Data Collection
Data Processing and Transmission
Dissemination
Utilisation
Duplication of Activities
Political and Other Interference
Charging for Market Information
Given the apparent benefits of market information, it might be thought that most countries would have a flourishing Market Information Service. Judging by the results of FAO’s survey, that is far from the case. Adopting very undemanding criteria as to what constitutes an acceptable service,[19] we managed, from a survey of 120 countries, to identify only 53 functioning Market Information Services. Moreover, from the information received, the utility of many of those services that meet our criteria must be open to some question.
The absence of or poor performance of such services does not seem to be due to any lack of appreciation of their importance, at least among those concerned with marketing. FAO constantly receives requests for assistance with setting up or improving Market Information Services. However, problems with operating MIS are numerous. The main constraints appear to stem from lack of resources, not so much to establish an MIS, where donors are often prepared to assist, but to maintain it in efficient operation after the donors have left. Particularly in this day and age when governments are under strong pressures to cut expenditures, it is often difficult to maintain political support for services with few visible benefits.
Market Information Services stand or fall on the quality of their information. Frequently, however, this aspect of the service is given inadequate attention. Training of data collectors, after the initial enthusiasm of setting up a service, is often forgotten. With inevitable staff turnover, there is a danger that within a few years most of the collectors are people who have had no training. Data collectors frequently lack resources for transport to and from their markets. Where donors have provided transport, e.g. motorcycles, local budgets are often insufficient to meet fuel and maintenance costs. In Yemen, price collectors in Sana’a were paying their own transport costs to and from the market, in expectation that they would eventually be reimbursed when funds were allocated. Resources restrict the training that can be carried out and also restrict the ability of head office to send out inspectors to check on the work of field staff. Salaries can be very low. A consequence of all this is that price reporting can become mechanical, with reporters paying little attention to the accuracy of their work. An additional factor is that the peak time for market trading is often early in the morning, whereas government officials usually prefer to work from nine to five. There is a temptation not to visit the market regularly but to guess prices.
The question arises as to who should be responsible for collecting the information. Ideally, they should be people who are solely responsible for market information and have no other job. This is one of the strengths of the Indonesian Service that is described in Box 3. At the same time, full-time market information staff puts up costs and countries are thus often forced to use the services of government officers who have other responsibilities. This was noted as a weakness of an MIS in Benin, for example, where staff of the central MIS unit felt they had little control over those collecting the data. In Mongolia, prices were collected by the same people who collected fees from the market traders. As the fees were based on a percentage of the trader’s turnover, there was a clear incentive for the traders to report very low prices, leading to inaccurate market information.
Apart from having to overcome the natural suspicion of government officers (many traders try to evade taxes!), price collectors have to face problems such as calculating the weight of the produce (in many countries trading is conducted with traditional measures that can vary widely, or by “heap” that can change size hourly) and identifying the variety. They then have to get the price right. How to do this can be a problem in societies that tend to function on the basis of bargaining. In Kenya, price collectors were found to be using the first price given by the trader and not bargaining.[20] This is understandable as, if the collector is going to the market every day, the value of bargaining with traders who know perfectly well who he is may be open to some question. Many markets carry out both wholesale and retail functions. Mistaking the two prices is a common mistake in data collection. Furthermore, prices can fluctuate significantly during the day, both due to supply changes and to the need of traders to sell produce before it becomes unsaleable. The MIS in Indonesia, for example, is frequently criticised by traders on the grounds that it presents only one daily price, whereas prices in the assembly markets fluctuate hourly.
An internationally recruited advisor working in Sierra Leone considered allocating a sum of money to wives of local government officials so they could shop in the market. The plan was that they would record the prices paid and then return to their husbands’ offices to weigh the produce, before taking it home. This overcame the problems of not getting either the weight or the price right in that the women had every incentive to get the lowest price and it was possible to accurately weigh produce on good scales in the office. It also addressed a problem faced in Ghana, where traders were becoming increasingly frustrated with people asking the price but not buying anything. However, its long-term future as an efficient price gathering technique is doubtful because of the cost of daily purchases.
Delays in transmitting, processing and disseminating price data can undermine the credibility of an MIS. Out-of-date market information is of little value to market participants. In the days when communication between major cities and government officers in the “field” was largely by government radio, transmission of information for Market Information Services presented many problems, not least of which was obtaining access to a radio, which often had to be shared by all government departments. In these days of modern communications by ‘phone and fax, computer modem and, increasingly, E-Mail, the problems associated with transmitting information from the market where it is collected to a central processing unit should be less. Nevertheless, problems remain. Although many countries have sophisticated communications systems in place, government departments often cannot afford basic equipment, such as fax machines, and in countries where the power supply is unreliable, equipment often cannot be used or breaks down quickly. Where donors have provided equipment, recipient countries often experience problems in replacing it when it breaks down after, or even before, the donors have left. In countries with limited resources, a well-supplied MIS could often be better equipped than the office of the senior civil servant in a town or district. It is not unknown for MIS equipment to be commandeered by a senior officer, with a consequent breakdown in the service. A further problem is that budgets available to pay for ‘phone calls or faxes are often limited. Difficulties in meeting ‘phone bills are frequently faced, particularly where access to ‘phones is not rigorously controlled.
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Box 3, The Indonesian Market Information Service[21] The Indonesian Service was set up in 1978 with technical assistance from the German Government. Lengthy and extensive participatory fieldwork was carried out to identify the needs of the potential users of information and considerable attention was paid by the Germans to the planning process.[22] The results of this fieldwork were that it was decided to place emphasis on prices at the farm level, either at the point at which traders met farmers or at the local assembly market. Research showed that prices at this stage were the ones farmers most wanted. It was also decided to concentrate on vegetables, as these were cultivated commercially while, at that time, fruits were just backyard crops, at least as far as small farmers were concerned. Indonesian vegetable farmers enjoy many advantages. Volcanic soil and reliable rainfall mean they can get three crops a year and have time for a 60-day fallow period. Consequently, seasonal price fluctuations are relatively minor. Market information is thus not so much required by farmers for long-term planning as for purposes of negotiation with traders. They use the Service to check that they bargained successfully the previous day or to get an indication of the price they should ask for the next day. In contrast, the Service does not appear to be widely used by traders. They have their own information networks: phone connections are good and the markets they supply are generally no more than five hours away from the growing areas, with the result that either they or their employees visit the terminal market daily. Even though the MIS is an efficient one, traders tend to be more up-to-date with the prices. The Indonesian MIS collects prices from Monday to Friday in nineteen production areas and at twenty wholesale markets in eleven of the country’s 27 provinces. Price collectors receive training annually. Despite having to work outside normal hours and receiving an average salary of just $75 a month, the field staff appear well motivated and have good relations with farmers and traders. Prices are collected at different times of the day depending on the location. Usually, prices in production areas are collected in the mornings, while prices in wholesale markets are recorded in the afternoons when supplies from the production areas have arrived. Average prices are then sent to provincial headquarters where they are compiled into reports for broadcast on local radio stations in the vernacular, at 19.30 on the same day. They are also forwarded to the main MIS Unit in the Ministry of Agriculture in Jakarta. Transmission of data is mainly by radio, with telephone and fax also being used. The Jakarta Unit prepares selected prices from around the country for broadcast on national radio in the national language every night at 20.05. It also sends prices from around the country to provincial headquarters for broadcast, where relevant, on local radio. Prices are also published in newspapers and the Unit prepares a quarterly report and an annual volume that contains monthly averages for all the prices collected. Price collectors are responsible for daily updating of notice boards with local and regional prices, although these appear to be less well appreciated by farmers than are the price broadcasts. The Indonesian MIS has proved remarkably sustainable and
provides a valuable service, most notably for farmers. A measure of its impact
is that the Ministry of Agriculture has since copied its approach in setting up
Market Information Services for meat and fish. The current cost of running the
Service is around $850,000 a year which equates to about 0.1 per cent of the
value of vegetable production. |
Many MIS have used Lotus or Excel spreadsheets to store market price data, and generate daily or weekly bulletins. While a spreadsheet system can be quickly and easily set up for immediate data input and reporting of market data with minimal training for data operators, there are problems in using spreadsheets for market information. In Guyana, for example, an Excel system was initially set up by FAO using a system of inter-connected sheets and making use of the cut and paste facility of Windows. Macros were developed to facilitate this cutting and pasting of data from one sheet to another. These macros, however, required maintenance which was beyond the scope of the data entry personnel, and they were soon abandoned. Setting up macros to work in spreadsheets is always a tricky business, since they do require some input from the operator and can never be totally automatic.
A problem with many MIS is that they become obsessed with processing and analysing the data and tend to ignore the main purpose of gathering it in the first place, i.e. to provide speedy and useful information to farmers and traders. This is often a reflection of the lack of a commercial orientation among Ministry officials, particularly those from formerly centrally planned economies, who see data primarily in terms of its use for planning and control purposes. The strength of the Indonesian service described in Box 3 is that information is disseminated within a few hours of collection. The Indonesian service is relatively weak on subsequent data handling, but it certainly fulfils its prime function of informing people of prices on a timely basis.
The survey identified only thirteen countries that have daily dissemination of price information. In many circumstances, daily information would appear to be a precondition for a commercially relevant MIS. For example, where markets are held daily for horticultural produce there is very little relevance for the farmer in prices of three days earlier. Staples, on the other hand, are generally far less perishable and thus prices change more slowly. In these circumstances, a weekly service would appear adequate.
Problems with dissemination are associated with guaranteeing that the information is accessible to the target audience and ensuring that the information is in a form in which it can be understood. Again, lack of resources is the major constraint to effective dissemination. Almost all countries surveyed by FAO reported that they were experiencing difficulties in this regard. Many services find that they do not have the resources to finance price broadcasts on the radio which, in most countries, is by far the most effective way of accessing small farmers. Radio stations, on the whole, do not regard market information broadcasts as news services but more as potential paid advertisements. This problem is growing as, under structural adjustment reforms, radio stations are being privatised or are expected to cover an increasing part of their operating costs and are demanding payment to carry broadcasts. However, Market Information Services have few opportunities to raise the funds, although they have tended to be very slow in exploring the possibility of sponsorship.
Many countries have technical problems in broadcasting country-wide. In southern Africa, for example, both Lesotho and Zambia experience problems. For farmers and small traders, alternative methods of announcing prices, such as newspapers and bulletin boards, do not have the same immediacy. Other problems with information dissemination include ensuring that the broadcasts are at a time when farmers and traders can listen to them. In Ghana, for example, prices are broadcast at 17.45, when most traders are in the markets, while in Benin broadcasts are at times when farmers would usually be expected to be in their fields. In the Caribbean, the MIS of Dominica surveyed market information users and concluded that the price broadcasts were at the wrong time. It was unable to rectify the situation as it could not afford to broadcast at a time favoured by farmers as radio programmes at that hour were too expensive. It is also essential that the broadcasts are in local languages or only a few large traders will benefit. As just one example, in Guinea Bissau prices are broadcast in Portuguese, but the bulk of the farming community speaks Creole. Use of more than one language inevitably increases the amount of air time required and hence the cost.
In most countries radio ownership is not universal. This has prompted MIS developers to use notice boards to publicise price information, with mixed results. In Indonesia, price boards in producing areas are used by farmers, although boards in urban markets are consulted much less. In Malaysia price boards were poorly utilised. This was attributed by the Federal Agricultural Marketing Authority (FAMA) to the fact that only price information was provided. FAMA therefore started to also post information on supply, demand, market potential and local agricultural activities.[23] In some other countries, boards are a visible indication of the weaknesses of the MIS. They are often not maintained and prices are rarely updated. They are frequently sited close to Government offices and far from the markets. Even where boards are updated regularly, they are useful only when farmers gather in one place to sell their produce. Where itinerant traders visit villages to buy crops, boards in provincial and district centres are next to useless. A further problem is that in order to use price boards farmers have to be literate. In many countries widespread literacy cannot be taken for granted. Thus, while price boards are inexpensive and an indication that something positive is being done to promote market information, they should only be erected when a regular flow of up-to-date information can be guaranteed, when they are sited at places where farmers congregate and when farmers are able to understand them.
Units of measure used can cause problems of understanding. Holtzman[24] reports that one Kenyan trader rapidly lost interest in published prices when he found out the hard way that a “bag” in Nairobi was nearly three times the size of a “bag” in his home town. Thus there is a need to find ways of standardising the information presented. This should not, however, go as far as an attempt to force the marketing system to change its established measures in favour of something more convenient for the MIS. In Yemen, an FAO project instituted regular monitoring of standard trade units; price data was reported in kilos but collected according to the trade unit (e.g. carton or box) and there was a need to ensure that these packages remained constant in size.
Information needs to be relevant to the target audiences. This means that considerable care must be taken to make sure that the type of price information provided is that which the user finds most useful. Small-scale farmers, for example, may find data on prices in their local assembly markets much more relevant than major city wholesale market prices. Uganda and Benin are two countries where farmers have complained that prices broadcast are not relevant to them because they lack transport to major city markets. Where governments have in the past or still do set official prices, farmers can mistake the prices broadcast for the official price. This implies that the introduction of an MIS must be accompanied by an extension and media campaign to explain to farmers the meaning of the prices being broadcast, and that such a campaign must be repeated on a regular basis. Some services would like to target consumers, but they generally only broadcast wholesale, not retail, prices. A survey in Senegal, for example, found consumers very critical of the output of the national MIS.
Price information would be much more useful if it were accompanied by a range of other information regarding, for example, quantities available at the market or in major producing areas, supply-demand trends, and problems with transport, such as road blockages. In Sri Lanka, the MIS started reporting on the number of trucks arriving at the wholesale market. However, it must be recognised that it is better to provide no information than inaccurate or misleading information. For example, without the sort of sophisticated reporting system that exists in South African wholesale markets it would be very difficult for a private MIS to report accurately on quantities arriving at markets. In Indonesia, twelve different products loaded on the same truck would make life very difficult for a market reporter asked to record quantities of each arriving at Jakarta wholesale market. The FAO survey of the MIS in Senegal noted the absence of a suitable methodology for dealing with quantities and felt one needed to be developed. One problem with this, however, is that while collection of price information by government officials may well arouse suspicion amongst traders, collection of quantity information almost certainly will. In Mexico, for example, information is collected on fruit and vegetable prices in 26 wholesale markets, but in only three of these is quantity information collected. The reason given for this is that wholesalers refuse to cooperate because they believe that the information could assist tax collectors.
While many countries lack functioning MIS, in several there is a significant duplication of information activities. In Benin, for example, there are at least four national institutions collecting price information and disseminating it through various bulletins. This can cause confusion, particularly when there is no consistency between the data sets. In Cambodia in early 1996, data on agricultural prices were collected by the Ministry of Agriculture, the Ministry of Commerce, the Statistics Service for Retail Price Index (RPI) purposes and by a local radio station (see Box 8). Only the radio station was disseminating the prices in a form useful for farmers and traders. In countries which lack the resources to operate a reliable and sustainable MIS which is commercially useful, duplication of data gathering would appear indefensible. The first stage of any improvement programme is a consolidation of existing activities. With Ministries often reluctant to give up “territory” this may be easier said than done.
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Box 4, The Zambian Market Information Service[25] As in most of Eastern and Southern Africa, agricultural marketing in Zambia is undergoing a major transformation. The country has liberalized maize marketing and is in the process of liberalising input marketing. The Market Information Service, set up by the Ministry of Agriculture with FAO assistance, has played an important role in facilitating this process, particularly in the case of maize produced by small-scale farmers. Unlike Tanzania, for example, which prior to liberalisation had a flourishing parallel market in grains, maize marketing in Zambia was entirely controlled by the Government, first through NAMBOARD and subsequently through cooperatives. In Tanzania it was easy for the private sector to take over the parastatal’s trading activities but in Zambia traders were expected to start from scratch. The provision of market information was considered an essential step in encouraging such trade. ZAMIS started operating in May 1993, although several of the staff had previously been operating a cooperative stock-management information system. Initially, priority was given to the needs of traders but it was always intended that ZAMIS would be extended to cater for farmers and by the end of 1995 this was being done. The Service is coordinated in the Ministry of Agriculture in Lusaka and price and supply information is collected in the field by Provincial Marketing Officers and their colleagues in the districts. The Service collects and disseminates wholesale and retail prices for maize, maize meal, other food crops, fertilizer and seeds. In particular, the maize wholesale prices serve as reference prices for the private sector and, as such, play an important role in promoting produce movement from production to consumption areas. With the launching of ZAMIS, information on prices and market developments was disseminated through three channels: weekly radio broadcasts, weekly market bulletins and price boards. All ran into problems. Debts by a different section of the Ministry meant that the radio station stopped accepting all material for broadcast. An increase in postal charges of 400 per cent made it impossible for the Ministry to finance distribution of the weekly market bulletin and the price boards did not generally find favour with farmers. Many of these problems were eventually resolved and the information returned to the radio and twice-weekly reports in a national newspaper were introduced, while the bulletin continued to be published thanks to sponsorship from a local bank. Future sustainability will depend very much on attracting and retaining such sponsorship. ZAMIS has recognised that it is not sufficient just to publish
prices. Farmers must be able to interpret the data and must also be aware of
potential market outlets. For that reason, the Ministry is trying to introduce
local newsletters on a provincial basis to advise farmers on which traders are
buying and where. A small FAO project also trained extension workers and farmers
in how a liberalized market functions. The project paid attention to improving
on-farm storage, which is becoming increasingly important now that farmers have
no outlet for their crop immediately after harvest. |
As countries liberalise their agricultural markets, price setting by governments becomes less common. However, in countries which have in the past established “minimum” or “official” prices, farmers are reported to have difficulty in understanding the meaning of prices broadcast by MIS. Many still look upon such prices as government imposed. Some MIS have had difficulties in reporting accurately on prevailing prices, particularly of staple crops, because the market prices have been above the official government price and sections of the government have been reluctant to allow actual prices to be broadcast. If it is accepted that MIS can increase the bargaining power of farmers then it follows that, at least in this aspect, MIS can lead to a reduction in traders’ margins. Further, larger traders may oppose an MIS because they have invested in obtaining their own information and an MIS will reduce their competitive position in relation to smaller traders. Thus some traders have in the past adopted tactics of providing deliberately misleading price information. More extreme actions have included attacking price notice boards at some markets.
The vast majority of MIS in developing countries and emerging economies are public services. Obviously, public provision has limitations of cost and if users require more than very basic information they should be required to pay. For example, in Colombia a new MIS generates market information on ten wholesale markets on a daily basis. This information is transmitted to Bogota by satellite and a detailed bulletin is prepared by noon of the same day. This is available, at a price, to traders and anyone else who wishes to pay for it. The same information, in summary form, is subsequently published in several newspapers and broadcast on the radio. In China market information is distributed through a dedicated ‘phone line or a computer modem connection. Callers pay for the information through the cost of the ‘phone call, with the MIS company receiving revenue from the ‘phone company.
People who are prepared to pay for market information do, by definition, require more information than is available publicly. They also require the information more rapidly. Thus a precondition for a commercial service is good and inexpensive telecommunications. In the long term, the potential offered by improved communications systems, such as the Internet, is enormous.
It is unlikely that an MIS that begins by offering a free service will ever make the transition to a commercial one. A New Zealand-funded project in Papua New Guinea set up an MIS with the intention that it should eventually become a commercial company. It quickly found, however, that the main users of its information were small traders and semi-subsistence farmers who were in no position to pay for the information. Even if they had been, it is not clear how they could have been charged, given that the most rapid system of dissemination to small-scale users is undoubtedly radio.
In Zambia, the market bulletin was favourably received by traders. However, when it became necessary to charge them for copies, very few took out a subscription, partly, perhaps, because much of the information was available in a national newspaper. One option considered for the future was that the subscription should be included in the traders’ annual registration fee.
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Box 5, Private Market Information in South Africa Agritel is a privately run information service supplying market information from South Africa’s wholesale markets and 11 major abattoirs. The markets are computerised and all transactions (price and volume) are recorded. Agritel receives data daily on all the markets and it then processes and packages this in a more user-friendly format. The result is a comprehensive service covering both price and volume data for all commodities, varieties, classes, sizes, and packages. Agritel has approximately 400 users who pay monthly fees ranging from US$ 28 to US$38 depending on the number of services and markets the user wishes to access. Users include producers, packers, caterers, butchers, wholesalers, market agents, and the markets themselves. In addition to paying the subscription fees, users must have access to Beltel, which is the national telephone company’s electronic transmission network. Access can be obtained through a terminal hired from Beltel, or through the use of a personal computer and modem. The telephone call to Beltel is toll-free. The Agritel service is completely menu-driven and easy to use. The system provides the following information for the current and previous days’ trading for each market:
In addition to the current trading data, users can access historical information
using a graphics package supplied free of charge by Agritel to its larger
customers. The historical information shows trends since the start of the
service. Agritel allows the use of market information to its fullest potential.
It is, however, only cost effective because of the ease of access and availability
of fully computerised data. It is unlikely that Agritel would be commercially
viable if the company had to collect the information itself, rather than
being able to rely on available data sources. |
