One vitally important area where I can find very little impact analysis is at the nexus between ICT and distribution costs. With staple crops in Africa the cost of delivery to urban market is typically in the range of 10 to 20% of the wholesale price. Nearly half that cost is incurred over the first 25% of the journey. Given the increased issue of keeping food prices down for the urban poor, we need to understand how ICT is impacting on logistic costs. And how through better understanding and/or though specialist applications, ICT can be used to facilitate aggregation, enable more efficient collection routes and the encourage the better utilization of backhauls, as a way of taking out unnecessary transaction costs out of food distribution. This could be a win: win situation, enabling producer to receive better prices as well as lowering cost for urban consumers.
And yet in the field we are seeing - what IFPRI have described as a ‘quiet revolution’ in agricultural marketing, particularly in Asia. Powered by cell phones and leveraging the improved rural transport networks we are seeing disintermediation occurring. Larger scale traders are venturing into the country to buy products directly. So product instead of cascading through the hands of multiple small traders, it is being marketed directly, reducing transaction costs. In both Bangladesh and NE India, we are seeing the emergence of dally primary wholesale markets at some locations which used to be only the sites of weekly consumer markets.
Dixie, its quite intresting that the price that rural farmes receive is 100 percent less than that in the nearest collection center in some cases. While margins may vary, generally the margins received by rural assemblers ( rural traders transacting between rural households and the long distance traders/inter district travelling traders) are almost 100%.
On one of the applications that we worked on here in Uganda to try and connect markets where farmers posted offers to sell and buyers were posting offers to buy, we did find that traders were still not interested in going beyond the rural assembly points ( usually roadsite marketing points). They said that much as a particular farmer or farmer group has posted an offer to sell, traders from far away do not know where and how to locate them. In the end this would be costly for them trying to find out who these farmers/farmer is. They also wanted to bargain as they look at the product.
This finding indicates that while ICTs can enable farmers to know the prices, still they would need to be supported with marketing infrastructures/points that are easily accessible. They need to assemble their products where traders can easily meet them. I also met this scenario in Tanzania where big buyers were not intrested in dealing with individual farmer and prefering to deal with rural assemblers. They argued that the transaction costs are much higher as one gets to the household level.
I think this is an area where NGOs should play a leading role in setting up collection marketing points and then support rural farmers to easily deliver their supplies/products to such points.
ICT is about providing information but by itself, it cannot lead to increased efficiency of the marketing system.
Interesting points, Graham. We all know that the transport sector in the developed world uses ICT applications in very sophisticated ways to increase efficiency and speed products to markets -- fleet management systems. And you cite some examples in Asia. But how about Africa? Does anyone have examples of this?
I also came across the system that you refer to and this is in connection with cross-border trade. within individual countries here in Eastern Africa, transport is still heavily run within the informal sector. Yes there are some companies that have come up. Therefore this is still virgin territory for ICT and I think all applications would be very much welcome. I will try to look for existing examples here and share with the team. But like I just pointed out, this is an area where new knowledge can be brought here from the developed world and I think companies/individuals in the developed world should come over to explore the ground here. I do think that technologies are now available. Its time for development projects to facilitate transfer to such technologies through private partnerships between local firms and international companies?
This subject is very interesting, and I agree with Grahame that little research has focused on the impacts of ICT on logisitcs or transport costs in agriculture. I also agree with Judy that the developed world uses many ICT devices to lower costs and improve management/aggregation, so there must be some useful (and more affordable) applications that could work in developing areas. I think what might help in making sense of the 'quiet revolution' and the impacts of mobile phones and other ICT is engaging in interdisciplinary dialogue between agriculturalists, ICT specialists, and those working in the transport sector. Interdisciplinary approaches and collaboration between IT and ag experts, and the private sector, have been necessary for all projects/companies working on ICT for agriculture (especially to maintain sustainability). As for transport/logistics, the World Bank has an entire unit dedicated to infrastructure and transport. Many other development partners, along with national governments, make major investments in faster and safer transport. Numerous economists have also harped on the relationship between transportation and road/highway infrastructure (among other types) and improvements in the export sectors as well as product affordability.
All that said, it is very likely that experts in transport and logistics might have critical knowledge on how to use ICT to lower transaction costs in agriculture...which leads me to wonder how many agriculturalists are dialoguing with transport specialists on this topic. Combining expertise and exploring devices used in the tranport sector might lead to increases in understanding both opportunities and impacts that ICT for logistics/transport has on smallholder farmers.
Dixie, its quite intresting that the price that rural farmes receive is 100 percent less than that in the nearest collection center in some cases. While margins may vary, generally the margins received by rural assemblers ( rural traders transacting between rural households and the long distance traders/inter district travelling traders) are almost 100%.
On one of the applications that we worked on here in Uganda to try and connect markets where farmers posted offers to sell and buyers were posting offers to buy, we did find that traders were still not interested in going beyond the rural assembly points ( usually roadsite marketing points). They said that much as a particular farmer or farmer group has posted an offer to sell, traders from far away do not know where and how to locate them. In the end this would be costly for them trying to find out who these farmers/farmer is. They also wanted to bargain as they look at the product.
This finding indicates that while ICTs can enable farmers to know the prices, still they would need to be supported with marketing infrastructures/points that are easily accessible. They need to assemble their products where traders can easily meet them. I also met this scenario in Tanzania where big buyers were not intrested in dealing with individual farmer and prefering to deal with rural assemblers. They argued that the transaction costs are much higher as one gets to the household level.
I think this is an area where NGOs should play a leading role in setting up collection marketing points and then support rural farmers to easily deliver their supplies/products to such points.
ICT is about providing information but by itself, it cannot lead to increased efficiency of the marketing system.
Interesting points, Graham. We all know that the transport sector in the developed world uses ICT applications in very sophisticated ways to increase efficiency and speed products to markets -- fleet management systems. And you cite some examples in Asia. But how about Africa? Does anyone have examples of this?
I know that USAID's East Africa mission has worked some with ICT and transport but related to reducing delays at borders and tracking goods in transit across countries, including the regional RADDex system (http://www.competeafrica.org/components/reducing_barriers_to_trade/transit/index.php) And
Judy
Dear Judy,
I also came across the system that you refer to and this is in connection with cross-border trade. within individual countries here in Eastern Africa, transport is still heavily run within the informal sector. Yes there are some companies that have come up. Therefore this is still virgin territory for ICT and I think all applications would be very much welcome. I will try to look for existing examples here and share with the team. But like I just pointed out, this is an area where new knowledge can be brought here from the developed world and I think companies/individuals in the developed world should come over to explore the ground here. I do think that technologies are now available. Its time for development projects to facilitate transfer to such technologies through private partnerships between local firms and international companies?
This subject is very interesting, and I agree with Grahame that little research has focused on the impacts of ICT on logisitcs or transport costs in agriculture. I also agree with Judy that the developed world uses many ICT devices to lower costs and improve management/aggregation, so there must be some useful (and more affordable) applications that could work in developing areas. I think what might help in making sense of the 'quiet revolution' and the impacts of mobile phones and other ICT is engaging in interdisciplinary dialogue between agriculturalists, ICT specialists, and those working in the transport sector. Interdisciplinary approaches and collaboration between IT and ag experts, and the private sector, have been necessary for all projects/companies working on ICT for agriculture (especially to maintain sustainability). As for transport/logistics, the World Bank has an entire unit dedicated to infrastructure and transport. Many other development partners, along with national governments, make major investments in faster and safer transport. Numerous economists have also harped on the relationship between transportation and road/highway infrastructure (among other types) and improvements in the export sectors as well as product affordability.
All that said, it is very likely that experts in transport and logistics might have critical knowledge on how to use ICT to lower transaction costs in agriculture...which leads me to wonder how many agriculturalists are dialoguing with transport specialists on this topic. Combining expertise and exploring devices used in the tranport sector might lead to increases in understanding both opportunities and impacts that ICT for logistics/transport has on smallholder farmers.