Designing Market Information Services Prof. Sanjeev Kapoor Indian Institute of Management Lucknow

Agenda for Discussion Present Agri-business Context Need for Market Information in Present Agri-business Scenario Market Information Services – Concept and Uses Using Market Information for Production Planning and Higher Price Realization Designing Market Information Services – National & International Experiences Promoting Market Information Services - Issues

Need for Market Information Existence of competitive market economy after the globalization and liberalization One of the pre-condition for a competitive market economy is that correct information on market conditions must be available to all stakeholders in the market system

Need for Market Information Information related to - prices - demand of product - Quality of product - Transaction cost - Intermediaries involved in the market Information on these variables over time and across space

Market Information Services Collection of price and non-price information, on a regular basis, related to widely traded agricultural products Dissemination of this information on a timely and regular basis through various media to different players in the marketing system Use of this information by recipients for increasing the production and marketing efficiency and transparency of the system

Market Information Services Facilitate efficient allocation of productive resources Bargaining power of the farmers with traders can be increased Reduces transaction costs by reducing risks. Which market the farmers should send their produce, or whether to send their produce to market at all. Availability of information encourages new entrants into the marketing system as lack of information is an entry barrier to both production and trade. It provides opportunity to farmers to plan and diversify the production in lines with market demand. It can be a valuable input into Early Warning System for food security by identifying areas of possible shortages as reflected by higher prices.

Market Information Services Current information Historical information - complied over time, often several years Use of these two different information is different

Market Information Services Current information - reducing market cost by reducing the risk of loosing the money on a market transaction - channel selection (selling at farm gate, or to local market, or to wholesale market or selling directly to consumers) - higher price realization due to increased bargaining power - harvest decision - Marketing strategy – individual or group

Market Information Services Current market information and spatial Arbitrage - Arbitrage is a process of buying at lower price and selling at higher price with the objective of taking advantage of price differences in two markets that exceeds transaction cost.

Market Information Services Historical market information - storage decisions - production decisions - entry in the trade - selling decision (when to sell)

Use of Market Information for Getting Better Price Is the wholesaler getting a good price for us? Is the wholesaler being honest? What other reasons could be for the price less than reported by MIS? Am I getting the same price or better than other farmers? I can negotiate with the present trader based on the reported price With knowledge of marketing costs, farmers can find out realistic farm gate price.

Use of Market Information for Production Planning Whether to grow new crops? - based on net profit analysis Whether or not to store? - based on seasonal price fluctuations and storage cost When to plant and when to harvest the crop? - based on technical feasibility and seasonal price fluctuation

Market Information Services – Indian Experiences Directorate of Marketing and Inspection - DMI is an attached office of DAC, MOA - Initiated a project “AGMARKNET” during March 2000 - Aims at networking 2810 APWMs by the year 2007 - Reporting of daily wholesale prices and arrivals - Covers about 300 commodities and 2000 varieties of agriculture produce

Market Information Services – Indian Experiences - Information is disseminated through the internet (agmarknet.nic.in) - Information is accessible in eight regional languages besides English

Market Information Services – Indian Experiences National Horticulture Board - Initiated market information service in 1985 - collect daily wholesale market price and arrivals of seasonal fruits and vegetables from 36 markets - International price of fruits, vegetables and flowers are also collected - Brings out a weekly bulletin and a monthly bulletin - disseminate information through web (hortibizindia.org)

Market Information Services – Indian Experiences Department of Economics and Statistics - collects daily wholesale price of important varieties of foodgrains from 140 markets - Weekly wholesale prices of 130 agriculture commodities from 530 markets - farm harvest prices for 19 crops from district level on sample basis - daily retail prices of vegetables, fresh fruits, livestock products and foodgrains from 90 centers

Market Information Services – Indian Experiences - Collects these prices through State Agricultural Statistical Agencies and State Agricultural Marketing Boards and its 14 Market Intelligence Units - Generally there is time lag of 2-3 weeks for reporting and disseminating the data - major thrust is providing inputs for generating weekly wholesale price indices by ministry

MIS - Components Target audience Purpose of information Which information to be collected How the information should be collected? Dissemination of information - mode - frequency Utilization of the information Cost of MIS Charging for information from the users Institutional structure for setting MIS

S.No. Feature Indonesia Zambia South Africa 1. Target Audience Small Farmers Traders Farmers/Traders/Support Industries 2. Purpose of Information Negotiating with traders Entry into Trade Market selection, Enterprise selection using historical information 3. Commodity Vegetables Maize Poultry 4. Nature of Information Daily wholesale price in morning and afternoon Daily wholesale and retail price Highest and lowest price, quantity, unsold volumes, trends in prices 5. Dissemination of Information Radio/Newspapers/Notice Board Market bulletins/ Radio/ price boards Computer 6. Cost Donor Govt. and agency Donor Agency and sponsorship by bank Private Company 7. Charge from user Nil Yes

Market Information Services - Issues 1. Accuracy - Price related to a particular variety and for a defined quality - It should be consistent over time - Price related to which type of transaction in the market - unit of information

Market Information Services - Issues 2. Availability - Information to be available timely - Mode of dissemination - Radio, T.V, Phone, Fax, Internet 3. Analysis - Interpretation of the information

Market Information Services - Issues 4. Sustainability of system - Funding for collection of information - Charging the cost from users 5. Scale of Information - How many products should be covered? - How many location or markets? - frequency of data collection?