UPDATE: The Price of Cocoa, Delivered to Your Phone

29 Nov

Miranda Pabby, an enumerator for Esoko, explaining how to use text messages in Nkwanta, Ghana.

With mobile phones achieving an estimated 80% penetration rate in Ghana, can cellular technology help make agricultural markets more efficient? Could providing market information to farmers alleviate information asymmetries between farmers and traders?

One idea being explored in Ghana is a text message-based market information system, which would provide automatic and personalized price alerts for agricultural commodities and buy and sell offers directly through SMS. At the Center for Technology and Economic Development (CTED), an Abu Dhabi-based NYU organization affiliated with DRI, Professor Yaw Nyarko and a team of graduate students are evaluating the effect of such a system set up by Esoko, a private company based in Accra, on the livelihoods of smallholder farmers in rural Ghana. The goal of the study, designed as a randomized controlled trial, is to see whether providing farmers with market information leads to fundamental changes in the bargaining process between farmers and traders.

Last summer, the team conducted a baseline survey of 1,000 farmers in nearly 100 communities in the Northern Volta region of Ghana, asking them what crops they were planting and bringing to the market, how the bargaining process with the traders works, and how often they use cell phones. The farmers were then randomly divided into two groups – a treatment and a control group of roughly the same size.

Two interested farmers learn how to receive Esoko messages.

In early October, the farmers in the treatment group were given training and access to the Esoko technology, including regular messages regarding crop prices. Next summer, farmers from both the treatment and the control groups will again be given the same survey. The team will rely on the baseline and annual follow-up surveys to document the changes in the bargaining process and in farmers’ marketing behavior brought about by the Esoko text messages.  After the follow-up survey in July 2012, the farmers in the control group will also be offered free training and access to the Esoko technology.

Farmers from Nkwanta South mid-training.

The study will shed light on how mobile phones can increase the efficiency of agricultural markets and improve the livelihoods of farmers in the developing world.