Designing%20Market%20Information%20Services

1

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

2
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

3
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

4
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

5
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

6
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.

7
Market Information Services

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

8
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

9
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.

10
Market Information Services

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

11
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.

12
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

13
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

14
Market Information Services Indian Experiences

• - Information is disseminated through the
  internet (agmarknet.nic.in)
• - Information is accessible in eight regional
  languages besides English

15
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)

16
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

17
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

18
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

19
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 Nil Yes
20
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

21
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

22
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?