The Economics of Agricultural Information for Smallholder Farmers

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The public sector has a crucial role in generating and making available agriculture-related information to smallholder farmers, argues Ajit Maru, GFAR’s Senior Knowledge Officer, but more research is needed on how this information is used and managed as these farmers transition to more market-oriented production.

The foundations of the Asian “Green Revolution” that resulted in spectacular increases in production and productivity of rice and wheat were large-scale government subsidies. The minimum price of the agricultural commodity was assured by governments; electricity, irrigation, fertilizers, pesticide and even seed were made available free or at much reduced rates to farmers. Agricultural extension, which was providing new information and knowledge needed for these management responsive crops, was not only provided free but was also carried out by government agencies.

The shift from subsistence to market-oriented agriculture is resulting in new and different crops such as fruits, vegetables and intensive animal production. With these new crops, farmers’ needs for information are rapidly changing. At the same time, governments are reducing investment in public sector agricultural extension as they come under political and economic pressure to control their expenditure, so that farmers have even less assistance and access to new information. In many countries in Asia, there is growing expectation that farmers will seek extension and information services from other providers such as cooperatives, commodity associations, private consultants, telecommunication services providers and civil society organizations as government extension services are reduced and withdrawn.

Smallholder farmers are mostly resource poor, not just in terms of finance, land and water but – equally importantly – information and new knowledge. The availability of relevant, timely and affordable information and the ability to use it effectively are major factors affecting farmers’ ability to participate in markets.  This has impacts on these farmers’ livelihoods especially when they have to radically shift their farming practices.

The argument for making extension a paid service is that the information provided is an input as in any other in market-driven business and that the farmer can profit by its appropriate use. The farmer should pay for these services under the principle of “producer pays” for the benefits they get in production of commodities.  However, this argument needs to be made with care in a situation where markets and the shifts in farming systems, input provision and market participation, are still evolving.

The information each farmer now needs is very specific. Generic information as offered in current extension approaches to farmers and producers does not yet satisfy the needs for market participation. For example if agricultural scientists in a research station work out that growing one acre of tomatoes optimally require  nitrogen as five kilograms as urea, it is not necessary for the farmer to apply only five kilograms of the fertilizer. She may need to adjust the dose according to her needs. Her land may already have nitrogen equal to two kilograms of urea and so she needs only three more kilograms. However, if her land has less than “average” levels of urea, she may need to apply more than five kilograms.

If the farmer applies more fertilizer than actually needed, she has wasted it and has lost some of her investment and profit. If she under-doses the fertilizer she will not get the most optimum yield and also suffers a loss of profit.  So the farmer needs specific information to get optimal returns when she participates in markets. This information is her “private good” that is generated from “public good” information.

This new model of providing farmers with specific information primarily makes public good information (the base rate of urea) usually produced by the public sector or government into a private good (the dose the farmer needs to apply). The conversion of this information from a public good to a private good is usually done by an intermediary working for profit and who is paid for the service.

This new model raises many issues. At the very core, almost all agriculture-related information – even in economically developed countries – is generated by publicly-funded agricultural research and development organizations and is technically “public good”. This information has to be available and accessible by all. There must be capacities created in the larger agricultural communities to transform this information into “private good” to support users of agricultural information. The information must be affordable and useful to the ultimate user, the farmer and producer.

This brings to the fore that the public sector and government cannot absolve themselves from a crucial role in generating and making available, in accessible form, information as a “public good” that farmers can ultimately benefit from. At present and in the foreseeable future, governments and the public sector will remain the largest collaborators and generators of agriculture related information.  In evolving agricultural systems as in Asia, governments are also responsible for creating and governing the systems and capacities to effectively use information.

However, there is a lack of basic understanding of how farmers are using information in transforming agricultural and farming systems, as they shift to being market-oriented, as well as of the roles of different types of information and the relationship of “public” and “private” data and information. There is an urgent need for research in agricultural information management, especially in the context of smallholder farmers, in mapping quantitatively patterns of use of information and information services and the principles governing the structure and functions of agricultural information systems. Without this understanding, policy making, developing Institutions for smallholder participation in markets, and supporting the shift to new forms of agriculture and farming will not be possible.

This was a part of a larger discussion around the economics of agricultural information for smallholder agriculture in a Club of Ossiach, Chinese Academy of Agricultural Sciences and GFAR/FAO organized Workshop at the International Conference on Intelligent Agriculture, Beijing on 28 September 2015. Ajit Maru chairs the Club of Ossiach and Walter Mayer of PROGIS facilitated the Workshop. For more information contact ajit.maru@fao.org

 Photo: Apurv Maru


9 thoughts on “The Economics of Agricultural Information for Smallholder Farmers

  1. Is interesting to see a picture of a male farmer, along with a young kid, then read the article that repeatedly refers to female gender(she). Unless it’s a she with a mustache.

    1. Hi Nikos,
      We understand what you mean. The post was not about gender, as such, but as goes, almost unconsciously, we thought of female farmers when writing the article. The “he”-“she” might be confusing, and you picked that up well.

      1. From the author of the blog post: The photograph is from a very small village weekly held market (haat) in rural Karnataka, India. It may have been selected to show 1) that there are many different types of markets other than the supermarkets and grocery stores with very nicely arranged shelves of the developed world. 2) That while “she” the woman and the girl child in the family toil unpaid for their labor in the family farm, the monetized outputs and the economic control of most family farming is in the hands of “he” the men in the family. 3) It could also indicate how this power is passed from the father to the son in a family farm. 4) It could also indicate how in most family farming, with “he” going to the market, the “he” has the only access to external information and acts as a “gatekeeper” to this information for the family.

      2. Thanks for your answer and clarification.
        I agree with the “subliminal” messages that might be associated with this picture, but never the less, even though a picture is a thousand words, each message should be concrete and easily understandable.
        If not so, potential confusion will be hanging in the air. Let’s not forget, that not all people that are exposed to the messages are able to understand the situation on the ground, or have ever seen in reality.
        Simple and coherent always works.

  2. Reblogged this on Edwin Kenamu and commented:
    I would like to share with you all this blog post on Economics of Agricultural information for Smallholder Farmers that was published by GFAR . strongly believe that most agriculturalists and development practitioners will find this material very useful

  3. Agree in principle, but felt that the article trivializes the execution challenge. The ability to convert public good to private good requires a fundamental capture of information, which, in western parts of the world is provided by farm management software. The companies that provide these fms systems are all privately held concerns. Transferring the onus of capturing this data onto governments requires a massive shift in both policy and capabilities.

    1. From the blogger:
      The article/blog is simplified to draw broader attention to a highly nuanced and complex dialogue about data, information and knowledge management in the context of smallholder farmers, especially those who are resource poor and in developing countries, being conducted by GFAR in various forums (eg. See: http://www.godan.info/responses-to-odigodan-discussion-paper-may-2015/; http://www.ciard.info/e-discussion-data-farmers).

      Even in the western parts of the world, the state/public sector such as the Department of Agriculture (USDA) and State Agricultural Universities (SAUs) in USA and the EU for data collected under Common Agricultural Policy (CAP)P for farm subsidies and regulating European Good Agricultural Practices (EUROGAP), remain the largest and primary source of data and information related to agriculture. Therefore there are policies and capabilities within the governments to collect, collate, manage and use data and information. This process of data and information management will be further intensified as governments of other developed countries which are resourceful start collating data related to agriculture and agri-food systems, as the USDA is now doing, to combat effects of climate change, loss and (control) of biodiversity and enabling access to commercial interests in their countries into global agricultural and food markets.

      There are many types of data and information (geo-spatial, weather, biodiversity) which only a State/Collection of States can have resources (right and responsibility) to collate and manage. This data and information in addition to enabling governance are also very useful to farmers. Therefore even private companies developing farm software need and will increasingly need State owned/managed data to complement for their services. Otherwise these services will be very limited. This could also be a reason why the private sector is very strongly lobbying governments to have universal “open” data.

      When the world was using printing based information and “snail mail” communication technologies, the capacities to access and process this information by individual was very limited and the State could “get away” with not enabling the public to access and use the information it collects for their individual use. With digital data and information, electronic communication and very enhanced data and information processing capacities for even an individual in a remote village the public and the individual within is more easily able to use this information. The issue is how much and at what level should the State be involved in enabling its citizens in using information? The article opines that when farmers are resource poor and cannot avail, access and afford as also lack capacities to effectively use data and information and yet, when forces such as globalization and market orientation of agriculture affect their livelihoods, the State certainly has responsibilities. These responsibilities need to be also discussed. As the comment indicates this will need new policies, approaches, regulations, standards, norms, regulatory mechanisms, structures, organizations, work processes etc. The blog in its last paragraph eludes to this as “Institutions” that are now and in future needed. It is interesting to note here that many of these “Institutions” are emerging first in the developed world (for example Open Government) but also in the developing world (India: Right to Information) and now need to be tailored to be effectively implement for agriculture.

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