MARKET INFORMATION SYSTEMS (MIS)
The phrase 'Market Information Systems' is used extensively and has attracted a great deal of attention for some time. It owes much to the extent that web technology has become available to a far larger audience, but also to the virtual demise of extesnion services and to a desire on the part of development agencies to use modern technology to reach farmers and improve their livelihoods.
The CTA, whose Mission it is to -
“To strengthen policy and institutional capacity development and information and communication management capacities of ACP agricultural and rural development organisations. It shall assist such organisations in formulating and implementing policies and programmes to reduce poverty, promote sustainable food security, preserve the natural resource base and thus contribute to building self-reliance in ACP rural and agricultural development.”
has re-launched a debate previously held in 2005. We held it in high regard and as a tribute to the valuable work being undertaken by our friends in CTA, have decided to set up this page on MIS.
The main issues in our opinion are:
Devising Market Information Systems
- What Information
- Who provides
- How distributed
- Who pays
The usual argument for MIS is a perceived need to distribute market price information on the assumption that the receipt of such information will enable ideally farmers to get best prices. In most countries, there are a number of markets and so price information from each market circulated to interested parties will lead to a more transparent market mechanism.
In the last decade a large number of Governments of developing countries have launched such services. The technical task involved becomes easier by the day and it is possible to cover, let us say, half a dozen markets, with price information on 10-20 items and to transmit it to screens at all the markets covered. It is possible to go further and to let that information be available over the web to anyone who wants it. The Ministry of Agriculture in India had such a system in place in 2000 and the Central Bank in Sri Lanka with fewer markets had it around the same time.
The most advanced systems in the world such as those that cater to stock markets and exchange markets have real time market information that is constantly upgraded albeit at short intervals. Market price information can be gathered once a day or can be updated a number of times during the day although it becomes cumbersome to do so. Once a day is easy enough and can be organised through a panel of market traders but more than once a day that normally requires assigning staff for the specific function.
More limited price coverage at commodity exchanges is very old indeed. Chicago is probably the best known. A more limited produce range at a single point allows real time information on trades just as it is available from stock markets. At a commodity exchange, prices and volumes of trades made can be transmitted and electronic systems would even allow trading from a distance through brokers or dealers. Real time information is only required to enable such trade.
There are three possibilities, either the state provides, or the private sector or a public-private partnership. Market price information is nearly always provided by the state although it can be contracted. If there is just one market, as is the case with a stock exchange, the exchange itself can provide the information.
Commodity price information, as opposed to markets, can be provided by commodity associations or regulatory bodies or by an exchange or by the private sector. There are a lot of commodity marketing boards which have a state owned or quasi state owned status. There are many examples of state related commodity boards and more rarely they are associations.
The reason why there is more exaltation when market information is provided by the private sector is because it suggests that the activity is a profitable and self sustainable activity which clients consider valuable enough to pay for. Of necessity, the most viable are the leading produce including maize, rice, wheat, sugar, cocoa, coffee, tea, soyabean oil andother edible oils. The minor commodities are seldom commercially viable.
Distribution of information to a few points is easiest. One market can send its prices to the other markets and it can be displayed on screens visible to traders. The next less transparent system is to send information to private computer screens in a set location such as trading floors or exchanges or markets.
With the web and faster speeds of transmission, there is no problem in distributing information. Reuters and Bloomberg and others send it to a large number of subscribers who often trade on the basis of that information. You can even send information to subscribers on their mobile phones. To receive information in this way, you have to be able to afford a computer with an internet connection or a mobile phone account. You also have to pay for that information. There are a number of private sector providers although none of them appear to be making much money.
To overcome the problems above, information can be piped to distribution points. In India ITC sends market information and even answers farmer questions to those selling to the company at its buying points. Thompson have a few farmers in three states who can receive market prices iat various centres in each state.
Taxpayers are paying for most of the market information being distributed in developing countries. Either taxpayers within that country as a service provided by the Ministry or the Central Bank, or taxpayers in developed countries through aid programmes. These two ways avoid demanding that information users pay where the answer may be a loud no because the information may not be commercially useful.
I have not heard of a single example of farmers paying for an information service in any developing country in the world although it is possible to pretend that they are paying while the real party is an aid donor. They obviously do not find such information to be commercially justifiable. Instead, donors pay presumably because they think it is good for farmers and farmers are just not clevel enough to see they should pay for it.
Traders, however, do pay for privately provided market information when it is commercially valuable information. In India, my friends at Agriwatch have a large service with private sector clients and even the Government as customers. For those who believe in the private sector and sustainability, this is the key criteria - who pays? When traders pay, those providing the information have to make sure it is good and delivered timely. It keeps the system competitive.
Trade associations do pay, even if it is in part state money due to national membership of organisations such as the Asian and Pacific Coconut Community or the ICCO.
A massive amount of taxpayer money is used to finance UN information systems such as at UNCTAD, COMTRADE and the FAO. Although institutions focus on providing what they believe to be commercially viable, it is interesting that they have to be paid by public sectors. Very few in the private sector think what they offer is worth paying for. Sad but true. What is also true is that countries do appear to value the information for public sector purposes.
It is crucially important to decide who the target beneficiaries are. Not only in order to be honest but also knowing the traget determines content or format or at least should.
The dishonest part of the answer to this question as with most development quastions is to argue that the indirect beneficiaries are the poor small farmers. They may not have electricity, certainly no computer, probably no mobile phone, they may be committed to selling to the trader who gave them credit or the input supplier, sell at farm gate rather than even the road, but some MIS suppliers justify use of taxpayer money by claiming it to be used to empower the very poor. Knowing what the prices being paid are in a market nort accessible to them or by people who they do not owe money to, is not of any realistic interest.
There are two sets of people who need the information. They are traders at any one market who want to know what the prices are at other markets in order to take advantage of arbitrage and wholesalers in deciding where to take their produce to. These two categories help markets function better and this can be argued to have a trickle down benefit for the poor but it is a tenuous argument not capable of being measured or monitored.
However, markets functioning better is a good end in itself and in the long term interests of poorer farmers even if it is not measurable.
Market price information helps develop transparency in the value chain, allowing actors to take into account market factors in their actions. It is fairer to all concerned to have information in the public domain.
Most of all market data is useful as one of the sets of data required for analysis. What should be grown, how should it be grown, who sold to and at what prices. But that requires a mechanism for analysis and for conveying findings to farmers. With the virtual death of extension services, that crucial link is missing.
Therefore, one major use of IT being advocated is for making it possible to provide a cut price extension service. A person, can be a self employed graduate, in a village can be a focal point for providing extension through a state contract and eventually maybe even by charging farmers. The information being gathered and analysed can be passed on to farmers in a useful way - that is, as advice on long terms strategy on crops and portfolio.
There is not enough market information in the world. Even more, there is almost no farm gate information on prices. We need such data for analysis and planning. Traders and wholesalers need it for arbitrage, transparency and operations.
But to argue it is for small farmers is ludicrous. Even to argue it is for larger farmers is far fetched since only what I would call gentlemen farmers with over 8 ha and other sources of income may be able to make use of such information. The largest farmers can use it because they are their own wholesalers.