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Farmers Need Marketing Information

Marketing information not only helps farmers make profitable decisions in the short term on when and where to market produce, and what price to expect. It also has another vital function, of helping farmers decide what to produce. Since there may be a time delay of months or years between investing in a crop or herd and getting a profit, farmers who understand market trends and market opportunities have a better chance of succeeding than those who do not.

In fact, marketing information plays a vital role in the functioning of the whole market, by regulating the competitive marketing process. By helping ensure that produce goes to markets where there is a demand for it, it shortens marketing channels and cuts down on transport costs. It helps ensure that each marketing transaction is a fair one, and that all participants share the risks and benefits. However, this does not happen if marketing information is distributed unequally, as is generally the case when many small-scale farmers in Asia are selling to a relatively few large-scale dealers. The farmers then end up bearing the greater part of the risk, while the dealers end up with the greater part of the profits.

Recent advances in information technology a re making it more feasible to provide small-scale farmers with the marketing information they need. However, farmers may not benefit from sophisticated facilities, if the system is poorly managed or not designed for their needs. It is not enough for marketing information to be collected: it must also be disseminated in a form accessible to farmers and adapted to their needs.

Marketing Information Systems in Asia

Different countries have developed different systems, with variations only partly related to the amount of money invested in the system. They are also related to planning priorities, and the type of commodity produced.

Most countries in Asia operate a marketing information service with the express aim of promoting efficient marketing and raising farm incomes. The form it takes varies according to the level of economic development, and especially the extent to which agriculture has changed from subsistence to commercial farming.

In Indonesia, Japan, Korea, Malaysia, Philippines, Taiwan ROC, and Thailand, agricultural marketing information is a national government service which receives regular government funding. It is usually run by the Ministry of Agriculture or its equivalent, sometimes by several Ministries (for example in Thailand, marketing information it is jointly operated by the Ministry of Agriculture and Cooperatives and the Ministry of Commerce). There are often additional independent services for particular interest groups. For example, Japan has an information service operated by ZEN-NOH, the national farmers' cooperative organization. Malaysia, a major agricultural exporter, is the only one of the seven not to have a single government service covering all major crops. Instead, each major export crop has its own price information service, run by the special government agency that is also responsible for extension and technical research for that crop. Information about vegetables and other domestic food items in Malaysia is the work of FAMA, the Federal Agricultural Marketing Authority.

Collection of Marketing Information

The essential data of marketing information are price data. Agricultural price data are based on thousands or millions of transactions, many of them on a small scale, that are taking place every day all over the country. Collecting an adequate sample and making sure that these are representative enough to be useful is not an easy task. In each country, the central government office is linked to numerous reporting stations in the provinces which report regularly on the local prices of a range of commodities.

Data Collection from Wholesale Markets

In Taiwan, Japan and Korea, which are all industrialized and relatively wealthy, there is a well developed system of wholesale markets in towns and cities. It is the prices in these wholesale markets which provide the basic price data, collected and transmitted to head office by market officials as a normal part of their duties. In all three, the data is collected and transmitted by an on-line computer network.

Data Collection by Surveys

In the less industrialized countries, there are not many wholesale markets and a different system is used. In Thailand and Indonesia, price information is based on surveys of both the farmgate prices and the prices paid by consumers, carried out regularly by designated farmers and dealers. The Philippines uses information collected from public markets and supermarkets in Manila and 44 trading stations in the provinces. The marketing information from these countries is usually collected and given preliminary processing at the reporting stations, either manually or by PC, and transmitted to the head office by fax, SSB radio, or telephone.

Each system has its basic difficulties. It is obviously much easier to collect price data from wholesale markets, where prices are being discovered openly and publicly during auction. However, there is the problem that wholesale markets charge fees, and farmers often try to bypass them and sell privately. These private sales may represent a considerable market share. In Taiwan, for example, where wholesale markets charge a fee of 3-5% of the sale price, farmers are selling an estimated two-thirds of their vegetables through other channels. None of these transactions appears in the price data: they are statistically invisible. Obviously they are distorting the accuracy of official price data, but nobody knows to what extent. In countries where wholesale markets are not well developed, most sales between farmers and dealers are taking place at the farm gate or in small markets. Since price discovery is occurring in a series of scattered, private transactions, the reliability of price data is a major concern.

Quality Affects Price

Another major problem shared by both systems is that information about prices is not very useful unless quality is taken into account. Prices for good quality fruit and vegetables and preferred rice varieties may be more than double those paid for poorer quality foods. For farmers to be able to use price data, they need to be able to compare what has been sold with the produce they themselves are planning to market. This needs a uniform national grading system. All seven countries are striving to achieve a national grading system with which farmers are familiar and which is applied uniformly over the whole country, but only Japan has so far achieved it.

Forecasting

Forecasting of future demand to guide farmers in their production planning is one of the most useful, but also one of the most difficult, tasks of a marketing information service. In Thailand, the Ministry of Commerce and the Ministry of Agriculture and Cooperatives have jointly set up an on-line information system which collects marketing information from a variety of sources in both the public and private sectors. The Thai government is now analyzing supply and demand in order to distinguish those crops which continuously face marketing problems (i.e. production needs to be reduced) from those which have only occasional marketing problems or for which there is strong market demand.

In Taiwan, where poultry are fed mainly on imported concentrates, the volume of poultry feed sales is published regularly as a guide to poultry farmers on current production levels.

Dissemination of Marketing Information to Farmers

National marketing information systems usually provide price information through the mass media, such as newspapers and radio. However, it is not clear how useful such information is likely to be to farmers.

In most marketing information systems, regional data is transmitted to a central national facility where it is processed and amalgamated with similar data from all over the country. The result is useful to those working for central government agencies, who need to know what is happening over the whole country. It is of less value to the farmers in the rural areas which provided the original data.

Farmers are interested mainly in prices in local markets where they sell their goods. for efficient dissemination to farmers, market information services need to be decentralized, especially in remote areas where there are wide regional price differences. Thailand is now planning to develop a database system at a provincial level so that the relevant agencies can operate the system more efficiently and conveniently. The AGMARIS Project in the Philippines has also decentralized the marketing information system so that there will be improved access in the provinces. Indonesia's marketing information system already uses provincial offices to distribute locally collected data to radio stations, newspapers etc., and to maintain "Price Boards" which are displayed in collection areas and updated every day.

Conclusion

It is clear that the governments of all seven countries are aware of the importance of information technology and have invested heavily in a marketing information service. In Japan, the Ministry of Agriculture, Forestry and Fisheries spends US$ 9.5 million every year maintaining and operating its information service for perishable foods alone (fruit and vegetables), while large sums are also spent for other commodities. Less industrialized countries have less to spend, but still have allocated comparatively large amounts of money. As a result, there are enough highly trained staff and computerized facilities for technology not to be a major constraint to data handling and storage at head office.

However, the benefit to farmers is relatively limited. Distribution of marketing information at a grass roots level is not adequate to meet the needs of farmers. The information distributed tends to be raw price data, often averaged over the country, which is of little use to farmers.

Mode of Delivery

While computer equipment is very suitable for storing and analyzing large quantities of data, it has little relevance in terms of a direct information service for farmers. Generally speaking, farmers benefit more from simple technology which communicates information which is relevant and easy to understand. The efficiency of an information service should be judged, not by whether it uses sophisticated equipment, but by whether it meets the needs of the end user. at a village level, the simpler the delivery system, the more effective the dissemination of market information is likely to be.

Point of Delivery

Not only the mode of delivery, but also the point of delivery is a difficult problem. Especially where there are large numbers of small farms, home delivery is limited by the fact that many farmers may not own radios or television sets, and may not have access to a daily newspaper. Delivery of the information to the market place itself is sometimes seen as a solution, since this is a centralized gathering place for both buyers and sellers. However in practice, farmers at market seem to be too involved in actual transactions to pay much attention to bulletin boards or radio broadcasts on prices.

Lack of Information Not the Only Marketing Constraint

Finally, it should be remembered that while the lack of marketing information is an important constraint for farmers in developing countries, there are other urgent problems. Information is only one of the constraints facing farmers in remote parts of Asia who are trying to earn money by growing produce for sale.

Other difficulties include poor roads, the distance from urban markets, the lack of transport, the lack of a good grading system, and poor packaging so that produce is spoiled in transit. Marketing chains are long. Produce passes from one dealer to another, in a journey that may take many hours or even days to reach its final destination. Where farmers face these difficulties, and where they have little choice over marketing outlets, even a very good marketing information service may not help much. It may be a prerequisite for an efficient marketing system, but it is not enough in itself to create one.

Recommendations on How to Improve Marketing Information Systems

Two recent workshops held by FFTC Workshops produced the following recommendations:

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  Advanced information technology is suited to government collection and analysis of large quantities of data. It is of little relevance in terms of a direct information service for farmers, although it might be valuable if suitable intermediaries are used. Generally speaking, farmers benefit more from simple technology which communicates information in a lucid and relevant way. It should be noted that farmers are interested, not only in current price information, but also in marketing issues and news, and demand forecasts.
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  There is wide price variation according to quality. Fruit and vegetable prices are particularly influenced by quality, including size. The lack of a uniform national grading system is a major constraint to the development of an efficient national marketing information service.
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  Farmers must be able to seek out and compare the information available for different outlets if they are to sell to best advantage. Price information is less useful if there is only a single market outlet, or if farmers are price takers rather than price seekers. Where there is a very wide gap between the farm gate price and the price paid in wholesale markets and by consumers, marketing information can help narrow the gap, but only as part of an efficient marketing system.
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  It follows from the previous point that the effectiveness of marketing information largely depends on the structure of the overall marketing system.

"Marketing information is a means to an end, not an end in itself."

Two International FFTC Workshops on Marketing Information

First Workshop: Navigating the Marketing Information Systems of Asia

Location: Seoul, Korea


Date: May 22-28 1994


No. Participating Countries: 7 (Indonesia, Japan, Korea, Malaysia, Philippines, Republic of China, Thailand)


No. Papers: 9


No. Participants: 19 plus observers


Co-sponsor: National Agricultural Cooperative Federation, (NACF) Korea

Second Workshop: Dissemination of Agricultural Information, and Access to It by Farmers

Location: Taipei, Taiwan RO

Date: October 17-22 1994

No. Participating Countries: 9 (Australia, Indonesia, Japan, Korea, Malaysia, Philippines, Republic of China, Thailand, USA)

No. Papers: 11

No. Participants: 21 plus observers

Co-sponsor: Institute of Agricultural Economics, National Taiwan University

List of Papers

1st Workshop

1. The agricultural marketing information system in Japan: An overview of it as a public service

- Teruaki Nanseki

2. Agricultural marketing information systems for centralized and non-centralized marketing organizations in Taiwan

- Yi-Chung Kuo

3. Marketing information system for agricultural products in Korea

- In-Sik Shin

4. The agricultural marketing information system for selected commodities in Malaysia

- Fatimah Mohd. Arshad and Kusairi Mohamed Noh

5. Information management for vegetable and fruit marketing in Japan

- Kentaroh Matsumura

6. The agricultural marketing information system in Indonesi

- Mened Gunawan

7. The agricultural marketing information system in Thailand

- Charern Sukanantapong

8. The agricultural marketing information system in the Philippines

- Moises L. Sardido

9. The development of agricultural information services in the Chung-Chong area of Korea

- Oh-Gie We and Pyeong-Ik Choe

2nd Workshop

1. Agricultural marketing information system in Japan: Use and evaluation for agricultural extension.

- Teruaki Nanseki

2. Dissemination and use of agricultural marketing information in Korea

- In-Sik Shin

3. Dissemination of agricultural marketing information of selected commodities in Malaysia

- Fatimah Mohd. Arshad

4. Disseminating market information in the Philippines; Experiences and lessons at the micro level- Felix Librero

5. Agricultural marketing system and information collection; Taiwan's experience

- Chiang-Ren Show

6. A marketing information system for fresh fruits and vegetables; The US experience

- Hsin-Hui Hsu

7. The provision of marketing and economic information in Australian agriculture

- Vernon Topp

8. Agricultural marketing information system: Design and implementation in the Philippines

- Ratelieta T. Millendez

9. Evaluation of market news reporting system for broilers in Taiwan

- Yi-Chung Kuo

10. The provision of an agricultural marketing information system in Thailand

- Suchoti Daosukho

11. The framework for disseminating agricultural marketing information accessible to farmers: The case of food crops in Indonesia

- Prajogo Utomo Hadi

Index of Images

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  Figure 1 Lack of Transport Is a Serious Marketing Problem for Many Asian Farmers

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  Figure 2 Cooperative Wholesale Market, Korea

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  Figure 3 Market Vegetable Stall, Taiwan

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  Figure 4 Unloading Cabbage for “Kimchi”, Wholesale Market, Korea