Monday, March 11, 2013

Information Technology in Agriculture

Information technology has transformed markets in developing countries faster than ever
imagined. This is particularly dramatic in the rural areas of sub-Saharan Africa, where mobile
phone infrastructure often represents the first modern infrastructure of any kind. It is estimated
that over 60 percent of the population in sub-Saharan Africa has access to mobile phone service,
with over 400 million subscribers (ITU 2009). This technology has greatly reduced communication
and search costs for rural households, especially compared with traditional methods of searching
for information (Aker and Mbiti 2010).
High search costs are more than a theoretical concern, as they can have important welfare
implications for rural households in sub-Saharan Africa. High search costs make it difficult for
farmers to engage in optimal arbitrage; without information on the spatial distribution of prices,
farmers might sell their commodities at lower than average prices in nearby markets. While
policymakers have attempted to address these information constraints by providing price
information via market information services (MIS), there is little evidence of their impact on
farmers’ behavior and welfare, perhaps because they do not provide timely information on
applicable markets. As a result, mobile phone technology offers an important opportunity to
overcome information constraints.

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