2nd Market Information Symposium “Marketing Information as a Leverage in National Food Security Planning and Regional Sustainable Trade” September 15th – 16th, 2011 at Silver Springs Hotel, Kampala THE ROAD TO THE MARKET Small scale farmers and cell phones in developing countries Bjorn Van Campenhout, IFPRI-Kampala
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2nd Market Information Symposium Marketing Information as a Leverage in National Food Security Planning and Regional Sustainable Trade September 15th –
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2nd Market Information Symposium
“Marketing Information as a Leverage in National Food Security Planning and Regional Sustainable Trade”
September 15th – 16th, 2011 at Silver Springs Hotel, Kampala
THE ROAD TO THE MARKETSmall scale farmers and cell phones in developing
countries
Bjorn Van Campenhout, IFPRI-Kampala
There IS growth in Africa!
Importance of ICT for development
“The single most transformative technology for development” – Jeffrey Sachs
<->
Africa has problems that need priority (eg. Low productivity of small scale farmers, basic health care, education,...)
Framework: technology threadmill
• Idea: productivity increasing technology is no solution without a consumer market
• Effect of inovations is dependent on price elasticity of demand: – Inelastisc: quantity demanded increases marginally with a given reduction in price
– Elastisc: quantity demanded increases substantially with a given reduction in price
– > determines effects of innovation on well-being of innovator
Framework: technology threadmill
• Ag. Commodities, like eg. maize generaly have low price elasticity
• Long run: supply increases and prices collapse
• Innovating farmer is left worse off than before inovation (<-> consumers)– > condition: sufficiently integrated markets –
arbitrage: information is key!
Use
• In developed countries: social/status symbol
• In developing countries:– First real broad based technological innovation
– Sector itself has substantial effect on the (informal) economy:
• Public phone services
• Prepaid selling points, accessories shops,...
• Battery charging services,...
– Technology adapted to local circumstances (in terms of power supply, ease of use,...)
Adapted services
• M-pesa
• MIS
• Health monitoring
• Prepaid – very small amounts
• Flexiebele systemes to reload
• Mobiel internet (tethering)
Impact
• Lots of anecdotic evidence in popular press (technology quarterly of economist magazine, BBC world,...)– Fishermen in Zanzibar– Taxi drivers in Dar es Salaam– Butchers and producers of various other
perishable products– Etc...
Impact
Impact - macro
• Roller and Waverman (AER 2001): impact of telecom infrastructure – only for fixed lines
• Fush, Meschi and Waverman (2005): 10 percent increase in cell phone adoption-> 0.6 % increase in growth
• Qiang (2009): 10 increase in cell phone adoption -> 0.8 % increase in GDP/capita
BUT: direction of causality?
Fishermen in India (Jensens 2007 QJE)
Fishermen in India
The man in the middle
• Middlemen are not liked – not productive, parasites, liars,...
• BUT: very important function in economy!
• Study in Tanzania that focusses on the negotiation process between farmers and middlemen
Semi-subsistance farmers in Tanzania
• 1100 farmers interviewed, focus on maize marketing
• Focus op onderhandelingspositie van de boer• Economic as well as behavioural characteristics:
– Attitudes towards risk?– Impatience of farmer?– Knowledge of prices in other markets?
• Outcome variable: – Difference between farm gate price and consumer
price (arbitrage over space)– Difference between price at time of harvest and time