The Colloquium started off with Helani Galpaya giving a brief over view of the agriculture project. Harsha de Silva then went on to give a brief overview of the agriculture market as it is… today. The relevant market is limited to 2.3 million farmers. But even this is not the entire focud group as they have to be entreprenial farmers.

However, the volumes of exports of non plantation crops are extreemly small in comparison to tea. Sri Lanka is the largest exporter of cinnamon. However, China also produces a lower quality cinnamon produce. This proves that there is a great use for traceability. It is clear that the demand on the global market has changed. This is apparent in the demand for organic foods etc. Harsha argued that the out- grower model where the farmer is tied to a companty seems to have certain merit for the above and reason.This lead into the argument for branding. Often branding will allow for farmers to differentiate themselves from the general mass that will be helpful in not only securing a consumer base but also averting disasters.

So what kind of ICT’s does one apply to which type of produce? Why is a gherkin a better tool to prove the importance of traceability? Can this be measured through looking at the level of fragmentation?

Rohan Samarajiva noted that at LIRNEasia we play with economic problems.. therefore what is their incentive to join this programme? Do they get a benefit from engaging in traceability?

Harsha responded that a better incentive structure need to be built into the system. This is problematic as these farmers are already better off than their counterparts as they are already in long term contracts with companies.

Rohan questioned what the incentive for the farmers will be? There seems to be incentives for the companies in terms of quality and delivery but the incentives of the farmers are less pronounced.

Harsha noted that traceability will show up the inefficiencies of the system which will reduce the wastage and thereby increase the income. The shorter the supply chain the more meaningfull traceability will become. However, he noted that it is necassary to bring in an economic incentive to the mix.

Rohan noted that traceability does not cause out-growers. They are formed by companies to bypass the labour and land laws. Harsha responded saying that traceability is an independant measure that will improve the chances for the farmer to sell his produce. Also the buyers will be more disposed to purchase from a farmer that has traceability as opposed to one that isnt. Harsha argued that if the traceability keeps a tab of how many hands the produce changes then there is an incentive to reduce the supply change. He noted that it is therefore an positive externality of traceability. an noted that the harsha needs to be careful when he explains his objectives and advantages derived from traceability as this is an area that can be debated and broken down.

InSri Lanka there is no national traceability agency and this presents a problem for individual farmers that are not in an out- grower market. So it seems like traceability does not seem to be an option for farmers in general.

however, more needs to be done in regard to creating incentives for the farmers.

The next presentation was handled by Shamistra Soysa and was titled, ‘Traceability in agriculture markets’. She went on to explain the project findings and the way in which the project was conducted. The main objective behind the project was to see if traceability increased the gherkin yield and if that yield was of better quality.

She then goes on to explain the four main stages of the Gherkin chain. They are growing, harvesting, transportation and testing. Helani noted that the actors will also need to be identified early on in the presentation. The project involved four main actors who were the farmers, the field managers, the center manager and the manager of the company itself.

Before the project there was no bi-directional flow of information. The company was not able to acquire information on the problems faced by the farmers. This meant that the ocompany was not able to get feed back on its processes. This is what the project aimed to ahieve. This ranged from geting information back to the farmers about their produce and the company being able to get feed back on farmer processes.

The entire process was done through a use of a mobile phone and the internet connection. The mobile phone used a special, tailor made application that was in sinhala and menu driven for greater ease of use. The computer application was in all three languages that was driven by the data personnel.

The project was done in two villages. They were Thalwa and Koswatta. Rohan argued that there should be not a comparison between the two villages. It was decided that the productivity should be calculated on a per acre basis.

There were certain data entry problems that the project faced as well. The younger farmers were more likely to use the mobile phone to enter data as opposed to the older farmers. Helani argued that this was because of a more proactive center manager in Koswatta as opposed to Thalawa. The center manager had a responsibility to ensure that the farmers entered the data.

It was noted that under this system everyone could benefit. Farmers were able to create sms networks and keep track of payments. The Center managers were able to track raw materials, save time, reduce unnecassary costs, take preventive measures for possible defects and improve relationships between the farmer and the company. Overall the improved flow of information resulted in better quality gherkins.

Farmers have a real fear that they will not get paid for their produce. This is pronounced if the price that paid for the gherkins fluctuates on a daily basis. The concept of data entry allows for payments to be done on a daily basis depending on produce of each farmer. However, the farmer will prefer to have a stable income over the entire season.

However, the project came in line with certain problems. They were technical problems, problems associated with incentives and capacity issues.

Under the existing system in place with HJS the middle man takes the hit in regard to quality. Therefore a new incentive system needs to be set in place for the farmer to improve the quality of his produce. But does this mean there should be a penalty for lower quality?

Can phones also be used as money wallets? or a saving scheme?since farmers seem to have an issue with saving.

The next presentation was delivered by Dimuthu Ratnadiwakara on transaction costs in agriculture markets. The presentation was focused on the study done to estimate the cost of information for vegetables sold at the Dambulla market. He started off with looking into some definitions of transaction costs in regard to agriculture. Transactions costs can be observable or unobservable and most situations have a combination of the two.

Therefore the focus of the project was the ‘cost of information’. That is that cost can be reduced if accurate and timely information is available to the farmer. The project attempted to calculate the cost of information of a process that a farmer will have to follow to grow and sell his produce. During every stage if this process there is cost of information.

He then went on to explain how the farmers were selected for the project. There was a sampling error of 5.41% as 315 farmers were involved out of the total 8000 in Matale District.

It was calculated that the transaction costs (i.e. cost of information and cost of facilitating transactions) were approximately 15%. Out of this 15%, 70% was cost of information. The data also showed that the cost of information is felt more by the smaller farmer as it is fixed. Also the highest cost of information is caused in the growing period due to inefficient system of distributing subsidized fertilizer. Often obtaining this fertilizer requires many visits to the center. However the growth phase has 44% of total costs. Therefore its not surprising to have highest percentage of cost of information in that stage. In relative terms the first stage has the highest  percentage of cost of information even though  the growth stage has the higest absolute cost of information.

He then provided conclusive evidence proving that using ICT’s was a cheaper method of getting information as opposed to making a visit. If half of a farmers visits are replaced by phone calls the cost of information will reduce by 33%.