Cellphones and (Rural) Development, Part Two

The agricultural sector employs 2/3 of India’s population, and contributes to 1/3 of its gross domestic product (GDP) – yet, Indian farmers in rural communities are plagued by debt, falling commodity prices, changing weather patterns, fluctuating demands in the global market, and failing crops. In regions such as Vidarbha, farmer suicides are endemic, to the extent that even the recent governmental debt relief scheme has been unable to mitigate the crisis.

Moreover, most rural farmers are unable to capitalize on the true value of their crop yields, often getting as little as “25% of the value of the final price of their raw produces against 40%-50% in America and Britain.” In light of this concern in particular, technological advances, specifically with respect to mobile phones, have gained traction within South Asia through initiatives like Grameen Phone, InternetSpeech, the recent IBM initiative, etc.

As highlighted in a recent Times Online article, of particular interest is the Reuters Market Light campaign, which has the capability to provide, for example, weather reports, crop spraying information and competitive market pricing, all through the mobile phone for 175 rupees a quarter.

I know what you’re thinking – we’ve all heard of this kind of technology before, but what makes this particular initiative so unique? According to the Indian Development Blog, Market Light uses a very different, and in their opinion, “superior system for gathering and reporting local spot prices than that employed by local newspapers.” The blog goes on to explain:

Newspapers typically rely on middlemen to report the range of prices observed in the market each day for a given commodity. The problem with this method is that the maximum and minimum quality of the produce that shows up in a mandi on any given day can vary quite a bit so these figures are often difficult to interpret.

Reuters Market Light takes a different approach. Rather than report a range of prices, Reuters provides the exact spot price for a given quality level of each commodity. Doing this takes more effort – the person providing the prices must be able to precisely discern between varying levels of quality — but it is much more useful for farmers.

In terms of measurable outcomes, this initiative has reportedly generated positive results to date, concretely enabling farmers to enhance their abilities to bargain, negotiate prices, and most importantly, make choices on the basis of the most favorable financial outcomes. Sounds great in theory, but what exactly does this look like on the ground, you may ask? (this article continues after the break – click “Read More”)

We get anecdotal evidence from our sellers and have examples where people have made as much as £3,500 by getting the right information in time. There’s a customer who gets a message that it will rain, so he deploys less labour. Another got a message that the supply of onions will go down so he held back his crop and made a $350 profit in one month,” he said.

Even a decision as simple as which market to sell to can be a difficult one given the price disparities between some markets – for example, “earlier this month oranges in Nagpur might have been selling for 8 to 10 rupees a kilo, in Hyderabad for 10 to 16 rupees and in Delhi for up to 18.” Remarkably, Reuters Light has found that “70% of its customers are changing their behaviour as a result of the service.” At the least, this indicates that something must be working.

So far, the company has approximately 250,000 customers in Maharashtra, with hopes of expanding in the future to technology that employs spoken rather than written modes of information conveyance. The company’s hope is to target a large portion of India’s 250m farm workers, specifically the 50m who sell at market. Given the rapidly growing market for mobile technology, this goal is not an unrealistic one. In fact, according to Reuters, “in some villages, 30% to 40% already [already have access to mobile technology], and India signed up a record 8.7m subscribers in January alone.”

This, along with other new campaigns that connect mobile technology with rural development are certainly exciting to read about – the question is how scalable are these efforts, and how effective will they be on the ground in different regions of the country? Stay tuned to TC-I for more updates in the future.

To read the first part of this series, go here.

6 Responses

  1. […] Clearly, access to insurance products would provide much needed economic stability to the rural poor. It can be argued that IRDA is a example of a unique model – using regulatory mechanisms to promote ’social business’. The Telecom Regulatory Authority of India (TRAI) also has pursued a similar strategy, by mandating cellphone companies to focus on rural markets. Of course, we have covered the social impact of cellphones in this space before. […]

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  3. […] $100K Entrepreneurship Competition hosted yearly at MIT. As mentioned in previous posts relating to cellphones and development, mobile technology seems to be the next frontier in terms of poverty alleviation. In this case, the […]

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