I failed to introduce myself in my previous post. So here you go. I am Varun Hallikeri, a Master of Arts in Law and Diplomacy candidate at The Fletcher School concentrating on International Business Relations and International Political Economy. This summer I am at FIT Uganda Limited in Kampala, Uganda and I hope you read my previous post to know what I am doing here.
Infotrade: The Service
The market information system (MIS) service of FIT Uganda Limited is offered under the trade name Infotrade. Infotrade is engaged in collecting and disseminating agricultural commodity prices from 22 district markets around Uganda and some smaller markets too. Both wholesale and retail prices of over 40 commodities are captured by the agricultural market information advisors (AMIAs). AMIAs are local traders, merchants, etc. in the various markets who are appointed by Infotrade collect market prices for a fee. The AMIAs capture market prices thrice a week and send it to Infotrade where it is compiled and collated in a central database after the data is verified.
This information is then disseminated on a weekly basis (mostly on Mondays) mainly through weekly reports which not only provide price information but also analyse price movements. The weekly report is made available on the Infotrade website as well as emailed to subscribers. Secondly, average weekly price information for various commodities is disseminated through web-to-phone service whereby short-message-service (sms) is sent to various users who have registered their mobile numbers with Infotrade. This is the ‘push’ format of sms and Infotrade also offers the ‘pull’ format whereby users can request for price information. Infotrade has secured a license from the telecom authority to use the number 8555 for a fee for this purpose. Users can text this number requesting market price information for a particular commodity and receive the required information for a fee.
Besides these two main avenues of information dissemination, Infotrade uses radio channels, village notice boards, and other avenues, in partnership with various organizations. This is done upon request by interested organizations, whereby Infotrade offers price information and partner organizations take up the role of disseminating information.
Market Price Information: The Impact
Farmers, traders and other stakeholders in Ugandan agriculture benefit from agricultural commodity price information in many ways. For starters, knowledge of market prices allows farmers to make decision on where to sell their produce. Of course, often an individual farmer may not have the scale, bargaining power or resources to move his produce from the local market to a distant market where the prices are higher. However, where farmers are involved in collective marketing, this information is useful to realize higher prices. In fact, during my time here, I met a few NGOs who work with farmer associations and help them in collective marketing. Secondly, market information helps farmers plan what to grow season after season. One of the NGOs I met was working with farmers to help them do a cost-benefit analysis in deciding what to grow. Market price is a critical input in such analysis. Recently, a group of farmers also visited FIT Uganda Ltd. (Infotrade) office wanting to know price information. As I interacted, I learnt that price information is useful to make decisions such as what to grow, how much to grow, where to sell, at what price to sell and other similar choices.
Traders also use the market information to make decisions on where to procure their produce from and at what price. In the market place, farmers are not the only group who suffer from information asymmetry; in fact, many traders too suffer from a lack of good information on prevailing market prices.
Besides directly helping farmers, market information also benefits agricultural research and policy-making. Researchers and policy-makers regularly seek market price information from Infotrade. However, the nature of information sought by them is different. While farmers look for dynamic and immediate (or prices a couple of seasons ago) market prices, researchers and policy-makers want long time-series information for meaningful analyses. Infotrade started collecting market price information in 2008 and offers the best market price information on Ugandan agricultural commodities.
Market price information is also beneficial for consumers and other development organizations. I recently learnt about one such use. An international NGO which distributes food vouchers to vulnerable groups approached Infotrade with an interest in market information to help determine the right price that should be charged by traders for supplying food against the vouchers issued by the NGO.
In the last month I have spent with Infotrade, I have learnt a good deal about the market price information service and its benefits. Clearly, there are many benefits of capturing and disseminating this information and I have outlined the more obvious ones above. Despite these benefits, you might wonder why is it that this MIS (Infotrade) suffers from challenges of financial sustainability (as outlined in my previous post). This takes me the next issue – the challenges (costs and revenues) of running a market information system, which I will address in my next post.