following the harvest, gain-
market supply and price information. These priorities shift
ing better access to cheaper inputs, and increasing produc-
during the production cyclefor example, market informa-
tivity for an overall reduction in the unit costs of production.
tion is of little interest until the start of the harvest. In prac-
Improving prices can involve, for example, gaining a stronger
tice, when a subscription-based agricultural information ser-
negotiating position, exploring alternative markets, or making
vice was rolled out, farmers claimed that the market news
better decisions on where and when to sell product.
service was the most valuable.
This module begins with an overview of the need for and
impact of ICTs in agricultural marketing, especially from the
perspectives of producers, consumers, and traders. The FIGURE 9.1: Percentage of Farmers Relying on a Given
overview concludes by reviewing lessons and envisaging Information Source, India
future developments in ICTs for agricultural marketing, sug-
Extension
gesting potential policy changes and active interventions to
improve their utility. (Note that although mobile phones fea- TV

ture significantly in the discussion, the emphasis is on their Radio

contribution to agricultural marketing. For a comprehensive
Input suppliers
discussion of mobile phones in agriculture, see Module 3.)
Progressive
farmers
The second major part of this module consists of four topic 0 2 4 6 8 10 12 14 16 18
notes that drill deeper into the role of ICTs in agricultural Source: Mittal, Gandhi, and Tripathi 2010.

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BOX 9.1: Changing Sources of Information for Farmers

A number of initiatives by governments aim to provide market price services, driven by the view that greater price
transparency is a public good. Price has been disseminated in many wayschalked on notice boards, broadcast by local
radio stations, published in newspapers, and (more recently) posted on websites. The information on these websites is
confined mainly to product standards and specifications as well as market studiesparticularly of external markets but
increasingly of local value chainsincluding databases of contacts such as buyers, traders, agricultural processors, and
input suppliers. To the extent that these sites become more accessible, their usefulness could increase, but at present
they are out of reach for most rural people.

Government-run market information services have been criticized because their poor accuracy and lack of timeliness
have resulted in little immediate economic impact. Public market information systems collect, analyze, and disseminate
information. They are generally considered to carry out the price analysis satisfactorily. There are weaknesses in price
gathering, as there are few incentives for accuracy or for working outside office hours. The major criticism has been that
the information does not reach farmers on time, if at all.

Mobile phone applications are changing farmers sources of market information. Agricultural applications support logis-
tics with graphical presentations of available supplies and methods for traders to upload price and supply information
directly. They facilitate marketing by linking buyers and sellers.

Private companies have started to either sell subscription-based information services or to use price information as a
means of promoting other products to farmersmost notably to sell mobile phone services (rural markets being among
the few unsaturated markets for mobile phone services) or inputs (particularly fertilizer). These services generally rely on
local-language text messages to farmers phones. In the main, the information has been well received by farming clients,
with good reports on its quality, accuracy, and timeliness and positive evaluations of its impact.
Source: Authors.

Through examples from India, Indonesia, and Uganda, like coffee, whereas the Indian farmers are specialized
figure 9.2 illustrates how farmers information priorities apple producers from Kashmir. For market information,
and sources of information can differ. It is worth bearing these farmers rely very little on the Internet but turn to
in mind that Ugandan farmers mainly supply commodities multiple other sources, including farmer organizations,

FIGURE 9.2: Farmers Differing Information Priorities and Sources of Market Information in Indonesia, India,
and Uganda
Farmers priorities for information differ Farmers sources of market information
Indonesia India Uganda Indonesia India Uganda

Info on farm credit & subsidies Family & friends

Farmer organizations
Access to experts in real time
Farmer supplier/vendor
Information type

Market/price information
for commodities
Other farmers
Weather info
SMS/voice service
Pest info & remedy Internet
Package of practices
leading to certification Newspaper et al

Package of practices TV

0 1 2 3 4 5 6 7 8 Radio

Importance Rank (out of 7) of 0 10 20 30 40 50

Information Type Percentage
Source: Kumar n.d.

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FIGURE 9.3: Ugandan Farmers Use of Voice- and SMS- other farmers, newspapers, radio, TV, and short messaging
Based Agricultural Information Services service (SMS) and voice services.
SMS search for
market prices Some sense of farmers actual demand for information ser-
14% vices can be gained from figure 9.3, which compares farm-
SMS weather and ers use of voice and SMS delivery mechanisms in Uganda.
technical advice Technical advice was the most popular agricultural informa-
SMS keyword
29%
search tion service, provided via phone-in hotlines, followed by
for inputs
SMS-based technical and weather advice, with SMS-based
10%
market price services coming third.
Menu-based SMS linkages
SMS for to traders
banana and 2%
coffee LESSONS AND FUTURE DEVELOPMENTS
12% Live hotline with
expert advice Quantitative evidence is increasingly available on how mar-
33%
Source: Kumar n.d. ket information affects prices paid to farmers (table 9.1). The
results are generally positive in terms of farmers income and
prices. There is some evidence that consumer prices can be
lowered; it is also clear that traders who have access to ICT
and mobile phones can raise their margins.

TABLE 9.1: Summary of ICTs Impact on Farmers Prices and Incomes, Traders Margins, and Prices to Consumers
LOCATION, PRODUCT, MEDIUM
(STUDY AUTHORS) FARMER TRADER CONSUMER COMMENTS
Uganda, maize, radio (Svensson and + 15% Increase in price paid to farmers considered to be due to farmers improved
Yanagizawa 2009) bargaining power
Peru, range of enterprises, public + 13% Increases in farm income, but higher for nonfarm enterprises
phones (Chong, Galdo, and Torero 2005)
India (West Bengal), potatoes, SMS + 19% Yet to be published, but showed information to be important both in the form
(M. Torero, IFPRI, pers. comm.) of SMS and as a price ticker board in markets
Philippines, range of crops, mobile + 1117% Effect on income among commercial as opposed to subsistence farmers, plus
phones (Labonne and Chase 2009) perceived increase in producers trust of traders
India (Madhya Pradesh), soybeans, + 15% Transfer of margin from traders to farmers, effect seen shortly after
web-based e-Choupal (Goyal 2008) (average: 1.6%) e-Choupal established

Sri Lanka, vegetables, SMS (Lokanathan + 23.4% Appreciable price advantage over control over time, plus benefits such as
and de Silva, pers. comm.) increased interaction with traders and exploring alternative crop options

India (Maharashtra), range of products, No significant In this one-year study, quantitative analysis did not show any overall price
SMS (Fafchamps and Minten n.d.) effect benefit, but this finding is thought to be due to sales in state by auction; price
benefits of 9% were observed with farm-gate sales and younger farmers
Morocco, range of crops, mobile phone + 21% Small sample showed usual behavioral changes; higher-value enterprises
(Ilahiane 2007) took a more pro-active approach to marketing via mobile phone
India (Kerala), fisheries, mobile phones + 8% 4% Outlier in the sense that fish catches are highly variable and fishermen have
(Jensen 2007) their own boat transport
Uganda, range of crops, SMS and radio Bananas + 36% Awareness of market conditions and prices offers more active farmers
(Ferris, Engoru, and Kaganzi 2008) Beans + 16.5% opportunities for economic gain
Maize + 17%
Coffee + 19%
Niger, grains, mobile phones (Aker + 29% 3 to 4.5% Traders increased margin by securing higher prices through greater capacity
2008) to search out better opportunities

Ghana, traders, mobile phones (Egyir, + 36 Traders using mobile phones tended to sell at higher prices but also tended
Al-Hassan, and Abakah 2010) to be larger-scale traders than nonusers

Kenya wholesale traders, mobile + 57% Improved trader margin through combination of cheaper buying prices and
phones (Okello 2010) higher sale price

Source: Authors.

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The scale of the effect on farmers prices appears to depend
on a number of factors, including:
The effectiveness of the informal market information
networks that already exist.
The stability of the price structurefor example,
whether the government controls prices for a staple
crop or whether fixed contract pricing is widely used.
How the product is soldfor example, ICTs may have
a greater effect where negotiation is part of the sales
process and a lesser effect when sales are by auction.
The type of product being marketed. Circumstantial
evidence suggests that market information systems
have a greater effect on prices of higher-value, less-
perishable products such as onions, potatoes, and
pulses and a lesser effect on prices of extremely perish-
able products such as leaf salad. (For an exception, see
Remote farmers with perishable crops in this module.)
By all indications, the phoneespecially the mobile phone
is the most powerful marketing tool available to farmers
and traders. The latent utility of the technology is still being
discovered, and the scale of its impact is still being under-
stood. Even so, the studies reviewed throughout this mod-
ule indicate the phones potential for reducing asymmetries
of information between traders and producers, lowering
transaction costs, and enhancing farmers ability to fine-tune
their production strategies to match the accelerating rates of
change in consumer demand and marketing channels.
It remains unclear whether market information services can
be delivered on a financially sustainable basis by the private
sector or whether they can ever be delivered efficiently and
effectively by the public sector, given its history of gathering
inaccurate data and disseminating it badly. The private sector
is finding it difficult to develop a working business model to
charge farmers for agricultural information and market services
delivered through ICTs. Some governments are interested in
purchasing SMS-based agricultural information services, either
to empower their field extension officers or to provide holis-
tic agricultural information services directly to farmers. The
content can consist of technical, marketing, weather, costing,
pest, and disease alerts as well as information on government
schemes. SMS-based services are likely to cost considerably
less than sending out mobile extension officers and be more
accessible than Internet-based services (box 9.2).
In the long run it is difficult to anticipate the eventual balance
between privately run agricultural information services and
government services. It is very likely that the optimum config-
uration could involve some kind of public-private arrangement.
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209
For example, the collection and analysis of information could
be outsourced to the private sector, which could use such
a platform to create additional value-added services for the
network of businesses and institutions that support the farm-
ing sector. Another option is for the agricultural department
to create a database of farming clients and negotiate lower
SMS costs. This platform can be used to deliver a fast, tar-
geted, and holistic package of information services consisting
of public-good information and also private-sector messages
to the farming community. Such a service has the potential
of creating a cadre of smaller-scale commercial farmers,
who will be better adapted to changing agricultural markets,
trained in the use of modern information systems, and able to
access services and receive advice via their mobile phones.
For the development practitioner, the key messages of this
module relate to the benefits of accelerating the dissemina-
tion of mobile phone technology (Topic Note 9.1), especially to
areas where its signal, and therefore its impact, have not yet
reached. In many countries, profits generated by mobile phone
use in urban areas are set aside specifically for extending the
mobile phone network further into rural areas. Typically these
funds are underused. This module provides a broad swathe
of empirical evidence of the benefits of phone technology for
improving rural income and, potentially at least, for reducing
transaction costs and thus consumer prices. In occasional
instances, technologies such as mobile phone amplifiers and
transmitters, focused on marketplaces, will extend the dis-
tance over which wireless signals can travel and encourage
additional agricultural trade to emerge. Many of these ICT
infrastructure issues are discussed in Module 9.2.
Although ICTs appear to reduce transaction costs (see Topic
Note 9.2), most of these cost savings presently accrue to trad-
ers who have invested in mobile phones. To date, disappoint-
ingly little analytical work has been done to provide empirical
evidence of these effects. These kinds of studies need to
be done. They are likely to be important for informing better
investment decisions on infrastructure, particularly at the nexus
between investments in roads, markets, and communications
technology. Given accelerating urbanization and the increasing
emphasis on food security, the development sector needs a
better understanding of how to ensure that the reductions in
transaction costs that are possible along the agricultural mar-
keting chain especially benefit those at both ends of the supply
chainthe rural producers and urban consumers.
As discussed in Topic Note 9.3, market intelligence and mar-
ket education are increasingly important to farmers survival in
increasingly competitive markets. Given the projected accel-
eration of change in consumer demand, the emergence of new
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BOX 9.2: The Spread of SMS-Based Services and Prospects for Reducing Their Costs

Unit Costs of SMS Messaging in Selected Developing Countries

In the future SMS will increasingly enable the
Lao P.D.R. two-way flow of information. The emergence of
Indonesia
Sri Lanka
China open-source software is facilitating the dissemina-
Bangladesh
Iran tion of targeted SMS messages on a large scale
Pakistan
Guinea (see the discussion of FrontlineSMS in Module 8).
Korea (Rep. of)
Panama Agricultural line departments and projects are
Nepal
Philippines using this technology to better control and improve
India
Bhutan
Viet Nam
their agricultural information dissemination. In par-
Mauritius ticular, this new technology should help eliminate
Azerbaijan
Paraguay
Oman the recognized weaknesses in dissemination by
Maldives
Bolivia government-run market information services.
Dominican Rep.
Botswana
Ethiopia The prices charged for sending SMS messages dif-
Tanzania
Ghana fer hugely from country to country and region to
Russia
Sudan region. They tend to be significantly lower in South
Malaysia
Guyana Asia than in Africa (see figure). For a mobile phone
Serbia
Micronesia
Georgia
company, the actual costs of SMS transmittal is a
Cambodia fraction of the price charged. Informed opinion often
Jamaica
Jordan
Montenegro puts the costs at between US 0.01 and 0.02 cents
Senegal
Yemen each. The margins that SMS messages generate for
Gambia
Uruguay mobile phone companies are particularly high. In the
Seychelles
Namibia minds of mobile phone company executives, their
Tunisia
El Salvador challenge is to balance the high margins generated
Kenya
Suriname
Ukraine
by SMS messaging with the potential of those mes-
Guatemala sages to generate additional revenue from voice
Egypt
Trinidad & Tobago
Niger services. This equation is not fully understood. Even
Mali
Benin so, there is considerable scope for a regulator to
Djibouti
Argentina insist that SMS rates be significantly reduced for the
Moldova
Uganda transmission of public-good information.
Armenia
Central African Rep.
Burkina Faso For example, in South Asia the total cost for a pri-
Sao Tome
Romania vate company to deliver a single agricultural text
Venezuela
Samoa message is believed to be around 2 US cents.
Colombia
Zambia This cost is divided into one-third (that is, about
Algeria Price in US$ of SMS
Nicaragua
Malawi US 0.6 cents) for broadcasting the SMS, one-third
Peru
Madagascar for sales and marketing, and the remainder for the
Nigeria
Mexico whole operation of collecting and analyzing infor-
Togo
Lebanon mation and operating the business. Even at this
Thailand
Lesotho relatively low cost, farmers still resist paying for
Papua New Guinea
Angola this information. Where the public sector wants to
Swaziland
South Africa use SMS technology to disseminate information
Rwanda
Vanuatu
Barbados to government staff and farmers, the affordability
Morocco
Cote d Ivoire of the technology is highly relevant. A World Bank
Cameroon
Chile project coordination office in India recently negoti-
Belize
Fiji ated to broadcast 100,000 SMS messages at US
Slovenia
Bulgaria 0.4 cents each.
Albania
Brazil
Turkey
0 5 10 15 20 25 30
Cents
Source: Authors (figure source is authors calculations, based on InfoDev cross-country data).

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TABLE 9.2: Current and Future Roles of ICT in Agricultural Marketing

FUNCTION DELIVERED
BY ICT
Real-time market research
Coordination of logistics
Market information (price and
supply)
Market intelligence
Inputs
ENABLING OR
DELIBERATE?
Enabling infrastructure
Enabling infrastructure
Deliberate: Public and private
sector
Deliberate
Enabling infrastructure
TECHNOLOGY FUTURE
Fixed-line and mobile phones Extending range of mobile phones and ICT, facilitated by infrastructure
investment and policies
Fixed-line and mobile phones Specialist applications, training/producer organizations
Web-based and SMS Applications and publicprivate sector partnership, plus training and
organization
Web-based Applications and development of market intelligence services, plus
training and organizations
Fixed-line and mobile phone Targets SMS messaged by private sector, e-vouchers for subsidies

Source: Authors.

marketing channels, and the evolution of modern variations
within traditional marketing channels, better information will help
farmers align production more closely with changing demands.
It can be argued that if the situation were left to resolve
itself, the bulk of the benefits generated by these new mar-
ket opportunities would go to the larger-scale and better-off
farmers and to the trading sector. To redress that imbalance,
there may well be a role for extensionparticularly the public
extension servicesto alert farmers to new market opportu-
nities, provide training on changing market conditions (espe-
cially experiential training), and transmit important market
intelligence, especially through the Internet.
Not only do farmers have difficulty identifying the best mar-
kets for their produce; they often have difficulty discovering
where and when they can purchase inputs, especially if
private input suppliers have been crowded out by govern-
ment distribution of subsidized inputs. ICTs can provide this
information (see Topic Note 9.4).
Input-supply companies can use text messages to promote
their products and provide technical advice to farmers.
Electronic voucher schemes offer potential for implement-
ing subsidy programs that crowd in the private sector and
enable more precise targeting of input supply programs to
the poor.
Table 9.2 summarizes the role of ICT in agricultural market-
ing, based on whether the ICT consists of enabling infra-
structure such as telephones or deliberate applications. It
also suggests what the future is likely to hold.

Topic Note 9.1: MOBILE PHONES AS A MARKETING TOOL

TRENDS AND ISSUES
Although the mobile phones main purpose among the public
is for social interaction, it is proving to be a powerful market-
ing tool. Around 6070 percent of calls are made to family
and friends; business calls typically constitute 510 percent
of calls. Learning to exploit the economic benefits of the
mobile phone is a skill that takes some time to develop (see
the evidence from Malaysia later in this section). Younger
users are typically better able to exploit the mobile phones
business advantages.
A building body of knowledge, summarized in the sec-
tion that follows, indicates that phones, especially mobile
phones, have a positive impact on agricultural incomes.
The evidence suggests that farmers use mobile phones to
tap into a wider range of knowledge and information than
they could access previously. Farmers build up a network
of contacts and draw on this wider experience and exper-
tise to obtain critical information more rapidly. Essentially
the mobile phone, its special applications, and the Internet
(although to a lesser extent currently) are becoming
management tools for farmers, specifically in relation to
marketing.
Research data are emerging on just how much farmers are
starting to use mobile phones to assist in marketing their pro-
duction. For example, work in Bangladesh, China, India, and
Vietnam showed that now about 80 percent of farmers own
mobile phones (Minten, Reardon, and Chen n.d.). They use
them to speak to multiple traders to establish prices and mar-
ket demand. More than half concluded selling arrangements
and prices on the phone (the exception was rice farmers in
China). This work illustrates just how much phone access is
driving change in marketing systems.

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Greater access to information and buyers steadily adds to
farmers market knowledge and gives them greater con-
fidence to diversify into higher-value (often perishable)
products. The additional knowledge translates into a more
accurate understanding of demand and an enhanced ability
to control production and manage supply chains. Farmers
behavior is changing, and their farming is becoming more
commercial. Trends emerging around the use of mobile
phones include: (1) farmers deal directly with wholesalers or
larger-scale intermediaries rather than small-scale interme-
diaries; (2) farmers conduct market searches over a wider
number of markets; and (3) farmers develop a broader net-
work of contacts than their peers who do not own mobile
phones.
Greater access to information seems to help farmers make
better decisions around:
Transportation and logistics. Farmers begin to
leverage economies of scale. They can organize and
coordinate among themselves and (larger-scale) truck-
ers to consolidate volume. Greater coordination also
occurs around the timing of aggregation, collection,
and volumes. Larger volumes can lower costs and
enable farmers to realize higher prices.
Price and location. An ability to compare prices
increases farmers power to negotiate with traders. It
also enhances farmers ability to change the time and
place of marketing to capture a better price.
Supply and demand. Farmers gain greater control
over their production and product sales by finding new
sources of demand, improve their ability to adjust sup-
ply and quality to market conditions, and learn about
quality, grades, and product presentation.
Diversification of their product base. Over the
longer term, a better understanding of market demand
and consumer trends helps farmers diversify into
higher-value crops and capture greater value.
Access to inputs. Farmers can make more informed
decisions about which inputs are better or cheaper to
buy and when and where to best obtain them.
EVIDENCE OF THE IMPACT OF PHONES
ON MARKETING
The evidence to date indicates that farmers (as well as other
stakeholders in the supply chain) increasingly use ICT, par-
ticularly mobile phones, to reduce their costs, increase the
prices they receive, and eventually acquire market knowl-
edge that improves supply-chain efficiencies and adjusts
supply more closely to changing demand. There is also an
8285-Module9.indd 212
intriguing suggestion that farmers use of the phone creates
a greater sense of trust with trading partners, presumably
because information asymmetries are reduced.
Peru: Rural access to telephones raises incomes
from farms and other rural businesses. When Peru
privatized its telecommunications industry in the
1990s, the government required the telecommunica-
tions company to install public telephones in 1,526
small rural towns across the nation. Some years later,
a study of 1,000 rural households distributed across
towns with and without public telephones found posi-
tive links between public telephone use and incomes.
Telephone use resulted in a 13 percent increase in per
capita farm income and a 32 percent lift in nonfarm
income (Chong, Galdo, and Torero 2005).
Filipino farmers used mobile phones to improve
income and build trust with trading partners. In
the Philippines, Labonne and Chase (2009) compared
the impact of mobile phones on subsistence farmers
and commercial farmers who generate a marketable
surplus. The study found little benefit for the sub-
sistence farmers, but commercial farmers benefited
significantly, as measured by improvements in their
consumption of 1117 percent. A particularly inter-
esting finding was that farmers reported improved
relationships with trading partners following the acqui-
sition of mobile phones. They may believe that the
relationship is more fair, since they now can negotiate
better terms.
In Malaysia, mobile phone use was linked to
increased profits among younger owner/
managers of farms and smaller agribusinesses,
especially with growing experience in using the
technology. When 134 younger agricultural-based
entrepreneurs were interviewed about their percep-
tions of the impact of mobile phones on their busi-
nesses, they reported two overarching benefits:
They could draw upon a wider network of people for
information (a wisdom of crowds effect), and they
could obtain information at a greatly increased speed
(Shaffril et al. 2009). Other benefits, such as market
information, time savings, and technology, were of
a lower order (figure 9.4). The overall impact was an
increase in businesses profits, especially after the
entrepreneurs had used their mobile phones for more
than two years.
Mobile phones in Niger bring better price inte-
gration, improve profits for traders, and reduce
consumer prices. In Niger, Aker (2008) found that
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
FIGURE 9.4: Commercial Farmers and Small
Agribusinesses Rate the Relative
Importance of Using Mobile Phones on a
Scale of 1 to 4 (Very Useful), Malaysia
Improved prices
Wider markets options
More systematic business
Dissemination new
Time saving
Knowledge of technology
Securing market information
Extension channel
Updated information
Enhanced networking
Timely access to information
2 2.5 3 3.5
Source: Shaffril et al. 2009.
mobile phones reduced search costs by 50 percent
compared with personal travel and that mobile phone
use increased both traders and consumers welfare.
Traders profits increased by 29 percentnot because
they traded more product but because they obtained
better prices through real-time market research con-
ducted via mobile phone. Mobile phones were also
associated with a 3.5 percent reduction in average
consumer grain prices. Aker also found that the use
of communications technology had several benefits.
Search costs were significantly reduced, coordina-
tion among market participants improved, and market
efficiency increased as traders became engaged in the
search process themselves rather than being on the
receiving end of a one-way communications system.
Traders were able to expand their reach of searchable
markets, sell in more markets, and increase their net-
work of contacts. An average trip to a market located
65 kilometers away in rural Niger can take two to four
hours round trip, compared to a two-minute call.
[With a mobile phone], in record time, I have all sorts of
information from markets near and far. Grain trader
from Magaria.
[Now] I know the price for two dollars, rather than
traveling [to the market], which costs twenty. Grain
trader from Zinder.
In Morocco, mobile phones changed farmers
cropping mix and marketing methods. A survey
of a small sample of farmers in Morocco found that
mobile phone use resulted in a 21 percent increase in
income (Ilahiane 2007). An even more relevant finding
was that the technology changed farmers behavior:
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8285-Module9.indd 213
213
Increasingly, they spoke directly with wholesalers or
larger-scale middlemen rather than smaller interme-
diaries. Farmers changed where they marketed their
crops, switching markets to capture better prices
and often resorting to larger and more distant mar-
kets. They coordinated with local truckers to improve
product transport and identify where to deliver their
products. Some farmers developed a two-way trade,
bringing products back from the market to sell in
their own rural communities. A particularly important
change was that they used their new market knowl-
edge to become more market oriented in their produc-
tion, move away from producing low-value crops, and
diversify into higher-value enterprises. The knowledge
gained from using the mobile phone reduced the
perceived levels of risk and helped them target their
production to specific, identified market opportunities.
Figure 9.5 illustrates where the impacts of ICTs on agricultural
marketing occur along the links in value chains, thus indicat-
ing the information required and the technology involved. The
diagram has two key messages. First, ICT potentially has an
impact on the management of every step in the production
marketing chain, from planning to sales. Second, almost all of
these functions are likely to be carried out by mobile phone.
Other potential services, such as market price information,
market intelligence, and specific cell-phone-based applica-
tions, largely perform support and secondary functions that
make farmers mobile phones more useful.
LESSONS LEARNED
The experiences in using ICTs to improve access to market
information reveal that ICTs contribute to:
Reduced logistics and transportation costs.
Farmers obtain the latest information with a phone
call instead of making a long trip to a market. They can
coordinate with other local farmers to use one large
truck rather than several smaller ones to deliver their
products.
Improved negotiation power. Farmers increase
their power to negotiate, particularly with traders,
based on their ability to understand pricing in multiple
markets, to cut out intermediaries, and to sell directly
to larger-scale buyers.
More sophisticated marketing plans based on
price information. For example, farmers can modify
the date of marketing, product permitting, or switch to
alternate markets, transport and regulation permitting.
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FIGURE 9.5: ICT Inputs to Marketing Along the Agricultural Value Chain

Harvesting,
primary Transport and Sales and
Production
processing, and logistics marketing
storage

Harvesting dates Arranging the

Pre- affected by Establish supply,
production aggregation of
market prices, product & demand, and
decisions grades adjusted prices
based on consolidation of
on basis of market loads
accumulated information
market
knowledge and Storage decisions based Real-time market
intelligence Seeking lower-cost
Access to inputs on market knowledge and transport and improved research and
access and costs of arrangements negotiation
storage

Motivated by Real-time Mainly Organized Real-time

market visits, Mainly phone market facilitated by by cell market
phone contact, Mainly real- research on cell phones, phone, with research Mainly
conversations, increasing SMS- time cell phones some cell some by phone, cell-phone
sometimes based input market with some phone apps assistance supported based
supported by advice and research on support being from web- by SMS and conver-
web-based promotion, plus cell phones through developed to based web-based sations
market e-vouchers for web-based support the market market
intelligence subsidies market processes intelligence price
intelligence services

Source: Authors.

Broader and deeper networks. Farmers commu-
nicate by phone with traders and farmers outside of
their immediate geography as opposed to making a
physical trip. The ability to communicate more easily
and to triangulate information creates deeper trust in
key trading relationships.
Innovative partnerships. For example, partnerships
are facilitated and built among groups of producers, or
by virtue of direct communication with corporations
and traders, or through the ability to supply product
based on just-in-time and/or quality needs.
Informed use of inputs. Farmers improve their
capacity to raise yields through better use of inputs
and/or use of better inputs. They can identify sources
of inputs, obtain them more cheaply, and are better
able to buy and apply them at the optimal times.
Improved farm business management. Farmers
can become better managers through better informa-
tion about which inputs to use, new knowledge about
grades and standards for produce, and increased
interaction with corporations, traders, and other
farmers.

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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
Topic Note 9.2: ICTS IMPROVE LOGISTICS, LOWER
TRANSACTION COSTS
TRENDS AND ISSUES
The higher the transaction costs, the smaller the geographi-
cal area in which it is feasible to market any product. Without
market access, productivity is low (Kunaka 2010), and options
for the farming enterprise are limited.
Driving down transaction costs in the supply chain delivers
very clear public goods. It can create benefits, especially
for poorer urban consumers, by lowering the costs of food.
Lower transaction costs also offer the prospects of higher
net returns for producers.
As noted in the overview, field observations show that in
many places ICTs, particularly mobile phones, are transform-
ing how rural logistics function. The resulting improvement
in logistics can be seen through lower transaction costs,
improved potential profits, and less wastage. By giving
people the ability to replace distance with space-shrinking
technology, mobile phones enable market agents to better
coordinate product supply and demand, strengthen existing
trade networks, facilitate the assembly of products to reach
a critical mass, and enable products to be delivered cost-
effectively to new markets. Despite these positive impacts,
other factors can still limit increased supply-chain efficiency,
such as geographic position, limited access to transportation
and credit, and poor access to inputs.
An ICT-enabled logistics system can help in:
Collectionby setting out well-organized collection
routes.
Aggregationby assembling markets with sufficient
critical mass to attract large-scale traders. Traders use
the quantity and variety of products and the mobile
phone network to conduct real-time research and
identify arbitrage and market opportunities for the
products they buy directly in rural areas.
Deliveryby coordinating directly with other farmers
or truckers to organize times, dates, volumes, and so
forth.
Currently, ICTs mainly benefit those who can afford the
technologymostly the traders. The logistics system will
not be fully transformed and smallholders will not fully ben-
efit from the ICTs described here until the technology is ubiq-
uitous and market information is less asymmetrical. At that
point, prices and the returns realized by farmers are likely
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215
to improve, as well as the downstream positive effects on
consumer food prices.
A typical rural agricultural value chain has several steps.
Production takes place on small plots of land. Very small
volumes of the produce are then sold to a local aggregator,
who perhaps collects it on a bicycle or bullock cart. This inter-
mediary then sells the aggregated (but still small) volume to
another intermediary, perhaps one with a tractor.
In such a manner, product cascades through the hands of
several intermediaries, who increase the load size at every
step, before it reaches the end market. Small aggregate
loads generally incur high unit transport costs. In addition,
each small-scale trader has to charge a relatively high margin
per kilogram to make a living wage. The aggregate margins
are relatively high. The resulting multiple handlings also
cause significant wastage through loss or spoilage, further
impacting the price that the smallholder receives and the
consumer pays.
Table 9.3 and figures 9.6 and 9.7 serve to overlay this descrip-
tion of a rural value chain with some sense of scale and num-
bers. Most farmers need transport to move small loads (units
under 80 kilograms) over relatively short distances (of 110
kilometers). Rarely are motorized transport services avail-
able, affordable, or even necessary to meet this demand,
particularly in sub-Saharan Africa.
Figure 9.6 provides an indication of how unit costs for
transporting produce change depending on distance, road
quality, and transport mode. The key take-aways are:
(1) the high cost of head loads and pack animals; (2) the low
unit costs, particularly for short distances on bad roads, of
intermediate modes of transport such as ox carts, hand-
carts, and bicycles/trailers; and (3) the greater cost efficien-
cies of mechanized transport, especially medium-sized
trucks, when the distances and the quality of the roads are
reasonable.
Figure 9.7 demonstrates the importance of critical mass in
lowering transport costs. A vicious circle is often observed
in the field: Even with a new road, truckers will not invest in
additional vehicles until they see a substantial increase in the
volume of agricultural produce that needs to be transported;
at the same time, farmers are wary of expanding produc-
tion without evidence that the necessary transport services
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TABLE 9.3: Size of Loads and Distance Covered in Moving Rural Goods Produced by Small-Scale Farmers, Various
Countries
WESTERN REPUBLIC OF
KENYA MALAYSIA INDIA BANGLADESH SAMOA KOREA
Typical distance of transport 90% of trips < 7 km 75% of trips < 7 km 90% of trips < 5 km Most trips < 12 km Most trips < 5 km Most trips < 10 km
Average off-farm distance 10 km 8.3 km
Loads transported 70% of trips < 25kg Most trips < 50 kg Most trips < 80 kg 3080 kg

Source: Banjo, Gordon, and Riverson 2010.

FIGURE 9.6: Transport Costs for Different FIGURE 9.7: Transport Costs in Relation to Demand, by
Vehicles in Developing Countries Mode
(US$ per Ton-Kilometer) 1.25 Truck

Cost/t/km (US$)
1.00 Pickup
Ox cart
Handcart Tractor
0.75
Bicycle/trailer Power tiller
Medium truck Medium distance, good road 0.50
Farm vehicle
Donkey cart 0.25 Ox cart
Short distance, poor road
Pick up truck
0.00 Bicycle
Power tiller 10 50 100 250 500 750 1,000 1,500 2,000
Motorcycle/trailer Demand (t)
Pack donkey
Source: Sieber 2009.
Headload
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8
Source: Sieber 1999.
The literature on ICTs impact on rural logistics largely
focuses on data obtained from user surveys and case
will be in place to deliver their surplus to external markets. studies. Little research has been done to assess the direct
One solution to this conundrum is to aggregate product into impact of mobile phones on reducing transaction costs
sensible critical masses at particular times and places. For related to agriculture. The lack of information is not surpris-
example, a 10-ton (medium) load would need to be made up ing, given that logistics is generally regarded as an infra-
of product from 150 to 200 smaller-scale farmers, a process structural issue and that its synergies with ICT have not
that is being greatly facilitated by the use of ICT, especially been considered.
mobile phones.

Additionally, there is little transparency around the avail- LESSONS LEARNED

ability of facilities for transportation, warehousing, stor-
Findings on how mobile telephony enhances marketing by
age, processing, and so on. One particular feature of rural
improving supply-chain management include:
transport internationally is the high costs in Africa, which
More efficient use of existing storage, packaging,
are often four times the cost in South Asia of transporting
transport, and processing facilities.
larger loads over longer distances. Some of this difference
in cost is ascribed to the cost of vehicles and poor quality Increased monitoring and coordination of freight
of roads in Africa, but a significant proportion is believed to transport operations, including product collection,
be the consequence of cartels. (In contrast, in Pakistan, for delivery, and security.
example, transport brokers regularly operate to consolidate Quick response to any disruptions in the supply
loads and improve transport efficiency with backhauls.) This chain (for example, disruptions such as vehicle break-
lack of information results in high transaction costs at each downs clear up more rapidly).
stage in the value chain and offers little opportunity to lever- Reduced travel time and expense through the ability
age economies of scale or move swiftly to alleviate blocks to call markets to obtain information instead of having
in the supply chain. to travel there.

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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
Disintermediation and improved transport effi-
ciency as mobile phones facilitate the assembly of
product, which enables larger trucker/traders to buy
sensible-sized loads directly in rural areas. Suppliers
can use mobile phones to conduct real-time market
research, and entire truckloads can be bought and
sold while still on the road.
Synergies between investments, so that combined
investments in roads, telephone communications,
and electricity have a greater aggregate benefit than
separate investments ever could have. (If a single
investment were to be made, however, the most cost-
effective investment would probably be telephones.)
PRINCIPLES AND GUIDELINES FOR POTENTIAL
INTERVENTIONS
Information technology is stimulating a quiet communica-
tions revolution in traditional agricultural marketing channels
in many developing countries. The benefits largely reside
with traders, who use the technology to maximize profits by
lowering search and transaction costs. The key question from
development practitioners is how to design ICT interventions
that enable producers to improve their returns and/or help
urban consumers to buy food at lower prices. Little empirical
evidence is available on the scale of these effects or on the
practices and investments that could enhance them.
A combination of economic intuition, observation, and
research indicates that important synergies can be created
from a confluence of investments.
Address policy issues around increasing access to
the poorest. Despite phenomenal growth in tele-
phone lines and mobile phone networks, access is
still highly inadequate and unequal. Today, the main
beneficiaries of ICTs are those who have the tech-
nology, enabling them to increase their profits. Not
only are the poor and those living in rural areas at a
disadvantage, but full utilization of the technology is
impossible, even for those with access, until universal
access is achieved. In other words, a full transforma-
tion of the logistics system will not happen until the
technology becomes ubiquitous, intensifying competi-
tion and carrying the potential long-term benefits of
reducing transaction costs.
Look for possibilities to create an integrated rural
infrastructure investment program. Investments
that help to remove intermediaries are believed to have
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8285-Module9.indd 217
217
good potential for improving marketing efficiencies and
lowering transaction costs. Studies in South America
have demonstrated synergies between investments
in roads, telephones, and electricity, although individu-
ally telephones consistently show the highest return
(Jansen, Morley, and Torero 2007). Integrated rural
infrastructure investments could include, for example,
investments that improve agricultural productivity,
rural roads, and rural markets (specifically assembly or
primary wholesale markets) and extend rural mobile
phone coverage. For example, in areas where phone
signals are weak, a mobile phone amplifier, located at
a market, would facilitate conversations and flows of
information around market opportunities and needs,
logistics, and prices. Markets themselves could be
built in selected hubs in rural areas where local farmers
can convene and sell produce. Experience indicates
that such markets must be located correctly. Normally
these investments are made in existing and expanding
marketplaces, often with public investment linked to
improvements in market management. For example,
a market committee is formed of stakeholders to
actively promote the market, oversee its operation and
management, and become empowered to act on its
further development.
Create capacity in farmer organizations and
groups. Coordinated activities by farmer groups
offer potential for improving opportunities and farmer
incomes through many channelsin operating the
market, in actively being empowered to seek out com-
peting transport options, and in organizing (through
mobile phones) sensible collection routes that ease
logistics, create the necessary critical mass of prod-
ucts, and attract larger-scale and more efficient buyers
and traders. As this topic note emphasizes, ICT will
increasingly provide avenues to link producer organiza-
tions, cooperatives, smaller transporters, and others.
(See the discussion in Module 8.)
INNOVATIVE PRACTICE SUMMARY
In South Asia, Mobile Phones Amplify
Investments in Extension and Infrastructure
to Bring Farmers to Markets
The following examples from Bangladesh, India, and Sri
Lanka describe how poultry farmers and vegetable produc-
ers managed to market their produce more efficiently. The
situations of these producers may be quite different, but the
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catalyst in each instance was the advent of mobile phones.
The example from India shows how benefits are magnified
through complementary investments in infrastructure (in this
case, roads and phone networks)
Bangladesh: Market Extension and Mobile Phones Give
Women Chicken Farmers New Leverage with Traders
As part of a Swiss-funded livelihoods project in Bangladesh,
community organizations, particularly womens groups,
were provided with a six-step, experiential training pro-
gram in marketing. The program covered the selection of
key products to market (step 1); basic economics (step 2);
market research (step 3); review of findings (step 4); pre-
sentation of action plans and agreement by the community
(step 5); and implementation of the chosen action plan
(step 6).
One womens group (image 9.1) traditionally sold backyard
chickens to a visiting trader. When they visited the nearby
market town, they were shocked to discover that chickens
were selling for nearly twice the price they were receiving.
They agreed that they would be prepared to consolidate their
chickens and transport them for sale directly into the market
town. Before committing to this action, however, they wanted
to confront the trader with their increased market knowledge.
When they challenged the trader about the price disparity,
his reply stunned them. He explained that he could not afford
to pay them more because he had to cover all his transport
IMAGE 9.1: The Bangladeshi Community Who Solved
Their Chicken Marketing Problems
Through Mobile Phones
Source: Authors.
8285-Module9.indd 218
costs with the few (normally 810) chickens they had avail-
able for sale. The women asked, How many chickens will
you need to be able to pay us sensible prices? Around 50,
was the traders reply.
When it was established that the traveling trader had his
own mobile phone, an arrangement was reached that the
community would phone him whenever they collectively had
50 chickens for sale. The arrangement worked. The price
has increased by 60 percent, enabling the women to aggre-
gate chickens from a far wider group of nearby villagers and
encouraging increased production, as backyard chickens are
now considered a profitable enterprise.1
Primary Rural Wholesale Markets Capitalize on New
Roads, Increased Vegetable Production, and Mobile
Phone Coverage in Assam
Planning studies for an agricultural competitiveness project
in Assam, Northeast India, showed flat or declining turn-
over in traditional wholesale markets but rapidly rising lease
incomes for weekly consumer markets (haats). Deeper
investigation revealed that only a small proportion of the
haats were booming (about 13 percent) They had developed
into daily wholesale markets selling tens of thousands of
tons of product (figure 9.8, image 9.2).
When these markets were visited and stakeholders inter-
viewed, an explanation emerged. The markets were boom-
ing owing to investments in new rural roads, expanded vege-
table production following increased investment in irrigation,
and the arrival of larger-scale truckers (with 10-ton vehicles)
to buy product.
The trucker/traders described the benefits of these larger
markets: They offered sufficient product for sale to provide
choice, they offered a variety of products, and the turnaround
times were quick, but the critical change was the extension
of the mobile phone network. The network enabled trucker/
traders to carry out real-time market research with their cus-
tomers to meet their produce requirements and prices.
Instead of product passing through the hands of multiple
small traders, resulting in high unit transport cost, significant
postharvest losses, and a high overall aggregate margin,
the transaction costs were reduced. The Assam Agricultural
Competitiveness Project is investing in these successful
1 For more information, see Dixie (2007).
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FIGURE 9.8: The Emergence of Primary Rural Wholesale Markets at Well-Located Weekly (Haat) Markets in Assam
3000

2500

2000
100000 Rs

1500

1000

500

ow a
lis a

ch ria
M rid a
ha on

Ka Ju a

h
B dh r

Ka Pa ra

n
lia ga

sa ar
C gm a
G alo hat

Bo ha t
Ka dun i
Si nia

rc rali
N lla
la ta
Ba ipe l

M Ja ori n
m R a

si gu ti

Lo Ju noi
C Ma ani
ya lla
or on
C orh an

Ka yak ara
Lo igani

ar ge

C iha
r i

R uw
Ba eow
ha or

ria
kh a
Se okia

n di

is m su
M ma
r

at
pa

ko uc

is u
un a
ng

w gij
ho
ha u
D ga

he n
ob n
K rg
Ja

o
p

on r
l
Ba

Villages
Source: Project documentation for the Assam Agricultural Competitiveness Project (http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK
=73230&theSitePK=40941&menuPK=228424&Projectid=P084792).

IMAGE 9.2: Produce for Sale at an Assamese Super- super-haats to provide them with the facilities required for
haat. the growing volumes of business they transact.2

Sri Lankas Smallholders Could Reduce Cost of Market

Information by Using Mobile Phones
Ratnadiwakara, de Silva, and Soysa (2008) calculated the
information-related transaction costs of smallholder farmers
who sell their vegetables at one of Sri Lankas largest whole-
sale agricultural markets (Dambulla). The four vegetables
that were most heavily traded (by volume) were considered
in the study: tomatoes, onions, eggplant, and chilies.

Information-related costs formed 70 percent of the transac-

tion costs incurred by farmers growing those crops. On aver-
age, a farmer made 24 visits to the wholesale market during
the crop cycle at an average cost of US$ 2 per visit, which
included travel, food, and related costs. The total search cost
Source: Authors.

2 For more information, see the documentation for the Assam

Agricultural Competitiveness Project (http://web.worldbank.org/
external/projects/main?pagePK=64283627&piPK=73230&the
SitePK=40941&menuPK=228424&Projectid=P084792).

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for a farmer averaged US$ 52, of which over 80 percent was
the cost of travel.
If half of a farmers market visits could be replaced with
phone calls (assuming a phone call costs US$ 0.37), the total
search cost would be reduced by 33 percent, without even
accounting for time saved.
Remote Farmers with Perishable Crops Reach More
Ugandan Markets when Mobile Phone Coverage
Expands
Ugandas mobile phone network expanded from covering
46 percent of the population in 2003 to 70 percent in 2005.
Using panel data from 856 households in 94 communities
across the country, Muto and Yamano (2009) estimated the
impact of mobile phones on farmers market participation.

INNOVATIVE PRACTICE SUMMARY Improved access to price information appeared to reduce

Across Africa, Mobiles Ease Market Logistics
The examples that follow, from West and East Africa,
describe how farmers and entrepreneurs use mobile phones
to ease the traditional barriers to moving and marketing pro-
duce. Some rely on sophisticated applications; others rely on
a series of phone calls.
marketing costs and increase farm-gate prices. Mobile phone
coverage was associated with a 20 percent increase in sales
of bananas, although the same was not true for maize. This
difference suggests that expanding mobile phone coverage
has been more useful for perishable crops and that farmers
have gained particularly from being able to arrange transpor-
tation more efficiently.

With Mobile Phones, Ghanas Market Queens
Transform the Onion Trade
The onion wholesalers known as Market Queens increas-
ingly use mobile phones to coordinate supply among them-
selves and to improve profits by facilitating reductions in
their transportation and opportunity costs (Overa 2006).
These costs are particularly high in commodity chains that
are geographically extensive and organizationally complex,
such as the onion trade in Ghana.
Mobile phones allow traders to save on time and transporta-
tion costs because they are able to coordinate trucking and
conduct their business in multiple locations or on the road
(table 9.4). The phone also gives wholesalers greater access
to their customers, which helps them to build trust and a
good reputation. In turn, these qualities encourage more
transactions at less cost and risk.
Farmers price gains are greater in areas close to the district
center than in more remote areas, but the farther a farmer
is located from the district center, the greater the impact
of mobile phone coverage on market participation. The
expanded mobile phone network favored banana farmers
in remote areas, who tend to have lower production costs,
compared to banana farmers near district centers, where
production costs were higher. The results also suggested
that even households without mobile phones benefited from
the network, possibly because traders used mobile phones
to reduce transportation costs.
With Mobile Phones and Training, Ugandan Farmers
Supply Fast-Food Chain
The Nyabyumba Farmers Group reached an agreement
to supply Nandos, a multinational fast-food restaurant

TABLE 9.4: Average Time and Cost Savings Occurring When Ghanaian Onion Traders Substitute Phone
Communication for Travel
DISTANCE FROM CENTRAL AVERAGE COST OF 5-MIN AVERAGE COST SAVINGS AVERAGE TIME
LOCATION ACCRA (KM) TALK (US$) (US$)a SAVINGS (H)b
Adenta 16 0.20 0.08 2
Prampram 50 0.80 1.66 3
Kumasi 289 0.80 11.66 9
Tamale 654 0.80 13.50 21
Bawku 899 0.80 22.00 30
Source: Overa 2006, as adapted from Table 5.2 in Segbefia 2000; Overa field data 2003.
a Cost of a 5-minute telephone call from a communication center, subtracted from the average cost of transportation.
b Includes average time spent waiting for minibus and traveling to Central Accra and back.

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in Kampala, with graded ware potatoes3 at a fixed price IMAGE 9.3: Inventories of Karaya Gum Mapped
throughout the year. Supplying these outlets offered farm- and Displayed Through a Mobile Phone
ers higher incomes and more stable demand but required Application
farmers to make significant improvements in product qual-
ity, quantity, and business management (Kaganzi et al.
2008).

To meet these conditions and engage with this higher-value

market over the long term, farmers needed to become more
organized and strengthen their partnerships with service
providers. A purchase agreement specified the following
conditions: Nandos would receive 50 bags of 100 kilograms
each every two weeks throughout the year; potatoes would
not be washed; bags would contain only one variety; each
potato would be approximately 80 grams, oval, with few
eyes; and a fixed price of US$ 170 per ton would be offered
throughout the year, payable by check on the 15th of each
month after delivery.

The key challenges were to ensure that farmers could

consistently produce potatoes to these standards and com-
municate directly with their client. Farmers lack of grading
knowledge and initial inability to produce potatoes that met
Nandos quality standards caused 80 percent of their produc-
tion to be rejected. Training reduced the rejection level to
less than 10 percent in less than a year.
To ensure direct communication, the chairman of the
Nyabyumba Farmers Group purchased a mobile phone to
maintain regular contact with Nandos as well as other mem-
bers of the cooperative. The phone facilitated collection,
delivery, and the fine-tuning of harvesting and dispatch to
match demand in Kampala.
Mobile Maps Optimize Logistics for Senegalese
Producers and Exporters
Manobi (http://www.manobi.net/worldwide/), a private ICT
provider in West Africa, has developed a number of applica-
tions to facilitate agricultural marketing. For example, Karaya
Source: Annerose 2010.
gum producers have a contract to supply local exporters, but
exporters claim that they do not know how much stock is
available and so cannot carry enough cash to pay farmers
at the sale point. Producers often are obliged to sell to local
middlemen instead at a lower price.
Manobi reports that its new mobile phone application
gives gum growers a dedicated system for recording their
inventory, which is displayed on the exporters mobile on
a map (image 9.3). Exporters can optimize their collection
logistics, more accurately estimate cash requirements,
and save money on transport. Gum growers sell at higher
prices directly to exporters and are paid cash on deliv-
ery. Manobi claims that as a result gum producers have
increased their sales income by 4050 percent (Annerose
2010).

3 Ware potatoes are potatoes grown for human consumption

rather than for planting.

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 222
Topi c Note 9.3: ICTS FACILITATE MARKET RESEARCH
TRENDS AND ISSUES
Multiple and complex dynamics operate around market
demand. Consumer demand changes constantly. Demand
for specific products fluctuates daily and weekly; longer-term
trends in consumer demand vary as well. Marketing chan-
nels continuously evolve. The rate of change in consumer
demand and marketing channels is accelerating. Ultimately,
the farming community will be better off if it can align pro-
duction more closely to market changes and opportunities.
To become adept at pairing production with opportunities,
farmers and others along the value chain need to become
better at acquiring market information that is immediately
useful and at acquiring longer-term knowledge related to mar-
kets. This topic note is organized around these two needs.
Market Information, Intelligence, and Knowledge
Immediate market information is used largely to sell exist-
ing crop and livestock products in ways that maximize their
profitability, mainly by creating a better understanding of
short-term fluctuations in pricing and demand. Most often,
short-term information improves price negotiation, but it can
also influence the timing of sales and the selection of the
market. This kind of information tends to change rapidly, and
its timeliness and accuracy is of great importance.
It is longer-term market information, referred to here as mar-
ket intelligence, that affects farmers longer-term decisions.
FIGURE 9.9: Farmers Incomes Are Highly Sensitive to Market Issues: Prices, Volume, and Enterprise Diversification
70,000
Net return
60,000
Indicative cost (Rs)
50,000
+10%
40,000
14,000
30,000
20,000
10,000
0
Base scenario
Source: Authors.
8285-Module9.indd 222
MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
Examples of these decisions include the choice of product to
produce, the choice of marketing channel to use, and other
strategic decisions aimed at maximizing profits. To be made
well, these kinds of decisions require an understanding of
competing suppliers, buyers needs, product specifications,
market trends, and other key issues for specific products.
Generally these decisions also build on the aggregate knowl-
edge created through the acquisition of short-term market
information over a period of time. The key development chal-
lenge lies in assembling and disseminating this information
in a timely manner, not just to traders or larger-scale farmers
but also to smallholders so that they can make more sensible
management decisions and increase their profitability.
Figure 9.9 shows how market information can significantly
affect farming profits. Profitability is highly affected by prices,
largely because any change in price has little or no effect on
costs, so the effect impacts directly on the bottom line. An
inability to find buyers for products also has a profound effect
on profits. By accumulating market knowledge, however
from a combination of market information and market intelli-
genceproducers gain an opportunity to identify and diversify
into alternative and more profitable products.
The main goal of increasing access to market information
is to empower farmers to take greater control of marketing
their production and orienting their production to identified
market opportunities. A deeper understanding of short-
term and long-term market dynamics should, on balance,
Marketing costs Production costs
+64%
+29% 23,000
15,400 18,000
64%
5,000
10% yield 10% price 30% sold Alternative
increases increases enterprise
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
FIGURE 9.10: Commercial Farmers Information Needs and Sources
Commercial farmers require a package of information
(Mobile phone/SMS) Short-term information
Real-time market research
Market prices
Market supply/demand
Accurate local weather forecasts
Timely & specific technical advice
Cost of production data
Sources of inputs
Source: Authors.
enable farmers to become more commercially savvy and
profitable.
In essence, the ability to conduct market researchto gather
both short- and longer-term informationwill increasingly
become part of the mix of farming skills. In most situations,
market information is fragmented, anecdotal, outdated,
inconsistent, and incomplete, although the situation differs
by product. For example, markets for staple cereals, which
are often subject to price controls, move relatively slowly.
Information about these markets is more widely known.
However, for products that are more perishable or for which
consumer demand is shifting, the market situation is far
more opaque.
The primary role of government in promoting the acquisi-
tion of immediate information through ICTs is to focus on
the overarching importance of maximizing mobile phone
coverage while improving access to the technology for the
rural poor. An equally important role for government is to
support producers in using the technology to become more
commercially astute and better attuned to changing markets
for agricultural products. The overall aim is to strengthen
farmers position in their day-to-day trading and, over time,
enable them to focus production on satisfying consumers
and buyers demands and to develop skills in market servic-
ing (the capacity to develop relationships with stakeholders
in the next stage of the value chain).
Producers Market Information Needs and Research
Strategies
Figure 9.10 provides a sense of the package of information
that farmers need with respect to immediate information
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223
Longer-term information (Web based)
Alternative enterprises/options
Price patterns
Demand trends
Product specifications
Production blueprints
Databases of buyers,
suppliers, transporters
and long-term market intelligence. It also displays the likely
sources of that information.
In the day-to-day marketing of their products, farmers are
mainly at a considerable disadvantage. Their market informa-
tion will come from a neighboring farmer who may have visited
a market on the previous day. A traders core skill is to read the
market, assess supply and demand, and compute how these
factors might affect price. Increasingly traders will triangulate
their information with information from others. Given the oppor-
tunity, traders will exploit farmers relative ignorance to buy low
and, ideally, sell high. The power balance in these negotiations
is altogether different when the trader senses that that the
farmer-interlocutor also appreciates the real market situation
and can access different markets, buyers, and outlets.
Field observations show that traders use their mobile phones
extensively for finding information (such as local and more
distant prices and product availability), negotiating prices, and
conducting entire transactions on the phone. These observa-
tions increasingly are supported by empirical evidence; fig-
ures 9.11 and 9.12 present examples from Kenya and Ghana.
Research on negotiation approaches indicates that it is
important to obtain as much information as possible prior to
a negotiation. This information should include the trading pat-
terns, goals, and preferences of those that one is negotiat-
ing with. Groups provided with more information in advance
achieved more effective and efficient outcomes as well as
higher levels of satisfaction with the negotiation. These find-
ings reaffirm the findings from the Philippines discussed ear-
lier in this module, where farmers reported feeling increased
trust in their trading partners after farmers had gained access
to mobile phones.
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 224 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T

FIGURE 9.11: Traders Perceived Benefits of Using Mobile Phones, Kenya

160

Number of observations
140
120
100
80
60
40
20
0
ut ets ea
t
ere S ing
e t
/vol e t
/inp rk h l th SM rad
ark lity ark ce ma oc e & t
m i m du t st rav all to
al
ail
ab nt ro tan er t c
llin
g
l oc v i sta o fp dis b rok t h an o ne
ve
myu e ta
r / d
il i t y e i n
i e s /
e r p h
t r a
si
n
/in
p
oth ab rad iar ath ing ou
t
i ce ce in v ail t ot ed n er s us ith
r u s a m o r w
p
rod ric
e
on le er ph rtn
e s
on
np Ab int ce
t i on o o np i n fo f or s on g pa pri
on t y ce din w
ma ati on Ge nc pri ne
n for r m m ati n de t e tra a te
i r p t i
t fo fo te tia u o
Ge t in t in ed go ow eg
Ge uc Ne oll en
Ge d F R
Re
Source: Okello 2010.

FIGURE 9.12: Traders Perception of the Benefits of Using Mobile Phones, Ghana

Renegotiate new prices without travelling trading

Followup trading partners using phone call & SMS
Negotiate prices on phone rather than travel Accra
Norhern
Reduce tendency for intermediaries to cheat
Able to trade in distant markets
Get info on availability of produce/input
Get information on prices in other/distant market
Get information on produce/input availability/vol
Get information on prices in my local market
0 2 4 6 8 10 12 14 16 18
Percentage of traders who gave response
Source: Egyir, Al-Hassan, and Abakah 2010.

Research on tomato farmers negotiations with rural trad- three to five years (Minten, Reardon, and Chen n.d.). About
ers in Ethiopia showed that on average farmers initial ask- 70 percent of rice growers and 30 percent of potato growers
ing price was about three times higher than the final price contact multiple traders by phone to explore selling opportuni-
they obtained from buyers (Jaleta and Gardebroek 2007). ties and prices, and about 60 percent will agree on the details
Yet when farmers had market price informationtypically of the trading deal over the phone. These findings explain
obtained by a mobile phone call to acquaintances close to and lend further weight to the findings presented earlier
the central marketthe difference between their initial ask- (for example, from Morocco, Malaysia, and the Philippines)
ing price and the final price was reduced by 16.5 percent. In on how the use of phones appears to increase farmers
other words, market information increased farmers bargain- incomes and profits. An example from Georgia (box 9.3)
ing power by one-sixth. provides additional evidence.

Still other evidence indicates that farmers increasingly use One of the most famous studies of the impact of mobile
mobile phones for real-time market research. In Bangladesh, phones was carried out by Jensen (2007), who tracked impacts
for example, about 80 percent of farmers now have mobile on the fisheries subsector as mobile phone coverage was
phones; of these, two-thirds have owned mobile phones for extended along the coast of Kerala, South India (see Module 3

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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
BOX 9.3: Winter Salad Grower in Georgia Improves His
Negotiating Position with Itinerant Traders by
Mobile Phone
Georgia has traditionally been the major supplier of win-
ter greens to Russia, primarily to the Moscow whole-
sale market. The salad crops are purchased directly at
the farm gate by a 5-ton trucker/trader, who delivers the
bundled leaves to the Moscow wholesale market. To
negotiate from a position of strength, the farmer would
phone a colleague in the Moscow market to establish
wholesale prices and make some estimates of sup-
ply. From experience, the farmer had good estimates
of transport costs from Georgia to Moscow and of the
typical margin the trader achieves. Using these figures,
the farmer arrived at a sensible estimate of the price he
was likely to receive, and he used this information as
the basis of his opening offer.
Source: Authors.
for details). The results were dramatic. Because farmers could
identify the best markets for selling their catch, price volatil-
ity was reduced, wastage was significantly lower, fishermen
achieved higher average prices, and consumer prices fell.
The marketing of caught fish differs from the marketing of
most agricultural products, however. Fish typically swim in
shoals, making for a feast or famine supply, whereas con-
sumer demand is relatively stable. Fishermen, unlike most
farmers, have their own transport, but they may not have
information about where it is best for them to transport their
fish for sale. By using their mobile phones, they can seek
out nearby undersupplied beach auctions and deliver their
fish directly to markets where supply is low and prices cor-
respondingly high.
ACCESSING IMMEDIATE MARKET INFORMATION:
LESSONS LEARNED
Short-term (immediate) market information refers to the
constant (daily or weekly) changing picture of supply and
demand requirements or a product in terms of quality, taste,
grading, delivery, size, color, and alternative market oppor-
tunities. Figure 9.13 sets out the three ways that producers
are likely to use this information. As shown in the previous
discussion, farmers in Georgia used market information to
strengthen their negotiating position, whereas in Kerala
fishermen used market information to switch to alternative
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225
FIGURE 9.13: How Farmers Use Market Information
to Improve Prices and Profits
Improved Reduced market
strength in information
negogiation asymmetry
Modify date of Greatest benefits
marketing/sales with higher-value,
storable products
Switch to Mobility and
alternative access to
markets options
Source: Authors.
markets. Producers also use market information to decide
when to harvest produce or, if possible, where to store it
until they can sell it at higher prices.
The enlightened debate among practitioners centers on the
relevance of the public sectors role in market information
services compared with that of the private sector, and on
whether the best way forward is a partnership between
the two sectors. Some take the view that if telephone infra-
structure is provided, stakeholders will find a way to use the
technology for gathering the price and market information
that they need.
How is this debate playing out? The public sector in differ-
ent countries has invested in its own market information
systems. As explained in the overview, this role consists
of three functions: (1) enumeration (collecting price data);
(2) data analysis; and (3) dissemination. Their performance
has generally been poor over the last decade.
Government employees have few incentives to attend
wholesale markets out of normal office hours to collect
real-time data. Analysis of price data sets frequently reveals
disturbing gaps or suspicious similarities in prices from day
to day. Field surveys often reveal little confidence in the
information by farmers and traders. The information is rarely
used except to give a general sense of the broad changes in
product prices, and often it arrives so late that it services only
for retrospective analysis by academics. In addition, govern-
ment market information has been mainly posted on Internet
sites to which small-scale farmers have almost no access
(box 9.4).
Even if farmers can obtain the information from the Internet, the
information is of limited use for changing the balance of power
in negotiations between farmers and traders. Despite these
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 226 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
BOX 9.4: Government-Provided Information on Market
Prices: A South Asian Example
A South Asian government took the view that the exis-
tence and dissemination of complete and accurate mar-
keting information was the key to achieving both opera-
tional and pricing efficiency. Not only did farmers need
agricultural market information to plan production and
marketing, but market participants needed the informa-
tion to arrive at optimal trading decisions.
The governments market information system was
established in 2000 as an Internet portal with the aim
of providing easy access to daily prices and arrivals by
commodity. The operating budget is some US$ 900,000
per year (which does not include enumerators salaries
but does cover the US$ 11 monthly bonus if 20 daily
reports are submitted). The system reports on 1,700
markets. The Internet site receives some 1.75 million
hits per year at a public cost of US$ 0.5 each.
The users are not farmers. They are graduates in the
3544 age group, who are mainly academics or work for
agriculture-based companies. It is claimed that outreach
to farmers has not happened because of inadequate
infrastructure (computers and networking), coupled
with a lack of manpower and trained personnel in rural
areas. Though still useful for broader economic growth,
the ICT scheme has not yet reached those targeted in
the outset of the intervention.
Source: Authors.
challenges, there is major potential for government-provided
ICT services to improve as resources become available, infra-
structure expands, and technological learning becomes more
widespread. (See Module 13, where key lessons in building
more effective IT-driven public services are discussed). In the
future, smartphones might make Internet-based dissemination
more effective, especially for interventions that seek to expand
market intelligence (see the innovative practice summaries).
As discussed in the overview, however, open-source software
that can be downloaded onto a laptop computer to send targeted
SMS messages to a database of mobile phone owners may have
a far greater impact. This technology offers the prospect of deliv-
ering market price information directly to farmers mobile phones
and thus empowering farmers to understand the value of their
products and immediately firm up their negotiation positions. If
governments do venture into this territory, a key issue will be the
unit price of each SMS message (as discussed in the overview).
8285-Module9.indd 226
The private companies that have emerged more recently
(typically in the last four to eight years) to deliver market
information take a pro-active approach to understanding
potential customers information needs, and they build feed-
back loops to learn how their services can be better attuned
to demand and more responsive to complaints. They use
their own enumerators, whose employment depends on the
accuracy of their price reporting. Generally their customers
mostly younger, more literate, and larger-scale farmers
have reacted positively. In the service operated by Reuters
Market Light, evidence indicates that the information is fur-
ther distributed by recipients to 512 others. In this process,
the status of the primary recipient is elevated in their rural
community. As emphasized in the overview, the early lesson
is that it is not at all easy to manage and operate financially
viable businesses selling information to farmers.
A third (and seemingly the most effective) option for provid-
ing market information is some kind of public-private partner-
ship. Partnership with the private sector helps to overcome
some of the public sectors challenges in gathering and dis-
seminating accurate market data. Under outsourcing arrange-
ments, for example, governments may purchase SMS-based
agricultural information for extension agents to distribute or
for direct distribution to farmers.
Another option is for the government line department to take
responsibility for disseminating information itself. To do so,
the department must build its own producer database, includ-
ing information on producers locations, key enterprises,
farm sizes, and so forth, and negotiate with mobile phone
companies to obtain SMS prices that more accurately reflect
the actual cost of sending SMS messages. The government
covers the costs of this service as well as the costs of run-
ning an incentivized market price reporting service by selling
the SMS service to othersinput suppliers, banks, and other
companieswho wish to target messages/information to
the farming community. Using the platform created to gener-
ate income by selling targeted messaging is a role that can
be outsourced. If and how this sort of arrangement will play
out in practice remains to be seen.
ACCESSING MARKET INTELLIGENCE:
LESSONS LEARNED
Aside from increasing their profits and competitiveness
through immediately useful information related to prices,
markets, and logistics, farmers require information about
market changes that may influence their production and mar-
keting choices over the longer term. The purpose of market
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS 227

FIGURE 9.14: Aggregate Consumer Demand by Agricultural Product from 2005 to 2020 at a 5.5% Yearly Growth
in GDP, India (Rs Billion)
2500
2005
2010
2 %
2000 2. 2015
2020

%
1500 4.9
%
6.3
1000
%
3.5
%
3.5
500 % %
% 3.2 6.5
% 3.6 3.8
%
% 4.6% 5.6
6.5% 5.1 5%
0
ls

ilk

ts

ls

try

gs

sh

es

es

ts

es

ks
ea

gu
ea

oi
uc

ui
M

in
Eg

Fi

ls

bl

ic
ul

Fr
d
le

Pu

sp

dr
er

od

ta
Po

an
ed
ib

ge
C

pr

&
d
Ed

an
Ve

od
ga
ilk

fo
M

lt
Su

Sa

ed
CAGR %

ss
ce
o
Pr
Source: CESS 2007.
Note: CAGR = compound average growth rate.

FIGURE 9.15: Projected Consumer Expenditures in in consumer expenditure on food over the longer term in
India from 2005 to 2020 and Additional India. They are based on a combination of income elasticities
Farm-Gate Income (Rs Billion) for various food categories, the impact of urbanization, popu-
lation increases, and a projected annual growth rate of 5.5
Key
Consumer Spending 2005 percent in GDP. Per capita cereal consumption is projected
204 Consumer Spending 2020
Additional farm-gate income to be flat, and growth in demand for cereals is forecast to
CAGR %
292 % be broadly in line with population growth. Strong growth in
2.2
140 consumption is expected for animal proteins (surpassing
5 percent), processed products (over 6 percent for milk
%
5.0 94 4.3
%
and other processed foods and beverages), and high-value
% crops (over 4 percent). Demand for fish is projected to grow
116 3.4
.2% 31 at more than 5 percent. Given that about half of Indias fish
5
6.3
% is sourced from the sea, meeting this demand will require
fish supplies from freshwater sources such as lakes, rivers,
Milk & Meat, fish, Cereal Field crops: High-value Processed ponds, and fish farms to grow by about 10 percent per year.
milk eggs Pulses, crops: Fruit, foods &
In business language, freshwater fish demand constitutes a
products oils, sugar vegetables, drinks
spices booming market. The single agricultural subsector that will
Source: CESS 2007. deliver the greatest increase in farm-gate income is milk.
Note: CAGR = compound average growth rate.

Patterns of consumption will change elsewhere as well. Huge

intelligence is to improve farmers understanding of changes
in agricultural marketing and demand so that they can adjust
their plans and production more closely to changing circum-
stances and generate the highest value.
Figures 9.14 and 9.15 illustrate why it is vital to understand
the implications of changing patterns in consumer demand for
agricultural products. The figures show projected increases
increases in Africas urban population (approximately 4.3 per-
cent per annum) over the next decade will place strong addi-
tional demands on agriculture to supply a different mix of prod-
ucts. Changes in marketing systems will occur at the same
time. Agribusiness will increasingly look to source raw material
directly from producers. New, alternative marketing channels
are emerging in many countries to deliver higher-quality prod-
ucts to supermarkets, hotels, exporters, and other buyers.

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 228 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
To facilitate diversification, farming communities are thought
to require product-based information, which typically includes:
A general overview of the market. What is the
markets size, value, and growth rate? What are the
divisions between sectors? Who are the competing
suppliers?
Product specifications. What are the prevailing grad-
ing and packing standards and consumer and market
preferences (taste, color, size, season)?
Marketing issues. What are the typical prices and sea-
sonal price patterns, quality premiums, and marketing
channels? What is the prognosis on future prices and
changes occurring in the supply chains for the market?
Key contacts. What are the names, addresses, and
telephone numbers for key contacts, particularly buy-
ers, agribusinesses, and traders but also specialist
input suppliers and transport operators?
Development practitioners often underappreciate the value
of names and addresses. Publishers in the agricultural sector
understand the value that stakeholders place on contact data-
bases, as they can be the key information required to open a
new market opportunity, enable producers to deliver product
a step further up the supply chain, or discover an alternative
way of doing things. Field experience has repeatedly shown
that larger-scale traders and agribusinesses are interested in
making more direct purchases in the field, provided produc-
ers can collectively aggregate a critical mass of product.
Information that can be categorized as market intelligence
changes slowly and is used occasionally (rather than every day).
It is most naturally housed on a website from which individual
farmers, farmer organizations, traders, and extension person-
nel can download and print it out for reference. The information
is generally considered to be a public good (and thus unlikely to
be delivered on a financially sustainable basis). For this reason,
the information is mostly funded publicly, although the prepara-
tion of market intelligence is often outsourced.
PRINCIPLES AND GUIDELINES FOR POTENTIAL
INTERVENTIONS
Based on the accumulating evidence, experience, and les-
sons learned, a number of principles and guidelines are
important to consider in developing market intelligence:
Market intelligence is one of the building blocks
for stronger knowledge of the changing market for
agricultural products. The provision of market intel-
ligence is primarily seen as a public-sector activity that
should enable more disadvantaged farmers to explore
8285-Module9.indd 228
and discover market opportunities for themselves.
Because the information is relatively slow to change,
is required only occasionally, and mostly needs to be
downloaded and printed for later reflection, it can be
conveniently housed on an Internet site.
Market information on prices, supplies, and
demand can positively affect prices paid to farmers,
but only if it is done well. Farmers need a package
of information that changes as their priorities change
throughout the agricultural season. This information
package can encompass weather forecasts, techni-
cal advice, market prices, pest and disease alerts, and
messages about schemes and support from the appro-
priate line departments. Market information on its own
is not enough to make farmers both more productive
and more profitable, however. An integrated approach
to information generation and delivery is required.
Both the private sector and government are hav-
ing difficulty in delivering ICT-based information
in a sustainable, effective way. One approach is to
outsource the supply of agricultural and market infor-
mation to the private sector. This approach would help
to underwrite their finance, enable them to use the
financial security to build a platform for a range of value-
added services, and enable them to look for alternative
income sources from other private companies deliver-
ing products and services to the farming community.
An alternative arrangement is a public-private
partnership, in which the public sector plays a
dominant role. New open-source technology is mak-
ing it possible for government institutions to provide
far more targeted information, primarily by sending
local-language SMS messages or voice messages
directly to farmers phones and by allowing feedback
from the field. The technology helps overcome the
major criticism that government information systems
do not reach their clients. Open-source systems can
become the foundation of an ICT-mediated extension
service that alerts clients to pest and disease prob-
lems, other information vital for production, and oppor-
tunities to participate in new government schemes.
The potential for generating income to cover operating
costs would be significantly increased if the govern-
ment would use its resources to build an accurate
and useful database of its farming clients, with their
mobile phone numbers and farming characteristics,
and leverage a very substantial reduction in the cost
of SMS messages (see the next point). The extension
service will have the very real possibility of selling
SMS broadcasting services to clients supporting the
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS 229

farming sector, such as banking institutions (to send
messages, technical and price information, and loan
repayment reminders to borrowers) or input suppliers
(to promote products, remind farmers to buy inputs,
and respond to pest, disease, and plant/animal nutri-
tion issues). Sales of such services, along with the col-
lection of price data, may best be done by the private
sector or suitably incentivized individuals.
Lower the cost of SMS. Clearly there are important
opportunities for enhancing the range, scale, and
impact of information dissemination by working with
the regulator to reduce prices for bulk messaging to
producers. Development institutions need to be able
to benchmark costs to strengthen negotiations when
proposing the development of public good, SMS-
based information services.
Invest in farmer education and extension training.
Helping smallholders to understand needs for grading,
organization, coordination, and market opportunities
is critical to success. Marketing education, especially
experiential marketing training, can be an important
element in leveraging the benefits that ICT can bring
to farmers prices and returns.
INNOVATIVE PRACTICE SUMMARY
Evidence of the Impact of Immediate Market
Information in Asia and Africa
The summaries that follow describe how various strate-
gies for disseminating short-term market information have
affected (or are anticipated to affect) farmers profits. The
delivery methods vary considerably, ranging from immediate
access through SMS and radio to the physical circulation of
information sent via SMS to extension agents.
Better Incomes for Farmers with Better Market
Information in Madhya Pradesh
Goyal (2008) compared farmer prices in the regulated market
(mandi) for soybeans in two areas of Madhya Pradesh. In some
areas, 1,600 Internet kiosks (e-Choupals) (http://www.itcportal
.com/sustainability/lets-put-india-first/home.aspx) operated by
ITC disseminated price information, whereas the other areas
relied only on the mandi for such information (figure 9.16).
Goyal found that farmers obtained better prices when they
had access to a wider range of market information. Farmers
price increases ranged from 1 percent to 5 percent, with an
average of 1.6 percent. The additional farm income from soy-
beans in Madhya Pradesh was estimated at about US$ 1020
million per year. This income was almost certainly a transfer
from traders to producers as a result of producers greater
market knowledge and improved strength in negotiation.
In India, Reuters Provides SMS-Based Market
Information to Farmers
In 2007, Thompson Reuters introduced the Reuters Market
Light (RML) service in India, a mobile information service
sending customized message to farmers in their local lan-
guage (for details, see Module 3. A survey of the 243 farmers

FIGURE 9.16: Prices Paid to Soybean Farmers in Areas with and without Market Information from e-Choupals
(Internet Kiosks)

Broad Trends in Mode Price of Soybean Across Districts of the State

1,800
1,600
Price in rupees/quintal

Farmers soybean prices in e-Choupal

1,400
traditional markets with and without areas
1,200
e-Choupals, Madhya Pradesh
1,000
800
600
No
Location of 400
e-Choupal
e-Choupal 200
0
1998q2
1998q3
1998q4
1999q1
1999q2
1999q3
1999q4
2000q1
2000q2
2000q3
2000q4
2001q1
2001q2
2001q3
2001q4
2002q1
2002q2
2002q3
2002q4
2003q1
2003q2
2003q3
2003q4
2004q1
2004q2
2004q3
2004q4
2005q1
2005q2
2005q3

Locations of
regulated
markets (mandis)
Quarter
0 90 270 Mandi
45 180 360 Hub Program districts Non-program districts

Source: Goyal 2008.

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8285-Module9.indd 229 11/21/11 1:06 PM

 230 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
that received the Reuters Market Light package (onion, wheat,
pomegranate, soybean, and tomato farmers) found that around
60 percent believed that they obtained improved prices and
often changed the time and location of sales. The information
was passed on to 512 others.
The analysis did not demonstrate any overall impact on prices
paid to farmers. This finding needs to be seen in context,
however. Produce prices are rising rapidly in Maharashtra,
and the vast majority of produce is sold by public auction,
where knowledge of earlier prices has little or no impact
on the price that farmers receive. The research was carried
out only for one year when this new information technology
was provided to a number of randomly selected farmers, but
farmers will need time to learn to exploit this marketing tool.
The data did show that RML users were able to achieve 89
percent increase in prices for the relatively small volume of
produce sold directly to visiting traders, and that the service
appeared to have a greater effect on younger users, who may
be on the front end of a learning curve. Younger users tended
to receive higher prices (6 percent) than nonusers of the same
age and to increase the proportion of produce that was graded.
Government Program to Equip Extension Workers with
Timely Agricultural Information and Improve Farm-Gate
Prices in Maharashtra
The annual cost for an extension officer to operate in India is
around US$ 5,0007,000 per year. These officers are generally
isolated. They are rarely trained or provided with up-to-date tech-
nical data and market information to disseminate to farmers.
Under a new Agricultural Competitiveness Project to improve
the market orientation of production, 20,000 extension offi-
cers (plus other farmer decision influencers) who own mobile
phones will receive annual subscriptions to SMS-based infor-
mation services.4 The services (in the local language) will be
tailored to suit local agricultural specialization and consist of
technical information, local weather forecasts, price informa-
tion, overviews of the market, and information related to
the competitiveness project, such as training opportunities,
government agricultural schemes, and so on.
The cost will be around US$ 1015 per year (constituting about
0.2 percent of the operating cost for an extension officer). Each
officer will receive around 1,000 messages per year. Extension
4 Information in this section is based on the Project Appraisal Doc-
ument for the Maharashtra Agricultural Competitiveness Project
(http://web.worldbank.org/external/projects/main?Projectid=P12
0836&theSitePK=40941&piPK=73230&pagePK=64283627&me
nuPK=228424).
8285-Module9.indd 230
officers will be specifically tasked with disseminating the infor-
mation to smaller-scale and more disadvantaged farmers.
The annual cost of the SMS program will be about US$
500,000. Annual crop sales in wholesale markets in the
state are valued at about US$ 8 billion per year. If the SMS
market information service for 20,000 extension officers in
Maharashtra has an effect similar to that of the 1,600 Internet
kiosks in Madhya Pradesh (where the e-Choupal scheme
raised prices paid to farmers by 1.6 percent), it could gener-
ate an increase in farm-gate income of some US$ 120 million.
Radio Raises Farmers Maize Prices in Uganda
Svensson and Yanagizawa (2009) assessed how prices paid
to farmers were influenced by market information collected
by the Market Information Service Project and disseminated
through local FM radio. The information was broadcast
through daily bulletins of 24 minutes and a longer weekly
program that provided district market prices.
Having access to a radio was associated with a 15 percent
higher farm-gate price. Where market information was not
disseminated through the radio, there was no effect. The
results suggest that reducing the information asymmetries
between farmers and other intermediaries increased farm-
ers bargaining power.
Market Price and Supply Information for Farmers
in Senegal
Manobis Time2Market (T2M) application provides real-time
information on prices and arrival status of products in mar-
kets (Annerose 2010). Manobi independently collects the
information, which it uploads onto a central database using
mobile phones that dial in to the server via WAP (wireless
application protocol, which is specifically designed for hand-
held wireless devices to browse Internet content). It offers
access to the data for producers, exporters, and public agen-
cies through the web, WAP, SMS, and voice.
Farmers can check prices before they set off to sell their
produce and discover where they are likely to find the best
offers. Farmers have secured, on average, about 15 percent
higher profits after having paid net costs, including the price
of Manobis service.
Esoko Develops a B2B Market Information Exchange
to Increase Market Efficiencies in Ghana
Esokos (http://www.esoko.com/) business model is to become
a market information exchange that aggregates and delivers
IC T IN A GR IC ULTUR E
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
market information and intelligence.5 The idea driving the model
is that most businesses in the agricultural value chain collect and
deliver their own data; Esoko will provide tools and a platform
and co-opt businesses to generate content for the platform.
Esoko pays on an incentive basis to acquire information,
using targets and bonuses. Their revenue-generation model
is based on levels of subscriptions (bronze, silver, gold, plati-
num), each with a different pricing structure and its own mix
of content and tools.
The impact of this information on traders, exporters, trans-
porters, procurers, and others in the agricultural value chain
is still to be determined. The service is believed to have
the potential to reduce inefficiencies in the value chain. For
example, an exporter took 60 days and needed 5 people in
the value chain to procure a natural plant product, but with
Esokos technology, the procurement process required 31
days and 3 people, improving both the major traders and
producers share of the export price.
Esoko offers options for farmers as well. Anyone with a
mobile phone can request data for the cost of an SMS, with-
out a subscription. For a subscription of US$ 1 per month,
farmers can automatically receive information on commodi-
ties, markets, and other topics of interest.
In developing a model for selling information to farmers, Esoko
encountered a few challenges. Farmers are widely dispersed
in the field and hard to reach. It is also difficult to quantify the
exact value that the service generates for farmers. Free field
trials for farmers elicited self-reported evidence of a 2040
5 Information in this case study is based on personal communica-
tion with Esoko staff.
FIGURE 9.17: Vegetable Marketing Channels, Republic of South Africa
Farmers
Packhouses
1% 22% 54%
Export Wholesalers
25%
18%
Supermarkets
Retail shops
franchises
Consumers
Source: Ministry of Agriculture, The South Africa Horticulture Market 2000.
Note: A bakkie is a pickup truck.
E C O N O M IC AND SE CT OR WORK
8285-Module9.indd 231
231
percent improvement in revenue. Sixty-eight percent of farm-
ers said that they would pay for the service; every farmer who
received information would forward it to a further 10 farmers.
(For additional details on Esoko, see IPS in Module 3.)
INNOVATIVE PRACTICE SUMMARY
Web Portals Offer the Big Picture on Markets
in Africa, Europe, and Asia
The summaries that follow describe web portals that offer
market intelligence in three quite different settings: South
Africa, Moldova, and India. The information spans a wide
range, including long-term price trends, quality standards,
options for marketing export crops, market advice specifically
developed for smallholders, and overviews of value chains
for individual products. This kind of information can shorten
the time that producers need to acquire a sound knowledge
base to develop production and marketing strategies.
Market Intelligence from Price to Advice in South Africa
Market intelligence is included as part of a marketing extension
program developed by FAO and the Republic of South Africa.
Overviews of the markets for different products are posted on
the programs website. They are downloaded by farmers as well
as extension officers providing marketing extension training,
particularly to South Africas emerging cadre of black farmers.
The reports cover horticultural crops, livestock, dairy, wool
and mohair, and broilers and eggs, and aside from the infor-
mation on markets, they include price histories, grading stan-
dards (fat codes for beef animals, for example), and advice
on market options for smaller-scale farmers. Figures 9.17
and 9.18 reproduce examples of marketing information for
13%
Processors
National produce
3% Wholesalers
markets
10%
Bakkie operators
33%
1%
Hawkers Asian markets
11/21/11 1:06 PM
 232 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T

FIGURE 9.18: Average Tomato Sales for Three Fresh national extension service website. Export Moldova provides
Produce Markets, South Africa a portfolio of important information to traders and produc-
11,000 1,750 ers to facilitate their access to export markets. The informa-
Johannesburg
10,000 1,650 tion covers 13 products and drills down to detailed market
9,000 1,550 information on export markets, varieties, packaging, and

Riton
Tons

8,000 1,450
postharvest handling and processes, as well as EU quality
7,000 1,350
6,000 1,250 standards, the standards endorsed by Global G.A.P., and
5,000 1,150 similar information.6
J F M A M J J A S O N D
Months
2,200 2,200
Cape Town
2,000
Detailed Market Price Projections from Indias AGMARK
2,050
1,800 Service

Riton
1,900
Tons

1,500
1,750 In India, under the World Bank-funded National Agricultural
1,400
1,600 1,200
Innovation Project (NAIP), a consortium headed by the Tamil
1,450 1,000 Nadu Agricultural University has developed a largely web-
J F M A M J J A S O N D
Months based market intelligence service (although SMS and print
2,600 1,600 media are also used). The service, AGMARK (http://www
Durban
2,400 1,500 .tnagmark.tn.nic.in), carries out a number of functions aimed
2,200 1,400 at improving farmers prices and their understanding of the
Riton
Tons

2,000 1,300
bigger marketing picture for selected products.
1,800 1,200
1,600 1,100
1,400 1,000 Like the Moldova portal, the NAIP portal offers information
J F M A M J J A S O N D
Months
on grading standards, export processes, and postharvest
technology, but its innovative element is a projection of
Quantity Price
Source: NDAA 2000. future prices based on rigorous surveys of the trade, interna-
tional information, and an understanding of Indian and global
production data (figure 9.19). With this information, the ser-
horticultural crops and fresh produce in South Africa (http:// vice generates future price estimates to enable growers to
www.nda.agric.za/docs/GenPub/marketEx.htm). improve their decisions to sell or store products.

As an adjunct to this information, the Department of

Agriculture website (http://www.daff.gov.za/) lists over 40 FIGURE 9.19: Indias Farmers See the Bigger Picture:
value chains, providing an overview of the market for a range AGMARKs Market Price Projections
of products, including field crops, livestock, and horticultural
products. The Agrimark website (http://www.agrimark.co.za/
about_frame.htm) posts weekly reports on key commodities
such as sugar, maize, and livestock, which build up a picture
of the market for these products over the medium term.
This is a good example of how government can provide a
comprehensive market intelligence service aimed at build-
ing farmers understanding of the market. Interestingly the
main criticism of the information has been the urgent need to
update it, especially the contact details of key organizations.

Export Moldova Portfolio Provides Detailed Export

Market Assistance
Another example of ICT used to provide market intel- Source: Tamil Nadu Agricultural University.
ligence comes from Moldova, where the USAID/CNFA
website, Export Moldova (http://www.acsa.md/category
.php?l=ro&idc=178), has been incorporated into the larger 6 CNFA is the Citizens Network for Foreign Affairs.

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8285-Module9.indd 232 11/21/11 1:06 PM

 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS
Topic No te 9.4: ICTS FACILITATE ACCESS TO
AND DELIVERY OF INPUTS
TRENDS AND ISSUES
Farmers yields deviate from potential yields for a variety
of reasons: poor climate or weather may play a part, along
with other factors such as socioeconomic status, physical
infrastructure, institutional and government policies, or poor
access to farming technology or finance. The benefits of nar-
rowing the yield gap include increased productivity and prof-
its. These issuescovered elsewhere in this sourcebook
remain a central challenge in improving farming efficiency.
Why dont farmers use inputs and intensify their production
more? The response to this question often is limited to farm-
ers lack of knowledge about technology, its affordability, and
farmers access to working capital.
Yet farmers may also lack information on how to get inputs.
Farmers can be unsure when inputs are available, particu-
larly when the government distributes subsidized inputs.
Farmers buying habits may also be suboptimal; a little
nudging at the right time could help them purchase inputs
at the correct time. This note examines how much of the
yield gap is related to problems in accessing inputs and how
ICT can be used to facilitate access. To date, research on this
subject has been limited; it might be important to prioritize
for further research.
ICTS AND IMPROVED ACCESS TO INPUTS:
LESSONS LEARNED
Farmers need accurate information on agricultural techniques,
including input use, and they also need to source good-quality
inputs in a timely way for production. In a study of mobile
phone use in India, six of the focus groups interviewed high-
lighted difficulties in sourcing inputs such as fertilizer, seed,
and agrochemicals for plant protection. They highlighted this
problem twice as frequently as the next key problem, which
was their lack of irrigation. Several groups noted that they
lacked information for distinguishing genuine products from
the counterfeits flooding the market, which remain a signifi-
cant productivity drain. Their concern over accessing inputs
was echoed in surveys of how Indian farmers used their
mobile phones. The search for inputsparticularly seed, fertil-
izer, and plant protection chemicalswas listed high among
farmers reasons for using mobile phones.
Even if they know where to buy inputs, farmers do not or
cannot always buy them at the right time. Duflo, Kremer, and
E C O N O M IC AND SE CT OR WORK
8285-Module9.indd 233
233
Robinson (2009) argue that a tendency to procrastinate may
explain why so few African farmers use fertilizer, despite
knowing that it raises yields and profits. Only 9 percent
of farmers interviewed believed that fertilizer would not
increase their profits, yet only 29 percent had used any fer-
tilizer in either of the two preceding seasons. When asked
why, almost four-fifths of the respondents said that they did
not have enough money to buy fertilizer, although fertilizer
was readily available, and even poor farmers earned enough
to buy fertilizer for a portion of their fields. Better intentions
made little difference. Virtually all farmers said they planned
to use fertilizer the following season, but only 37 percent
actually did so.
Duflo and colleagues contend that the reason for this gap
between thought and action is that many farmers are biased
toward the present and procrastinate repeatedly. Right after
the harvest, when farmers are cash-rich, most can afford to
buy fertilizer. But they dont. They postpone the purchase,
believing they will make it later. It seems that a small dis-
count, and little nudging, could improve the intensity of
input use.
The question is whether ICT, with targeted messages, could
be effective for helping farmers to become more rational and
better-organized buyers of inputs. In other circumstances,
having access to such information through ICT seems to pro-
vide clear benefits (table 9.5):
In India, farmers with access to ICT services reported
1040 percent yield increases, primarily through gain-
ing better access to hybrid seed and being encour-
aged to introduce new farming practices (Vodafone
India 2009). All farmers claimed that their mobile
phones had led to increased yields, with some also cit-
ing price and revenue improvement. These increases
are a result of better information flows through the
use of mobile phones and other ICT services such as
the e-Choupal.
A national survey of Indian farmers found that only
40 percent of farm households accessed information
about modern agricultural techniques and inputs.7 The
7 Situation assessment survey of farmers conducted by the
National Sample Survey Organization (June 2005), Government
of India, quoted in Mittal, Gandhi, and Tripathi (2010).
11/21/11 1:06 PM
 234 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
TABLE 9.5: Information Priorities of Farmers Using Mobile Phones in India (Ranked)
INFORMATION PROVIDED VIA:
NSS 59TH ROUND OF PHONE USAGE VODAPHONE
Seed Seed
Fertilizer application Prices
Plant protection Plant protection
Harvesting and marketing Fertilizer application
Farm machinery Harvesting and marketing
Farm machinery
Source: Authors.
survey also found that almost all small-scale farmers
reported some increase in convenience and cost sav-
ings from using their mobile phones to seek informa-
tion such as input availability.8
In a survey of farmers who received the RML service,
50 percent said they reduced expenditures on agricul-
tural inputs because of SMS information services. The
service is also changing farmers behavior: 44 percent
said that it changed their fertilizer applications and
43 percent said that it changed the timing of spraying.9
A reason commonly cited for the difficulty in obtaining inputs
is that the government will often distribute subsidized inputs,
often through schemes that last only a few years. These
policies restrict the potential for the private sector to supply
inputs, and when government programs end, no company
can sustainably deliver inputs to the farming community.
PRINCIPLES AND GUIDELINES FOR POTENTIAL
INTERVENTIONS
Given the multidimensional challenges of designing an effec-
tive intervention to supply inputs, a successful design will
take a multipronged approach:
Find innovative ways to form private-sector
partnerships. Better involvement and organiza-
tion of stakeholders can improve farmers access to
information about inputs. Agribusinesses and input
suppliers have an incentive to invest in ICT services
8 Mittal, Gandhi, and Tripathi (2010).
9 The World Bank and Reuters are funding a project commissioned
by Oxford Universitys Economics Department and International
Food Policy Research Institute (IFPRI) to quantify the impact of
the RML service on farm profitability.
8285-Module9.indd 234
REUTERS MARKET LIGHT
Accurate local weather forecasts
Technical information
Input sources and/or production costs
Market information
that provide input information because of the potential
benefits that can be realized from increasing input
sales. Moreover, input suppliers and dealers can come
together to create partnerships to facilitate access to
inputs. They can do so by combining their data and
communicating via SMS. It is certainly envisaged that
SMS systems can and will be used by input supply
companies to alert farmers to the arrival of inputs,
remind them to purchase inputs, and provide timely
advice on proper input use, especially for treating
emerging pest and disease problems.
Identify ways to use ICT to improve governance
of subsidy programs. ICT offers a means of deliver-
ing subsides to the intended beneficiaries. It enables
community procurement of inputs and input delivery
through the private sector. The embedded e-payment
system guarantees timely payment from the govern-
ment and encourages the emergence of a private
network of input suppliers.
Education and information dissemination are key
components of supplying inputs through ICT. It
is critical for farmers to have a rooted understanding
of the potential long-term implications on produc-
tivity and profits of using better inputs in a timely
manner. On a more practical level, farmers need
information about how to source inputs and iden-
tify counterfeit supplies, which remain a significant
productivity drain.10 Examples are emerging in Nigeria
of esystems for verifying the provenance of specific
agricultural inputs. Similar systems might be applied
elsewhere.
10 Mittal, Gandhi, and Tripathi (2010).
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 S E C T I O N 3 ACCE SSING MARKE T S AND VA LUE C H A INS 235

The innovative practice summaries highlight two experi-
ences in supplying inputs based on the use of ICT, one from
India and one from Zambia. These innovations seek to over-
come some of the limitations encountered in input supply
programs, such as the challenges of transmitting informa-
tion on input use to widely dispersed farmers or of ensur-
ing that government-subsidized inputs reach the intended
beneficiaries.
its revenues from commodity transactions at the kiosks and
from using the kiosks to market other goods such as agri-
cultural inputs.11 In addition to the kiosks, ITC will also offer
information services to farmers over mobile phone, thus
deepening its relationship with the farmer (Kumar n.d.).
Table 9.6 shows the impact of e-Choupal service on farmers
yields and costs. Ultimately ITC expects half of its revenue to
come from input sales.

INNOVATIVE PRACTICE SUMMARY

Agribusiness Advises Indias Farmers through
e-Choupal Kiosks
ITC is an agribusiness that provides information services to
Indias farmers through 6,500 e-Choupal (Internet) kiosks
(http://www.itcportal.com/sustainability/lets-put-india-first/
home.aspx). Started in 2000, the kiosks presently operate
in 40,000 Indian villages to reach approximately 4 million
farmers. These kiosks are hubs where farmers can obtain
price information, seek options for selling their produce,
buy inputs, and obtain advice on farming practices related
to input use. Services are offered free of charge; ITC earns
INNOVATIVE PRACTICE SUMMARY
Zambian Farmers Buy Subsidized Inputs via
Mobile Phone
In Zambia, an electronic voucher (e-voucher) system is being
piloted by the United Nations World Food Program (WFP),
CARE, and the local Conservation Farming Unit (CFU). With
11 ITCs Rural Development Philiosophy at Work ITC, http://www
.itcportal.com/ruraldevp_philosophy/echoupal.htm, accessed July
2011.

TABLE 9.6: Agricultural Interventions Made through e-Choupal Kiosks and Their Impacts
TYPE OF AGRICULTURAL
TECHNOLOGY OR PRACTICE
Seed use per unit area
Seed of verified quality
Seed treatment
New varieties and improved timing
of planting
Weed and other pest management
Soil testing
Storage practices and market
linkages
BEFORE E-CHOUPAL: 2000
For soybeans, farmers used a high plant-
ing density (4550 kg seed/acre)
Farmers limited awareness of benefits
of certified and foundation seed led to
limited use of such seed
Low awareness of benefits of seed
treatment
Farmers used varieties inappropriate
for local conditions (climate, pest, and
disease incidence and timing of rainfall)
Farmers controlled weeds by hand; for
pest control, they were largely guided by
local input dealers
No awareness of soil testing and conse-
quent benefits
Low awareness of hygienic practices for
stored crops; limited opportunities to sell
products
E-CHOUPAL INTERVENTION IMPACT
Farmers advised to use a lower planting Savings: 10 kg seed/acre (Rs 200/acre)
density (3035 kg seed/acre)
The e-Choupal demonstrated the benefits Yield increase and self-sufficiency in
of foundation and certified seed through seed (for self-fertilizing, nonhybrid
its agricultural extension program crops)
(Choupal Pradarshan Khet)
The e-Choupal spread awareness about Germination percentage and yields
benefits of seed treatment and provided increased significantly
treated seed to some farmers
The e-Choupal suggested new varieties Most suitable variety planted on time,
suitable for adverse conditions and leading to higher yields
advised farmers how to better align
planting with rainfall
The e-Choupal suggested use of Effective weed and pest control leading
herbicides and/or pesticides in specific to low loss of yield
circumstances
The e-Choupal propagated the practice of Reduced fertilizer costs and more
replenishing soil nutrients based on soil appropriate nutrients applied
testing reports
The e-Choupal advised storage of grain Reduced losses from poor storage
based on moisture content to avoid loss practices as well as better earnings
and contamination; it offered farmers alter- from the sale of output
nate opportunities to sell their products

Source: ITC Ltd 2010.

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 236 MOD ULE 9 STR ENGTH ENING A GR ICULTUR A L M A R K ETING W ITH IC T
the help of Mobile Transactions (a company specializing in
low-cost payment and financial transaction services) (http://
www.mtzl.net/), the e-voucher system empowers smallhold-
ers to obtain subsidized inputs from private firms (giving
the firms, in turn, an incentive to expand and improve their
business).12
An e-voucher is redeemed in the following steps:13
1. On receipt of the e-voucher, which resembles a
prepaid mobile phone card, the farmer goes to a
registered agrodealer. He/she buys inputs using the
voucher and the amount of top-up cash required to
complete the purchase.
2. He/she scratches the first foil to reveal a PIN. The
agrodealer uses the PIN to validate the authenticity
of the farmers voucher and certify receipt of the top-
up payment. Upon validation, the redeemable cash
value of the scratch card is automatically credited to
the suppliers transaction account from the master
subsidy account.
3. Upon delivery (which is either immediate in the case
of an agrodealer or later if the buyer purchases from
an agent), the farmer scratches the second PIN to
confirm delivery and complete the final authorization,
which allows the agrodealer or agent to receive final
payment from the master subsidy account.
Under the governments Fertiliser Support Programme (FSP),
small-scale farmers had difficulty accessing inputs owing to
delays in input distribution and poor monitoring of the pro-
grams fertilizer distribution.14 The mobile transaction system
enables electronic monitoring of the e-voucher system,
documenting which vouchers have been redeemed, where,
and for which products, thereby improving the efficiency
and effectiveness of the input subsidies.15 Because farmers
are registered with the system, they can be identified more
12 Mobile Transactions Zambia; see http://www.mtzl.net/info/index
.php?option=com_content&view=article&id=26&Itemid=8.
13 Based on testimony to the Parliamentary Committees on Agri-
culture and Lands on Performance of the Fertiliser Support Pro-
gramme in Zambia.
14 Based on testimony to the Parliamentary Committees on Agri-
culture and Lands on Performance of the Fertiliser Support Pro-
gramme in Zambia.
15 Kakunta (n.d.).
8285-Module9.indd 236
effectively for specific training programs with input- and
productivity-enhancing components. Moreover, the
e-voucher system supports private agribusinesses by mak-
ing them the direct source for inputs; as more private input
dealers choose to participate, competition may increase.
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