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Access to Market Information & Enterprise Development Does it work, is it important, what can be done? ARD Workshop on Using ICTs to Support Rural Livelihoods: Evidence, Strategies, & Tools. June 5, 2007 Grahame Dixie, Agribusiness & Marketing Specialist South Asia Agriculture & Rural Development Farmers incomes extremely sensitive to marketing issues i.e. price, quantity sold or switching to more profitable enterprises Net Return as impacted by Yield, Price, % marketed & Alternative Enterprise 70000 Net Return 60000 Marketing Costs 15400 + 10% 18000 + 29 % 23000 + 64% Production costs 50000 14000 5000 - 64 % 40000 30000 20000 10000 0 base + 10% yield + 10% price - 30% sold Alt Enterprise Money = Happiness, at least at the lower levels of income Access to Market Information Market Information: Instant Message Uses Medium Issues Case Studies Enterprise Development Market IQ: Strategic; Longer Term Market & product Knowledge Identification of Support Services Business Oriented Market IQ Market Mobilizers – Top Down/ Bottom Up Sales Platforms MIS & Project Design Combined Package of Mkt Info, IQ & sales Lessons Learned Discuss of Needs & Next Steps No consensus on the real impact of Agricultural Market Information Systems on producers, meanwhile the technology changes apace Believers Radio/Newspapers Land Lines Government Technology Internet User Groups Cell Phones Sales Platforms SMS Operators Non- Believers PPP/ Private Sector What Market Information do producers need ? In Uttah Pradesh farmers priorities from information technology were: • market prices, (on phones+ internet), • transport arrangements (on phones), • selling details (on phones), • weather forecasts, (internet), • technical queries (internet), • And, input supply. (on phones), A good starting point is to ask The Marketing Information The Message • Prices - typical range • Volumes – supply/demand • Locations –experience shows just few majors Mkts needed • Timely – frequency product dependent The Lessons • • • • • Accuracy – frequent criticisms of system Simple & relevant Local languages Less perishable crops - Initially most useful Comparable products - can be an issue in terms of weights, qualities and grades Information is not on its own enough – verified by farmers Radio the most effective means for disseminating simple Market information Uganda: Local language stations effective. > US 2 cents/ household. 50% + impact. When 2 store, mainly non-perishable crops. Where 2 sell. Improved bargaining . Mkt education Planting decisions & PH/VA activities.– Issues: Difficult interaction with radio stations. Costs can be v high (50% MIS budget) distorted by Aid , one way flow of information. Sponsored Mkts info broadcasts Great Interest around Internet and Web based information Indian : ITC ‘E choupal’. Costly $ 4-6 K, Mkt info, weather info plus selling interface. Info channeled few thru gatekeepers. Two way communication. Distance to collect info. Moving into inputs sales. Issue: Dissemination 2 producers. Skeptical about effectiveness of web based Mkt info. More relevant for accessing Mkt IQ & Agri-Biz The Cell phone the most powerful marketing tool. SMS Market Information is taking off Potential to deliver Mkt Info, weather forecast & limited Mkt IQ & act as a sales platform in the field – through either subscriptions or pay by use. Provides income stream – potential 4 sustainability & incentive for info provider 2 B accurate. Low unit cost $ 20 -40/ handsets Issues: around literacy, new texting skills, vernacular scripts, coding costs & sustainability. Text messages cost a fraction of US 1 cents @, industry standard 50:50 split between phone & content provider. Phone company’s key driver is revenue – manager discretion whether to forgo short term SMS income for long term talk time. Regulator v. important Phone Co 5 cents, Content provider 2.5 cents, MIS service 2.5 cents MNET, US1 cent TNS/Tradenet Subsidy US 3 cents 50:50 Split Phone & MIS Case Study : REUTERS – SMS in India, v positive test marketing results, now rolling out 5 States, seen as Social Investment Service 5 SMS/day in local languages, across all phone networks 1. Mkt Prices & supply – 4 Markets nearest handset High, Low and Average price + impression of price – initially for range of field crops (legumes) x 2 day 2. Weather forecast 3. Market Overview Issues Cost s – circa $ 1/month, or US cents 2.5 @ Financial Sustainability indication need to be millions of subscribers Info gathered by paid, knowledgeable local observers who phone in daily Issue is limited availability of vernacular handsets (3%), and handsets 7% of landowners, 2% of landless. Farmers liked the REUTERS SMS service because: • • • • SMS perceived as an enhancing livelihood product the farmers feel empowered – greater control receiving the message in the field in local languages Weather info for crop activity planning, better yields & harvest timing • Mkt info for decisions of when to store/sell & where to sell • 90% of the farmers are willing to buy, No differences between crop & land holding size • concern on authenticity of source/data – called Mkt to verify REUTERS aim to prove they can supply info to ‘Master of the Universe’ Traders in NY/London as well as to Small scale Farmers in India CASE STUDIES Cell phones the most powerful marketing tool: two way information, SMS, real time market price/supply/demand info, phone market research, logistics co-ordination.etc. Backyard Chickens, critical mass to improve sales price because of Grameen cell phone connection 9 Chickens = Tk 14 each 50 chickens = Tk 20 each Cell Phone = emergence of large Cell Phone = Nigerian Catfish scale primary wholesale markets in Assam Market Queen running + $ 1.85 million business by phone Cell Phone = Delhi wholesalers selling trucks to other traders on the road & diverting to end market Cell Phones = Georgian Winter salad growers collect price in Moscow – so that they can take informed negotiating positions Case Study: Elegant analysis of the impact of the Cell phone on Fish Marketing in Kerala, South Western India by Jenson Phoning in from off shore Mobile phones coverage rolled out in three phases With cell phone calls possible ‘off shore’ - fishermen call different beach auctions to decide the best market on that day. Result 1/3 of fishermen take fish to more distant auctions. Rapidly learned to the equation of transport cost viz. likely additional sales price. Wastage down from 5-8% to 0% Result was that fishermen and consumer were winners, as the market become more efficient and rational. Price volatility down dramatically Fishermen prices up by 8%, profits improved Consumer prices down by 5%, Access to Market Information Market Information: Instant Medium Uses Message Issues Case Studies Enterprise Development Market IQ: Strategic; Longer Term Market & product Knowledge Identification of Support Services Business Oriented Market IQ Market Mobilizers – Top Down/ Bottom Up Sales Platforms MIS & Project Design Combined Package of Mkt Info, IQ & sales Lessons Learned Discuss of Needs & Next Steps Market Intelligence: Strategic Information, Longer Terms Decisions Medium • Internet – down load Message (s) • Market Overview • publications • Product Mkt. requirement • combined with cell • Standards, specifications Uses • Mkt orientation • Mkt research • Mkt knowledge • Business Linkages • Enterprise mix & Diversification • Business Contacts Issues • Whose job? • Dissemination • Language/Literacy • Technology ICT can only be part of the package for lifting rural incomes Listing of contacts • Traders • Input suppliers • Transporters • Agribusinesses • Service Providers • Trader/ Agri Biz Associations Unit Costs Information/ Benchmarks • Inputs – seeds, fertilizers, packaging • Transport costs E.g. South Africa: India under the ATMA concept in Bihar Enabling Enterprise Development Market Intelligence Top Down • Longer term market knowledge • Business Linkages, marriage broking • Early dispute resolution • Standards, specifications • Buyer – seller meets • Major products/opportunities (80:20) • Businesses, service providers • Trader Associations Bottom Up– Business Mobilizers • Agribusiness Business advisers • Marketing Extension • NGOs • Skills trainers Experiential Market learning • Groups, Associations CIG • Resource audit – product options • Basic economics • Own market research • Visit working examples • Plan program • Draw down required TA/SP Tradenet – development phases Phase 1 Phase 2 Central Govt Input on Info But: no accuracy, timeliness, insight, language Private Traders & observers Groups & Associations v. variable Phase 3 Phase 4 Central Govt Groups & Associations Peer 2 Peer Peer 2 Peer Sales platform Slow to take off Trade Agent Testing now Internet Based Software Platform – broad cast SMSSales Platform License fee Free Basic $ 5000 pa License fee for add services Sponsorship Transaction fees e.g. Banks Insurance SMS - phone companies Cell Phone Based Phone Calls Producers, Associations etc Traders & Agribusiness SMS sales platform Broadcast SMS Extension/ NGO - internet Line Dept Web Site Market IQ Govt Sector, Line Depts. Broadcast SMS Web Based Platform Trader Ass Web Site Market Information Private Sector Info gatherers Public Sector PPP Private Sector Best Practices Phone Regulator Role Management of MIS Sector Studies Phone Operators Generation & Update Mkt IQ SMS Broadcast Mkt Policy Framework Standards, Specifications ? Cost subsidy SMS Trading Activities Producer Mkt Info Needs Assessment Pump Priming Activities Gathering Mkt Info Service provider Contract Mkt Ext / Biz Mobilizers Grouping/ Common Interest ICT Equipment & Initial contracts Auctions Commodity Exchanges Warehouse receipts Access to Market Information Market Information: Instant Medium Uses Message Issues Case Studies Enterprise Development Market IQ: Strategic; Longer Term Market & product Knowledge Identification of Support Services Business Oriented Market IQ Market Mobilizers – Top Down/ Bottom Up Sales Platforms MIS & Project Design Combined Package of Mkt Info, IQ & sales Lessons Learned Discuss of Needs & Next Steps And if you have been . . . Thanks, for listening Now is the time for talking Cell Phone Based Phone Calls Producers, Associations etc Traders & Agribusiness SMS sales platform Broadcast SMS Extension/ NGO - internet Line Dept Web Site Market IQ Govt Sector, Line Depts. Broadcast SMS Web Based Platform Trader Ass Web Site Market Information Private Sector Info gatherers Marketing Extension Marketing Education Co-ordinating Business Linkages Creating a better understanding of the process, the market & its demand's - terms of products and service Mobilising groups, Organising events, getting things started, hand holding, injecting energy Making introductions, between buyers & sellers. Facilitating the start up process of new trading relationships It Does Not Mean Deciding for farmers what they should do or what products to sell Any active participating in distribution, marketing & sales The ME course is a 6 step process, designed to empower villagers to identify market opportunities & plan how to exploit them. FO - all Step 1 Resource audit –what produced, embedded skills, resources & equipment, existing marketing arrangements & knowledge Task Force Step 2 Step 3 Step 4 FO - all Selection of target products, detailed costings, analysis of alternative markets, selection of location for markets research Market research task force holds discussions with traders on potential products in terms of prices, quantities, quality & market opportunity Analysis of Market Research findings & potential profitability of alternative products Step 5 Strategic choice of products for marketing development Step 6 Action plan, activities, responsibilities, timings for the selected products The ME course increased marketing knowledge amongst CBOs (i.e. 3x) and continued to improve with practice CBOs measurement of their marketing skills levels 90 80 M.E. Course 70 60 50 % 40 30 20 10 0 Before After Now Average AVA per CBOM involved The average additional cash income per group was in mainly in the range $ 2000 - $ 7000 and per involved CBO member is $ 200, but ranges from about $ 70 to $ 325. 350 Sinduri A Rakhalgachi A 300 Chalkaladi B 250 Shafalgasi A Uzirpukur C 200 Mollikpur A 150 Nagar Kusumbi A Parbatta Samity 100 Sandhani Samobay A Merrirhat Samaj A 50 Tripti Mohila A 0 Nizpara Purush A 0 5 10 Months since ME Training 15 Namapara S. B Vandarpara A The ME process has generated a diversity of businesses, the most important of which in terms of numbers involved are listed below Mini garments Tooth Pick Cap sewing Paposh preparation Male Goat rearing Ground nut processing Female Hand fan preparation Tailoring Egg Jujubee marketing Vegetable selling Health Product marketing Ice cream Stick Bee cultivation Homeo bottle preparation Nackshikatha/ katha sewing Pond fish culture Bamboo products making 0 100 200 300 400 500 600 ICT can only be part of the package Business Development Services Listing of contacts Enabling Enterprise Development Market Intelligence • Traders • Major products/opportunities (80:20) • Input suppliers • Longer term market knowledge • Transporters • standards, specs • Agribusinesses • Service Providers • traders/ Agri Biz Associations Business Mobilizers • Marketing Extension • Skills trainers • Buyer – seller meets • Business advisers • Trader Associations Top Down • Business Linkages, marriage broking • Early dispute resolution Bottom Up Processes – Experiential Market learning • Groups, Common Interest Groups • Resource audit – product options • Basic economics • Own market research • Visit working examples • Plan program • Draw down required TA Believers Market Information: Instant Medium Non- Believers Access to Market Information Message Market IQ: Strategic; Longer Term Medium Message • Radio • Price - accurate •Internet • Market Overview • Internet ? • Supply- timely •publications • Product Mkt. Specs • SMS ? • Weather • Standards • cell • Overview • combined with cell Uses • Store or sell • Place to sell • Negotiation Issues • Relevance • Govt vs Private/NGO • Dissemination Uses • Mkt orientation • Mkt research • Mkt knowledge Issues • Whose job? • Dissemination • Educate • Language • Cost vs.Sustainability • Accuracy – Incentive • Technology • Diversification • Ent mix. • Technology • Contacts (BDS) • Language WB Team Leaders MIS & other instruments developed sequentially • policy framework, - specific sector studies - farmer organizations, • market information, market IQ - grades & standards, databases • Positive approaches to empower producers (groups) to engage with market • legal trading framework, financing for traders, • support for private sectors trade organizations, • warehouse receipts, commodity exchanges, advocacy Key technology – Radio – Mkt Info, SMS, Web for Mkt IQ & cell phone for everything else. PPP for sustainability, •Service provider contract to provide integrated web & SMS market information & market intelligence data •Provision of cell phones with limited time contract to farmer groups, with closed user group access to project, technical services •Subsidy on SMS costs, PPP between phone companies, content providers Using the ICT information to promote enterprises & Livelihoods Mkt IQ - base information, Mkt Info – on going. Business Mobilizers, linkages support, Marketing Extension Harilai – Rurally based Farmers supermarket, with Internet access & technical support