Farmer profits increase by 33% because of availability of agri-market price information, another research study confirms

Posted on January 15, 2010  /  1 Comments

We documented the research done by Jensen and Aker on the benefits of mobiles to producers and consumers. Now we have a third good piece of research, this time not of decentralized information provision, but of centralized provision in India with the e Choupals.

ITC Limited, an Indian company that is one of the largest buyers of soyabeans, felt it was paying over the odds, but was unable to monitor the traders closely. Starting in October 2000 it began to introduce a network of internet kiosks, called e-choupal, in villages in Madhya Pradesh. (Choupal means “village gathering place” in Hindi.) By the end of 2004 a total of 1,704 kiosks had been set up, each of which served its host village and four others within a five-kilometre (three-mile) radius. The kiosks displayed the minimum and maximum price paid for soyabeans at 60 mandis, updated once a day, along with agricultural information and weather forecasts. ITC also posted the price it was prepared to pay for soyabeans of a particular quality bought direct from farmers at 45 “hubs” (mostly in the same towns as mandis). By setting up the kiosks, ITC enabled farmers to check that the prices being offered at their local mandi were in line with prices elsewhere. It also gave them the option to sell direct.

Bean there, done that
To evaluate the impact all of this had on prices, Ms Goyal used historical data from mandis and the locations and installation dates of the kiosks. She found that the presence of kiosks in a district was associated with an instant and persistent increase of 1.7% in the average price paid at mandis in that district. As expected, the availability of price information increased the level of competition between the traders, raising prices and reducing the variation in prices between nearby mandis. Farmers’ profits increased by 33%, and the cultivation of soyabeans increased by an average of 19% in districts with kiosks. And by buying some produce direct, ITC reduced its costs, which paid for the kiosks.

1 Comment