Phones and farmers
A scene unseen even just five years ago. Photo: A scene unseen even just five years ago. Textually
IN the early 1990s, I was engaged in an empirical research work on the nexus between mobile phones and poverty in rural Bangladesh. The research grant came from The Centre for Development Research (ZEF), Bonn. Many raised their eyebrows when they heard about the project. Such suspicious looks were expected in the early 1990s when even the "solvent" segment of the population could not afford mobile phones, which used to cost roughly one to two thousand dollars. It was treated as a "luxury" item only to be monopolised by the moneyed persons. My research findings on "Village Pay Phones of the Grameen Bank" at that time clearly showed that mobile phones could help the poor escape "rural penalty," (a la H. Hudson) defined as poverty mainly due to distance, poor connectivity and symmetric information. However, as of today, about 40% of the rural households in Bangladesh are reported to have access to mobile phones and roughly one-fourth of the users are poor. Rickshaw pullers, fishermen, traders -- all use it to minimise information asymmetry and quicken communication between two points. About a decade later and very recently, I was invited to comment on two research papers showing the impacts of mobile phones on farmers and traders in Africa. I understand that Japan International Cooperation Agency (JICA) arranged my presence in Seoul in the Annual Bank Conference on Development Economics (ABCDE) jointly organised by the World Bank, JICA and Korean Development Institute (KDI). Quite obviously, it was an opportune moment for me to examine my earlier hypothesis now tested in Africa, using relatively sophisticated models and rich data sets The first paper was by Megumi Muto and Takashi Yamano, both representing JICA and Foundation for Advanced Studies on International Development (FASID). They drew upon a panel data from rural Uganda, where banana producers could reduce marketing costs and raise income in tandem through information exchanged via mobile phones. The expansion of mobile networks increased market participation and sales of the fresh products -- bananas. More importantly, small producers and farmers in remote areas gained more money. As information flow increases, the cost of crop marketing is expected to decrease, particularly in remote areas where potential marketing gain from the increased information flow is large. "We indeed find that the network expansion has a larger impact in market participation in areas farther away from the district centres than in closer areas." The second paper was presented by Jenny C. Aker of the University of California, Berkeley on the impact of mobile phones on price dispersion of grains in Niger. Using a sequential searching model, the researcher observed that cell phones increased both the traders' reservation sales price and the number of markets. This reduces price dispersion across markets. To be specific, grain price dispersion had reduced by 6-7% reducing intra-annual price variation by 10%. What is important, though, is that not every farmer needs to have a set. The price information could spread either as a "public good" or as a "private good" through the community, producers' organisation and through others as well. A participant from the audience in that seminar informed us that in his village in Africa a mobile phone is hanged by a rope to the branch of a tree, where those interested can use it, subject to the payment of a price. Secondly, even with access to mobile phones, the full gains could not be reaped home, as farmers might need more information. The role of public authority and media in this respect is very important. Again, producer organisations could form an information forum of their own to be more effective at bargaining. In the context of Bangladesh, about 47 million people have access to mobile phones. The market is still dominated by Grameen phone with roughly half of the market share and the rest distributed among 6 other companies. The tariff rates are gradually going down towards a competitive level. The price of mobile sets has come down to an affordable level. It appears that mobile phones are effective not only in terms of reducing marketing costs and price dispersions, but also in terms of managing disasters, searching jobs and improving the quality of life. This "luxury" item of the early 1990s translated into a "necessity" just within the span of one decade. Mobile phones are now an essential instrument to reducing "rural penalty" not only in Bangladesh but also in other backward areas. But surely Bangladesh could boast about the beginning of an unimaginable era of communication for the farmers and the rural poor. So, never tease a technology; it could be a triumph for every class of the society. Abdul Bayes is a Professor of Economics at Jahangirnagar University. Email: abdulbayes@yahoo.com.
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