Using ICT to Provide Agriculture Market Price Information in Africa

This briefing paper highlights the importance of market price information in promoting efficient production and trade in the agriculture sector. Market price information, also known as MIS, helps actors in agriculture value chains make informed decisions that promote efficient production and trade. It is especially valuable for producers that sell in local and regional markets, as it enables them to negotiate with traders, determine what markets to sell to, store their crops until prices increase, or even plan future crops. However, companies interested in providing market price information services face challenges, including high upfront investment costs and ongoing expenses to keep information updated by trusted enumerators. Studies have shown that mobile phone service coverage alone can have significant impacts on market efficiencies. In Kerala, India, a study found that mobile phone coverage led to significant market efficiencies, with the difference in prices across markets declining, waste decreasing, and fishermen's profits increasing by 9 percent. A similar study in Niger found that mobile phone service penetration reduced market price dispersion across markets by 10 percent. There are several types of market information services, including mobile network operators, third-party service providers, buyers providing market and price information to producers, and MIS services offered by governments. Some key prerequisites for scalable and sustainable market price information services include a service provider company with a large number of subscribers in rural areas, a network of trusted market price enumerators, a way to regularly validate user value, a business model that enables services to sustain themselves, and a subsidy from government. Mobile network operators (MNOs) are often involved in the provision of MIS, either as primary service providers or partners to other service providers. Some MNOs offer value-added services that allow farmers, traders, and other users to receive price alerts, weather, and crop information. These services are accessed on a mobile phone in the form of interactive voice recognition (IVR), short message service (SMS), wireless application protocol (WAP) browsing, and Web-based Internet browsing. Users pay a fee for service to their mobile phone provider. Examples of MNO services include partnerships between Vodacom, the Government of Tanzania, and the International Fund for Agricultural Development (IFAD) to provide farmers and traders with access to the latest commodity prices via SMS, and a similar collaboration between Celtel (now Zain), the Zambia National Farmers Union, and IFAD to provide commodity prices to farmers via SMS. However, it is not yet clear if these examples will be sustainable without ongoing donor support. Third-party providers of market information services are also emerging in sub-Saharan Africa. These companies work through mobile phone networks and Internet service providers to offer an array of services that allow producers, traders, and others to get up-to-date price information, weather alerts, and other information. The information they provide can be accessed via mobile phone telephony (voice, SMS, WAP) and Internet portals. Examples of third-party market information services in sub-Saharan Africa include Esoko and Manobi, which both have affiliations with USAID.