Reposting this entry from The Connectivity, Inclusion, and Inequality Group blog at the Oxford Internet Institute. (see the original post here and download the full report on connectivity and the tea sector in Rwanda)
by Chris Foster
Market information systems are growing in popularity as an intervention by governments, NGOs and private firms alike. New information provision for farmers, often price infromation over mobile, have been touted as a way of helping farmers improve the price they get for their produce, and reduce their dependency on middlemen. In our research we explored the impacts of connectivity in the tea sector in Rwanda, and we spent much time mapping the actors, information flows and relations that gave us critical insight into the potentials and limitations of market information systems.
What determines price?
Before we come onto talk about market information systems, I want to talk about ‘price’ and I want to problematize the assumption that the low prices that smallholders receive are the result of a ‘lack of information’. Let’s look at the tea sector in Rwanda. In Rwanda it is only recently that smallholder farmers have been paid based upon a market price (as opposed to a flat government-set rate). So, the tea sector provides us with an interesting natural experiment to observe what happens when smallholders are exposed to market prices – do they seek out and use information and knowledge to improve prices?
Not really! In fact we found little evidence in our research that new price-based trading changed farmer’s behaviour. Quality (and hence price of tea) is not really determined by elements that the farmer could influence. Price is more linked to international market fluctuations and to ‘natural’ endowments (location, soil quality, climate). For farmers who looked to increase quantity, the nature of land sub-division in Rwanda means that it is difficult for smallholders to greatly increase yields and new techniques, fertilisers and irrigation are rarely designed for smallholders. Finally, there is little room for smallholder to choose or skip intermediaries – tea leaf from smallholders needs to quickly be processed, so farmers have little choice about which processor they sell to. It has to be the nearest one.
Even with the above reservations, we explored if smallholders might have some ability to improve their prices through information and knowledge. What types of market information are available and how are they used in the tea sector in Rwanda?
There have been some sectoral efforts to disseminate price information in tea, and there is a price information system available. This market information system was supposedly accessible for tea co-operative associations (which all smallholders are a member of), but when we interviewed co-operatives there was an inconsistency in knowledge of the system: some co-ops had access, but some co-ops didn’t know the system existed, still others used other relationships to find out about price. In short, our feeling was that it was difficult for co-ops and smallholders to trust price information, and how they might use this to improve was unclear.
There were also a number of other social factors that meant that efforts to improve tea through market information had been less than successful. The demographics of tea smallholders in Rwanda does not favour innovation. Agriculture in general, and specifically tea is not seen positively, and the backbreaking work of sowing, weeding and harvesting tea is not one to attract dynamic entrepreneurs – the majority of tea producers are male and older, whilst youth tend to prefer to look for work in the informal sector in a local city. In Rwanda policy also works against tea, where certain regions are exclusively assigned to tea growing, and so there is less ability for diverse portfolios or rich inter-cropping approaches for smallholders.
Market information and the bigger picture
In recent years there has been a growth in discussion of ‘pro-poor’ value chains, of poor farmer becoming involved in more commercially-orientated agriculture. Across the board, NGOs, donors and commercial firms have subscribed to this perspective and I think that market information systems is one element in this new paradigm in agriculture. Bringing development through profit, new clever finance, insurance, ICTs, market information and prices. However, pro-poor value chain approaches are often narrowly focussed on the immediate economics and neglect the structural (politics, colonial histories, land ownership), social (diversity of livelihoods, risk and gender) and complexities of production.
Market information does have a place though. From our work in tea we see a number of ways that implementers and developers of market information systems might improve activity. As I hope this outline shows, the value of qualitative research is invaluable to designers. My recommendation would be that all market system designers should spend time seeking to understand the supply chains, the relationships and small holder goals before starting to develop any system. How does price break down in the supply chain? Where might price (or other) be useful and when might it not? In hand with this, our own evidence suggests that more integrated approaches are important for success – in terms information, such as price, farmer information (pests, fertiliser, skills), contacts, market intelligence, and in integrating the diverse communication ecologies of farmers.
There is also value is designers thinking of information not only as a top-down exercise. In the tea sector, we saw sporadic online sharing between co-ops relating to tea management and production (horizontal rather than top-down information flows). Indeed, intermediaries such as cooperative were a key node in these information flows. Thus market information systems which consider bottom up information flows and intermediary players more overtly would be useful in improving the ability for market information systems to have impact.