Colloquium: Leveraging Mobile 2.0 for Agricultural Market Access in India

Posted on April 6, 2010  /  2 Comments

This colloquium was presented by Sriganesh Lokanathan, LIRNEasia.

Objective: to find out how Mobile 2.0 services are and can be used in the agricultural market.

Mobile 2.0 services are defined as services for more-than-voice, can include both one-way and two-way information.

Agricultural sector in Asia:

  • Share of GDP is quite high even in 2009
    • 12.8% in Sri Lanka
    • 17.5% in India
    • 21.8% in Pakistan
  • Sector accounts for a large percentage of overall employment
    • Directly nearly 20% in India
  • Characterized by large number of small landholdings
    • Average land holding size in India is 4.9 Acres
Markets in the developing world are prone to inefficiencies, characterized by information asymmetries
  • Small farmers in general have
    • Poor market orientation
    • unfavorable linkages to markets
For small farmers this restricts their ability to leverage their physical commodities for sustainable livelihoods through financial instruments (forward contracts, crop insurance, working capital). They still depend on other progressive farmers (mostly larger farmers with more access to technology) for information.
How can ICTs reduce information asymettry:
  • Various well know examples exist:
    • Internet kiosks: e-Choupal  in India (see Goyal 2008)
    • Mobile phones: Kerala fishermen (Jensen 2007), Grain Markets in Niger (Akers 2008)
  • With communication costs continuously falling market prices are only a phone call away.

How do ICTs increase market efficiencies:

Allocative efficiencies

  • Efficient allocation of commodities across markets so as to reduce/ eliminate wastage  (Jensen 2007)

Market efficiencies:

  • Reduction in price dispersion (Jensen 2007, Akers 2008, Goyal 2008)
Sriganesh – can product efficiencies be improved through forward markets, etc?
Harsha – Need to think abt it.
What about the BOP’s access to ICTs?
  • Access/ use of phones  in India (LIRNEasia 2008 study):
    • Two-thirds had used a phone in the last week
    • 36% of the Indian rural BOP population owns their own mobile as opposed to 7% who have a household fixed phone
  • But Internet use in India is low (IMRB study 2008):
    • 0.4% active rural internet users (includes BOP as well as other SEC groups)

Ayesha – we can include Teleuse@BOP data here.

Mobile 2.0 use among the BOP in India is very low. However, much of these services were not introduced only till after the survey was conducted.

Current State of Play in India of market information access through mobiles –  Business Models:

  • Mostly joint ventures between telcos and others:
    • Telecos  & Farmer organization:
      • IFFCO Kisan Sanchar Ltd (2008): Bharti Airtel & IFFCO
      • BSNL & NFL venture (2010)
      • KRIBHCO Reliance Kisan Ltd (2009): Reliance Communications & Krishak Bharati Cooperative Limited
    • Telecos & VAS companies
      • Mandi Bhav (2009): Tata Teleservices & Impetus Technologies
      • Idea Krishi (2010): Idea Cellular & RML
    • Telecos, VAS companies & state bodies
      • Mandi on Mobile (2008): BSNL, OnMobile  & Uttar Pradesh Agricultural Marketing Board
  • VAS companies using a direct selling approach
Many of these services are in a pilot stages, with different ventures in different regions. Only one know service which is provided without a partnership with a telco (Reuters Light).
Pricing model:
  • Subscription model:
    • Monthly, quarterly, semi-annual and/or yearly (RML, Mandi Bhav)
  • Free VAS service
    • IFFCO Kisan Sanchar Ltd
    • BSNL & NFL
  • Usage based:
    • Mandi on Mobile
Helani – what are subscription prices like?
Ideacellular – Rs 75 per month (for a set no. of alerts)
RML – depends on the area.
Rohan – the advantage of having the operator involved is in billing the costs
Sriganesh – they use scratch cards.
Harsha -RML said that that is  disadvantage; don’t have the brand and network
  • Market price information:
    • Everybody
  • Crop advisory (e.g. general best practices or more specific; some services based on both the crop and location; SMS based):
    • RML, IFFCO Kisan Sanchar Ltd, BSNL & NFL
Weather forecasts
Helani – How does RML get prices?
Sriganesh – they employ people who get it from the Mundis
Information is push-based.
Weather forecasts are localized, based on local reports. E.g. RML will make an assessment whether or not to give this information to subscribers.
Helani – do they all have information specialists?
sriganesh – couldn’t get this info. e.g. RML has many partners, usually an agricultural institute etc. My guess is that they are getting some generic information but need to check on that.
Service delivery through a variety of technologies:
  • SMS (RML, BSNL & NFL, Mandi Bhav)’
  • WAP (Mandi Bhav)
  • Dedicated Application (Mandi Bhav)
  • IVR (Mandi on Mobile, BSNL & NFL)
Non-voice solutions cater to upto 9 different local languages
sriganesh – ICRIER prefered voice-based services (literary not needed), but SMS had the advantage of being able to store messages. in india, where are so many languages spoken, voice-based services make more sense.
Why are companies getting into this?
telcos – to increase their customer base.
Telcos utilizing this mostly to increase the number of rural subscribers. E.g. IFFCO Kisan Sanchar Ltd: Airtel sells an IFFCO Kisan branded SIM card (1.5 million customers as of 2009)
VAS companies see a business case; Is it proven as yet? – Not certain (RML expects to break even in another 2 years, no information from others)

Mostly large farmers who are using this. BOP use is very low. even when poor farmers are using this, it is usually in places like Maharashtra, more likely due to closer proximity to larger farmers.

helani – has anyone studies on seeing if prices are converging since prices are online?

sriganesh – no.

harsha – ideally, if there locations close to each other and these prices are available, they need to converge.  but what we found was that it was different. the conclusion was that they were not using kiosks to get the prices.

sriganesh – when farmers say that they see value from mobile 2.0 services, it is more crop advisory rather than prices.

IFMR Trust Pilot in Kadi


  • Provide an accurate, transparent and optimal price realization process for farmers.
  • Provide commodity backed financing for farmers against their harvested castor seed crop as collateral

There were 3 partners – ATMNE, NSEL and NK Industries

ATMNE – Intermediary for farmers, trading on their behalf on the NSEL platform. Activities include canvassing farmers for the service; educating farmers on market prices, provision of commodity backed financing as well as immediate cash payments to farmers on sale.
NSEL – Provides the trading platform on which the castor seeds are bought and sold. Also certifies the quality of the commodity and also provides warehousing facilities via a third party company (Sohan Lal & Company)
NK Industries – The only buyer from the Kadi terminal on NSEL platform. The NSEL trading platform is situated within its premises.
Sriganesh – in Kadi, commissions were eliminated. NK can offer higher prices since they do not have middlemen.
Benefits to farmers from pilot:
  • Higher price realizations
    • Eliminated commissions
    • NK industries’ vertical integration allows them to be able to offer higher prices
    • Electronic weighing and superior quality certification has meant farmers are getting higher prices for their produce.
rohan – who put the certification in place
sriganesh – it was done internally; it can be sold elsewhere  but doesn’t mean that the certification will be accepted elsewhere.
  • Commodity backed financing helps them ride out moments of over supply in the market
  • Costs incurred for this service (INR 0.15 per bag per month + 10% interest on loan) are still lower than the increased profit from selling later

helani – do they have value on volume and grade sold?

sriganesh – the price quoted on the hub is for a specific standard; then depending on the quality of the product, the price will be raised or lowered in relation to this (based on predetermined calculation)

rohan – if there was RSS standard, everyone outside of the country would know what this standard is.

Policy implications:

you need a confluence of actors. the Kadi pilot was an example, if it is to scaled, need cold storage and warehouse facilities which is provided right now at the KADI premises.

Effective engagement in markets means confluence of a variety of actors who can provide:

  • Warehousing / cold storage
  • Crop insurance and loans
  • ICTs to link stakeholders

The above are not all in the domain of telecommunication regulators

people are still more comfortable using voice based services, rather than SMS. the missed call strategy works better than the sms strategy (one price a day).

helani – do they need to go to warehouse to sell, and can sell it to an outside party?

sriganesh – no, you can fix the price over the phone.

Awareness building and training

  • Youth are faster adopters and serve as gateways for their less savy parents
  • Companies need to engage in more awareness building for their services
  • Small farmers close to bigger farmers have better technology adoption

when talking abt crop advisory, there may be an incentive to understand the information better. if service provider see this as a profitable venture, there is no reason why they shouldn’t spend more on marketing it. telcos don’t really see the value of the service in itself, but rather as a way of attracting/retaining more customers.

Telco as a partner or as a conduit

  • VAS companies may not have the resources (advertising, marketing) necessary for going solo
  • Telcos are better off partnering with organizations specialized in providing information that farmers want
    • RML is cited has giving more relevant and timely information
    • When  telecos collect information it is deemed as less reliable (e.g. with IFFCO Kisan Sanchar Ltd)

Too early to say which model is better.

rohan – collecting money would be a major costs
harsha – this is where mobile money can come into the picture
rohan – one can learn from Minitel. or take the example of CellBazaar, where they sometimes market the product as “Grameen CellBazaar” leveraging the brand equity of Grameen.
helani – do you know what revenue splits are?
harsha – in india, mainly in favour of telco. but can’t really say in this specific case.
Do some research into the advertisement-supported model, based on Puree’s paper.
rohan – this is like game theory. one needs to see under what circumstances should multi-telco and single-telco models work, etc.