Seminar

Farmer Bargaining Power and Market Information Services

Julie Subervie (INRA-MOISA Montpellier)

May 6, 2013, 11:00–12:15

Toulouse

Room MF 323

Agricultural and Food Industrial Organization Seminar

Abstract

In many Sub-Saharan African countries, farmers typically have a choice between selling their products to traders who travel between villages and markets and transporting their products to the nearest market themselves. Because of communities' remoteness and poor communications with marketplaces, farmers' uncertainty about market prices is usually high. Traders may take advantage of farmers' ignorance of the market price and extract a rent from them by offering very low prices for their products. In this article, we model bargaining interactions between a farmer and a trader who incur different transportation costs, and we study how price information affects the bargain and the balance of power. We then estimate the causal effect of a Market Information System (MIS) working through mobile phone networks on Ghanaian farmers' marketing performances. We find that farmers who have benefited from the MIS program received significantly higher prices for maize and groundnuts: about 12.7% more for maize and 9.7% more for groundnuts than what they would have received had they not participated in the MIS program. These results suggest that the theoretical conditions for successful farmer use of MIS may be met in field.