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Smart marketing

16 June 2009

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Knowledge is power, and agriculture is no exception. Producers who keep track of market prices stand to make more money. ICTs, particularly mobile phones, e-mail and the Internet, are radically changing the ways farmers sell their products in some ACP countries.

It is a busy morning in the Jinga branch of Zambia's network of District Business Information Centres (DBIC). Farmer Aida Mulungwa has come in to use the Internet to find out how to sell her mushrooms. Close by, Business Information Officer Humphrey Mutaasa is searching contacts via e-mail and the Web to find a buyer for a batch of 10,000 Tilapia which will soon be ready at a local fish farm. In Ghana, meanwhile, Talhatu Kody is deftly fielding SMS messages on her mobile phone to track market prices in a 100 km radius, so she can best decide where to sell her maize and beans.

Smart marketing
Image credits: Spore / Smart marketing

The past decade has seen remarkable progress in the use of ICTs in the agriculture sector of developing countries, especially in the area of farmers' access to market information. Mobile phones, e-mail and the Internet are strengthening the bargaining power of smallholder farmers, whose biggest headache is often how to sell their produce for a decent price. Producers working without good market intelligence are easy prey for unscrupulous traders; ill-informed and vulnerable, they are often forced into accepting the lowest offer, especially if they have travelled to take their goods to market. Deals made by cellphone or e-mail can save precious time and money. Farmers need only leave their fields and pay for transport when they are sure they have a buyer. Conversely, they may be tempted to travel further afield if they know that they can get a higher price at a different market.

In Burkina Faso, Mali and Niger a scheme run by NGO Afrique Verte has launched ICT-based trading exchanges for cereals, so that producers can compare supply and demand in different areas.

ICTs can help with market research, enabling farmers to make better decisions about what to grow and when to grow it. Efficient market information systems can link producers with buyers even before their crop is harvested - in some cases before the seeds are sown. Big buyers need to know well in advance how much of a certain product they can rely on.

Strength in numbers

In many cases, it makes sense for small-scale producers to join up with others through producer organisations to ensure access to ICTs, streamline time-consuming exercises such as market research and offer bulk supplies to buyers.

Access to computers and mobile phones can help farmers' groups launch direct marketing campaigns. E-commerce offers opportunities to advertise to a larger audience and sell direct to customers. Information gleaned on the Internet can be crucial in enabling producers to understand requirements for export markets, including complex phytosanitary standards.

In Mali, five producing companies have grouped together under the brand name Fruiléma, creating a web platform to market their goods. The consortium offers mangoes and other fruit for export through its website and uses ICTs to collect information and follow the whole production chain, ensuring traceability for its buyers.

Market Information Systems (MIS), which provide details of prices and stocks in given markets, have been around for several decades. The first generation became popular with development organisations in the late 1980s and 1990s to fill the gap after the collapse of state-controlled marketing systems.

More recently, ICTs have started to revolutionise the way some farmers sell their products. Many of the systems use the versatile and popular mobile phone as a simple and low-cost means of relaying information via SMS to users in the field.

In Senegal, the Xam Marsé service launched by Manobi provides information on the prices and availability of fruit, vegetables, meat and poultry at all the country's markets. InfoPrix in Benin offers market prices of the 25 most important staple foods via SMS. In South Africa, the Makuleke Project has set up a virtual trading facility installed on mobile phones so that farmers can sell their produce direct.

Using market intelligence

High-tech market information systems vary greatly. Some give basic information on the price of a given product, while other, more ambitious ones offer details of availability, names and contacts of traders, quantities traded, stocks and even market trends and price forecasts. Second generation MIS that use ICTs are generally based at least partly on private capital as opposed to public funds. They also tend to be wider in scope and scale than their pre-high-tech predecessors, covering far more products and a larger geographical area.

In Benin, Burkina Faso, Côte d'Ivoire, Guinea, Niger, Nigeria, Mali, Senegal and Togo, the RESIMAO/WAMIS-NET network supplies the latest information on 400 rural and urban agricultural commodity markets via the Internet, radio, print, e-mail and SMS. The Smallholder Enterprise and Marketing Programme (SHEMP) offers a cross-border SMS market information service for farmers in Zambia and the Katanga province of the Democratic Republic of Congo.

Smart marketing2
Image credits: Spore / Smart marketing

The most successful systems are those offering two-way communication rather than the simple delivery of information, enabling farmers to sell products direct. Also important is the teaching component. Market information is only useful if farmers know how to use it.

The Linking Local Learners (LLL) initiative links all those involved in the supply chain - farmers, buyers, transpor-ters, traders and retailers - and it encourages them to learn from each other. Uganda's Rural Information System, which uses ICTs to distribute information on agricultural commodity markets, has developed a Train-the-Trainer system so that farmers can make the best use of the service. In Northern Ghana, the Eastern Corridor Agricultural Market Information Centre uses mobile phones to transmit market information to 24 community-based farmers' cooperatives. The leaders organise meetings with their members to interpret market prices for the benefit of illiterate farmers and discuss what action to take.

A growing number of high-tech marketing schemes target women, who often have poor access to ICTs, but strong potential for raising household income. An initiative in Tanzania's Uluguru Mountains is enabling women farmers to access up-to-date market information. The Eastern Caribbean Agricultural Trading and Development Association (ECTAD) is helping women farmers to use ICTs to tap export markets for speciality crops such as turmeric and thyme.

In Samoa, the Tagiilima Collective runs an Internet training centre for villagers and sells women's craftwork on-line, while in Senegal, mobile phones are strengthening the entrepreneurial initiatives of women fish processors.

Winners and losers

When it comes to reaching small-scale producers, the challenges of access and literacy remain substantial. Many schemes are top-down and not necessarily suited to the needs of local producers.

Reliability of data is another major issue. Some farmers are reluctant to trust information that they believe may not be objective. A 2008 study involving farmers in Tanzania showed that most producers still consider face-to-face contact to be important in the buying and selling chain.

Sustainability is a key problem. Most ICT-based services are currently run with donor support, and if operations are to be scaled up, they need to be self-financing. "For a scheme to reach a certain stage, it needs to have development support," said Ben Garside, a researcher at the International Institute for Environment and Development (IIED). "But there needs to be a sustainable business model to ensure that it lasts, and private sector involvement is key to that."

Some systems are already charting new territory, offering advertising space in exchange for market information services and/or charging fees to users.

Stories of deals that have been struck using high-tech MIS are legion. Esoko, formerly Tradenet, a highly successful system that enables producers in 15 countries to access market information by cellphone, vaunts the case of a farmer in Côte d'Ivoire who was contacted by a Bolivian trader wanting 500 t/month of cashew nuts and 3,000 t/year of cocoa for a client in Russia.

Many of the success stories are anecdotal, and there is very little evidence to show the effect on the earning power of smallholder producers. A report on the ANOPACI network, recently published with CTA support, highlighted the problem: "Impact studies are almost inexistent," it said.

Information is a powerful tool with far-reaching consequences. Market data diffused by MIS may encourage price fixing, since it makes it possible to check if traders have respected any pact to keep to an established price. Experts caution about other potentially negative spin- offs. Cutting out the middleman is not necessarily a good idea, since these often provide other essential services such as credit and technical support. And if one farmer with ICT access benefits from new markets, how does this affect his neighbour who still relies on the old methods?

Said Garside: "We are interested in more nuanced methods of looking at livelihood benefits and also better understanding who 'the losers' are from a particular intervention: does market access for some result in others being further excluded?"

Source : Spore

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