ICTs, Transaction Costs & Traceability in Agricultural Markets
ICTs are not ends in themselves. People use ICTs to improve their life conditions, either in terms of providing supportive communication for loved ones or enhancing abilities to better coordinate and conduct economic activities. Economic theory suggests that existing markets, especially those in poor countries, are riddled with imperfections. It is postulated that ICTs can make markets more efficient by reducing transaction costs. This project seeks to examine the contribution that ICTs can make to improve the life conditions of small-scale farmers through the conduct of baseline studies, the implementation of two related pilot projects and their assessment.
This project has two components: the establishment of baseline regarding ICT use and transaction costs in relation to farmers, collectors and traders participating in agricultural markets; an assessment of the potential for improving farmer livelihoods through a last-mile traceability system enabled by ICTs also centered on the DDEC.
ICT use and transaction costs
LIRNEasia intends to study the ability of ICTs to reduce information asymmetry, via the case-study analysis of the production and sale of produce at the Dambulla Dedicated Economic Centre (DDEC),
In this regard, LIRNEasia is collaborating with a USAID-funded initiative called Govi Gnana Seva (GGS) or Farmer Knowledge Service specifically conceived to address the information asymmetry problem faced by rural farmers in Sri Lanka.
For this purpose LIRNEasia conducted a survey and gathered data on the four crops that are most traded in the DDEC. This survey used a structured questionnaire which contains questions relating to the entire farming process starting from the point of decision to grow the crop to the point of selling and receiving money.
This study involves the following specific activities:
- Systematically assessing the transaction costs borne by farmers producing and selling their produce
- Estimating the total transaction costs associated with producing and selling produce at the main wholesale market and specifically the variable cost component related to information asymmetries
- Testing the validity of the central hypothesis through rigorous statistical analysis and quantify the relationship and cost benefits (if any) of the reduction of information asymmetries using ICTs
Improving farmer livelihoods through a last-mile traceability system enabled by ICTs
In general “farm-to-table” traceability in agriculture means the ability to trace and follow a given produce through all stages of production, processing and distribution. Traceability concerns are being addressed at both the national policy level as well as the private enterprise level in the developed world.
LIRNEasia’s interest is in understanding how ICTs can be used to help poor farmers in emerging Asia integrate with the global food chain by adhering to traceability requirements and benefit from the otherwise unavailable and lucrative opportunities in the export market. LIRNEasia will conduct research on the potential of ICTs in implementing traceability programs among small farmers.
In terms of methodology, LIRNEasia, in collaboration with a partner company, has introduced local language enabled mobile phones to a small sample of gherkin farmers in order to capture traceability information throughout an entire crop cycle, approximately three months. The farmers are required to enter information through a pre-designed phone application from the initial stage of sowing the seeds throughout the entire production process when raw materials such as fertilizers and pesticides are applied to the crop.
During the harvesting period, the farmers will receive a daily sms about the quantity of gherkins that passed the initial quality tests and were accepted, the daily income for these gherkins and the reason for rejection if any. A second similar sms may also be sent to certain farmers from the factory if there are any further quality issues.
At the end of the crop cycle, focus groups with the farmers and interviews with other members along the supply chain will be held to answer the following questions:
- Did the participants in the supply chain receive any benefit from the intervention? If so what are those benefits?
- Did traceability “improve” (or was made easier) due to having the ICT intervention?
- What was the value of the availability of up-to-date information to the farmer? Did this enable him to ultimately increase his productivity (i.e. reduce the number of rejected gherkins?)?
This project is funded by IDRC of Canada
Project Team: Harsha de Silva, Helani Galpaya, Shamistra Soysa and Dimuthu Ratnadiwakara
Kategorie: General, Aktualisiert am 4/17/2008 von admin | Log in
