Overview: Market Information

The phrase “finding out what your customer wants” emphasizes the role of communications in agricultural marketing. It encompasses two kinds of information: (1) the immediate information required on the market’s demand for specific volumes and quality of agricultural products and (2) the longer-term information on market trends (referred to here as “market intelligence”) required to make future plans for the farm. ICTs, especially mobile phones, facilitate the provision of both types of information. ICTs are used for real-time market research to obtain current information and help users gradually accumulate market knowledge and insight.

Studies of farmers’ information needs paint a mixed picture. Information needs differ significantly between countries and within countries for farmers producing different products. Farmers differ in their perceptions of the information they require (as revealed by market research) and in their priorities when they come to access information. The primary message underlying these disparities appears to be that farmers require a package of information and that their needs and priorities change throughout the production cycle.

Figure 9.2: Farmers'Differing Information Priorities and Sources of Market Information in Indonesia, India, and Uganda

A building body of knowledge indicates that 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 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.

In the day-to-day marketing of their products, farmers are mainly at a considerable disadvantage. Their market information will come from a neighboring farmer who may have visited a market on the previous day. A trader’s 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 opportunity, 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.

It is longer-term market information, referred to here as “market intelligence,” that affects farmers’ longer-term decisions. 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 knowledge created through the acquisition of short-term market information over a period of time. 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 so that they can make more sensible management decisions and increase their profitability.

It remains unclear whether market information services through ICT like mobile phones 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. 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 holistic 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 scheme.

Also read Topic Note 9.1 and Topic Note 9.3