SE-RABM-02:

ICT for Agricultural

Management
(Session 5 & 6)
Prof D V Deshpande
dvdesh@gmail.com
(M) 9919225539

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Coverage in topic 3- ICT For Market Access
(2 sessions)- Session 5 &6
• Types of market access ICT Service
• Pricing services
• Virtual Trading Floors
• Holistic trading services
• Downstream and upstream administration
• Issues and challenges for market access ICT service
• Advantages of and opportunities for market access Information
services

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3 types of ICT interventions covered in this
course
1. ICT For Production systems management
2. ICT for market access
3. ICT for financial inclusion

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What is the meaning and scope of Market Access ICT Services
Market access ICT services comprise any service
that provides beneficiaries, especially farmers,
with access to information on pricing of
agricultural products (inputs and outputs) and
on finding and connecting to suppliers, buyers
or logistics providers, such as storage facilities
and transport companies.

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Market Access ICT Services contd..
• These services also cover ICT solutions that help the typically larger
“upstream” and “downstream” firms, such as processors or exporters,
manage their operations and the quality of the produce better.
• Value chain- consists of three segments – upstream, midstream and
downstream

DOWNSTREAM
UPSTREAM MIDSTREAM

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Market Access ICT Services contd..
• Upstream includes inputs to agriculture, such as seeds, fertiliser,
machinery and technology
• Midstream is food production, including foodgrains, fruits,
vegetables, meat, fish, animal feed and dairy
• Downstream is the processing industry, packaging, marketing
• In particular this has helped provide several pricing services to
farmers throughout the world

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Example of ICT in market access- Farmer kiosks
– e-Choupal in India- initiative of ITC
• e-Choupal connects buyers with farmers to procure
agricultural/aquaculture products such as soybeans, wheat, coffee
and prawns, to reduce transaction costs
• At harvest time, ITC buys crops directly from any farmer at the
previous day’s price; the farmer transports her/his crop to a
processing centre for weighing and quality assessment
• The farmer is then paid for the crops (at a higher rate if deemed of
high quality) plus a transport fee
• e-Choupal also offers farmers many other value chain development
services through its ICT kiosk platform, such as sharing of best
practices to improve productivity, and price benchmarking to increase
sales prices.
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e-Choupal contd..
• e-Choupal reports that farmers earn an average of US$6/tonne (Rs.
450 per tonne) more because of more accurate weighing and better
pricing information
• ITC has benefited through lower procurement costs of about 2.5
percent less owing to lower intermediary fees and transport costs,
and more direct control over produce qualityconnect
• Benefit to ITC - through direct action with farmers, the system feeds
information to ITC on conditions on the ground, improving planning,
reinforcing relationships and ultimately improving supply security
• Short film on e-choupal
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Example of ICT in market access- SMS based
service
• “Frontline SMS” – Pricing Service
• Working since 2005, works in over 120 countries, supporting thousands of
organizations, universities, and NGOs by sending SMS to individuals and communities
• Service:
• manage bulk SMS online to a fully featured system that can segment
• list of users,
• filter responses,
• automated replies,
• Facilitate SMS campaigns from anywhere in the world
• Applications in agricultural development- provides pricing information to farmers
throughout Africa, Asia and Latin America
• Advantage of Frontline SMS is its use of simple, free and open-source software and
open to cell-phone and laptop hardware technology

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Example of ICT in market access- Sending Price
Information (and more) to Remote, Rural Farmers
in Cambodia
Information sent through SMS messages
• Price information (maize, soybeans and cassava)
• Buyer contacts,
• Weather information
• Farmer communications (e.g., meeting reminders) through Frontline SMS
software
• Rating good suppliers and buyers
• Providing information on seed and fertilizer costs
• Other info- providing basic health information to rural areas (e.g., health
alerts and communications, and health-related information) and
information to field extension agents (e.g., weather alerts and meeting
alerts)
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Example of ICT in market access-Rubber board,
India- Market price by SMS
• The Rubber board – Kerala- provides the update of both national and
international rates of natural rubber through SMS throughout the
country by the rubber farmers and dealers in India especially Kerala
State of South India
• They are tracking and sharing the prices of the commodity real time
by SMS
• Farmers are helped by a service by the Rubber board which through
SMS updates the farmers with rates in the global as well as domestic
markets, which is also displayed in the Rubber board’s web portal.

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Virtual trading floors:
• Virtual trading floors (VTFs) are electronic market places where
buyers and sellers connect through an electronic network
• This is different from pricing services, which mostly only provide static
information
• The important difference between VTFs and more traditional trading
floors is that the buyers and sellers on a VTF do not have to be
physically in the same location to make an exchange.
• There are two basic kinds of VTF: matching services, and commodity
exchanges.

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Matching services VTFs:
• Here, sellers and buyers connect directly with one another to conduct
the exchange of the item available at that moment (the “spot market”
covering today’s prices)
• Sellers register their products and delivery schedules, and buyers
register their needs
• These records are matched by a computer (or human operators
referring to databases) gives both parties various options to choose
from

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Holistic trading services
• These trading services provide holistic (complete) services as:
• pricing information services
• Virtual Trading Floors- transactions of purchasing and buying agri products
• Weather information
• Technical information on agricultural practices
• Long-term education
• Can link suppliers and buyers
• Connect parties for logistics, transportation, processing and storage needs
• Access to financial services (payments, credit, etc.)

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An example of holistic trading service-, e-
Choupal in India
• Connects buyer (ITC) with seller (farmer)
• Reduces transaction costs by using Internet kiosks to procure
agricultural and aquaculture products such as soybeans, wheat,
coffee and prawns
• Through its ICT-kiosk platform, e-Choupal also offers farmers many
other value chain development services, such as sharing of best
practices to improve productivity, and price benchmarking to increase
sales prices

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National Co-operative Dairy Federation of India-
NCDFI – electronic platform for buyers & sellers
Website: https://ncdfi.coop/

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NCDFI- “E-auction” facility

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Holistic trading services and “Soko Hewani” in
Kenya – the supermarket on air

• The Kenya Agricultural Commodity Exchange (KACE), in 1997,

developed the radio programme Soko Hewani (“the supermarket on
air” in Swahili language)
• It helps users to sell and buy agricultural commodities (and to sell,
buy and lease equipment)- for 13 traditional agricultural products, six
types of livestock, dairy products such as eggs and milk, inputs such
as fertilizer and seeds, and even fish and honey
• The matching involves not only purchasing of these products but also
processing, packaging, transport of commodities, storage, grading,
quality testing and finance.
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Kenya – contd..
• Initial front-end delivery of the information is “low-tech” (via radio),
there is a significant technology back-end to help the matching
process
• Agents of the KACE Market Call Centre use sophisticated ICT hardware
and software to take in, process and respond to requests made
around the clock. (Calls made after normal business hours are
recorded and addressed the following day.)
• Each client buyer or seller pays a flat fee of K Sh 100 (about US$1.10)
for each call

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The process in Holistic trading services and
“Soko Hewani” in Kenya
• Using a mobile phone, seller calls the Market Call Centre to place an
offer to sell an agricultural or other commodity, or offer on lease
property, machinery or service
• A buyer on the other side of such a transaction seeking information
on offers of services calls in via a mobile phone, uses the Web site
through a subscription plan, or visits a KACE Market Resource Centre
• Buyers can also make bids to buy or rent an agricultural commodity,
property of service

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Kenya contd…
• Each call is answered by a KACE agent, who registers the
information, which is entered into the main database where
it can remain for up to 14 days until fulfilled.
• KACE selects verified offers and bids on radio which is
broadcast through several local radio stations across the
country- for 15 minutes each day
• Interested parties call KACE back to accept or negotiate the
broadcasted offer.

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KACE reports the main benefits for
stakeholders
•Achieving a better price for services
•Saving on search costs & time
•Reaching a wider audience of potential
buyers/sellers
•Avoiding exploitive intermediaries.

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 NCDEX- NATIONAL COMMODITIES & DERIVATIVES
EXCHANGE LIMITED (www.ncdex.com)
• ONLINE TRADING- ELECTRONIC-

FARMER’S
ACCOUNT BROKER NCDEX

Online buying and selling is done…

Can you sell without having an item? Yes !! – this is called “Short selling”

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Advantage of commodity exchanges
• It has a “spot market” of current prices
• It also has information/ mechanism to estimate future prices
(“Futures contracts”)
• It can provide risk management services through forward contracts or
more complex derivatives for buyers and sellers like Options, to
mitigate potential losses from price fluctuations in the future (and
ideally to smooth out income expectations)
• These types of commodity exchange are generally more tech- savvy,
complicated and capital-intensive

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Issues and challenges for market access ICT service
• High initial investment:
• Require high levels of investment of capital and human resources
• New infrastructure / system need significant capital outlays for development and for
acquiring equipment and software
• The volumes required for profitability is high
• Security required for financial transactions and gaining user trust
• also demand significant capital outlays
• People may not be comfortable with the technology- need to convince
• Scalability and viability: for viability high scale is required but very few
examples of highly successful and profitable market access ICT services at
significant scale were found
• Regulatory risk- Government can change the rules which may affect the
business
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Advantages of and opportunities for market
access Information services
• Time and cost efficiencies:
• Very time & cost efficient as the costs are very less as compared to traditional
methods
• Empowerment of the poor due to transparency and information sharing
• Increased income from better sales prices and reduced transaction and
transport costs

• Smart technologies- integrating existing system and also linking all

the important transactions/ entities

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 Concluding comment
•ICT can play very important role in
improving efficient market access to
farmers and other stakeholders
•There is huge potential for these
services in India and other developing
countries
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