Access to market data gets better pricing

Access to market data gets better pricing
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First Published: Mon, Jun 23 2008. 11 25 PM IST

Informed decision : Farmers sort potatoes in a village in West Bengal. Project managers have hired tele-callers based in Hooghly, who update them on best prices sourced from agents at various markets.
Informed decision : Farmers sort potatoes in a village in West Bengal. Project managers have hired tele-callers based in Hooghly, who update them on best prices sourced from agents at various markets.
Updated: Mon, Jun 23 2008. 11 25 PM IST
Kolkata: Sailen Bag used to sell his potato harvest at rock-bottom prices to local traders as he knew nothing about the rates in the wholesale markets in Kolkata and Bhubaneswar. Not any longer.
Bag, a potato farmer in Uttar Kotalpur village of West Bengal’s Hooghly district, now uses his mobile phone, on which he gets regular price updates from Kolkata.
Informed decision : Farmers sort potatoes in a village in West Bengal. Project managers have hired tele-callers based in Hooghly, who update them on best prices sourced from agents at various markets.(Photo: Harikrishna Katragadda/Mint)
“Earlier, we had no alternative but to depend on middlemen,” Bag says. He and 95 other farmers got a free cellphone and an Airtel connection in the beginning of 2007 under a research programme for which US’ Boston University, Indian Statistical Institute, or ISI, and Washington-based International Food Policy Research Institute have joined forces.
The project has hired three tele-callers based here who update the farmers on prices sourced from agents at various markets. “Though I think I still don’t get the price I should, I can at least bargain for more,” says Bag.
“We have seen that information asymmetry has been a serious problem among potato farmers in the state because of which they sell at suboptimal prices,” says Sandip Mitra, an associate professor at ISI and a project researcher.
“Traders were very hostile to the idea of providing better information to farmers, but the farmers felt the information was useful,” Dilip Mookherjee, a professor of economics of Boston University and a collaborator, told Mint by phone.
A similar experiment was earlier undertaken with Kerala fishermen. Fishermen returning from sea were informed where they would get best prices for their catch. That experiment was conducted by Robert Jensen, professor of journalism at University of Texas.
“The addition of mobile phones to the system reduced price dispersion (across fish markets in Kerala) and wastage, and increased fishermen’s profits and consumer welfare,” Jensen had said in his study published in August 2007 in The Quarterly Journal of Economics.
Mookherjee says the current study is modelled on Jensen’s and being conducted in 72 villages—36 each in Hooghly and West Midnapore districts in southern West Bengal. The researchers have divided the villages into three categories. In 24 villages, they are providing updates over phones. In 24 others, they are posting information on the notice boards of councils or at places the farmers visit often. In the remaining 24, they are not providing any information, just studying the traditional farmer-intermediary relationship. The farmers will have to return the phones once the study is over.
Interestingly, the study—expected to end in a few months—has revealed that a large section of potato farmers in the state are beholden to moneylenders. Access to information makes little or no difference to those who have borrowed from the local loan sharks as they are bound to sell at predetermined prices.
“I get regular updates on my mobile phone, but the price at which I’m selling is far below the market price,” says Parashuram Bag, another potato grower in Hooghly. “I can’t do a thing because the guy who lends money threatens to stop lending if I bargain too much.”
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First Published: Mon, Jun 23 2008. 11 25 PM IST