USING MOBILE PHONE-BASED MARKET INFORMATION SERVICES TO LINK

SMALLHOLDER FARMERS TO MARKETS IN MALAWI

Simuja C.1
1,

Department of Computer Science , University of Malawi, Chancellor College, Malawi

Abstract
Smallholder farmers access to agricultural market has been a major constraint to agricultural
development in Malawi. Markets often fail for smallholder farmers due to high transaction costs
of participating in such markets. The mobile phone revolution in Africa has however brought an
opportunity to ease this constraint. In Malawi the mobile phone-based market information
services (MIS) have spread to rural areas for the benefit of a number of stakeholders including
farmers. Using the services farmers can receive information on available markets. However, little
is known on how services provided by Market Information Service link farmers to markets and
about the use by rural smallholder farmers. This work examines how the use of mobile phone
based agricultural market information services can link smallholder farmers to markets. Data was
collected via personal interviews using questionnaires in Chimbalanga and Mbowela areas in
Lilongwe, one of the districts in the central region of Malawi. These areas
selected

to represent

diverse

social,

cultural

and

were

purposively

economic backgrounds

and

capture differences in agricultural potential.

Key Words: Information and Communication Technology, Market Information Services,

Mobile phone, Malawi Agricultural Commodity Exchange

INTRODUCTION
Market access is one of the critical factors influencing the performance of smallholder
agriculture in developing countries, and in particular least developed countries (Barrett, 2008).
Access to new and better-paying markets for agricultural products is vital in enhancing and
diversifying the livelihoods of poor subsistence or semi-subsistence farmers

(Kristian, 2010).

Such markets can be local or village markets that serve regional consumers in districts within
one country, regional markets between countries, and international and export markets in both
developed and developing countries.

Despite its importance, market access in many developing countries such as Malawi remains
severely constrained by poor access to agricultural market information (Katengeza, 2011). Poor
access to market information results in information-related problems namely poor market
participation and adverse selection of markets, which in turn increase transaction costs and hence
discourage participation in markets by some farmers (Reddy, 2005).

Lack of adequate market information stifles progress in the smallholder farming sector and
opportunistic behavior (by traders and other market actors) tends to develop. Opportunistic
behavior between buyers (traders) and sellers (farmers) causes actors to prefer relational
exchange (i.e. selling only to those previously known and hence trusted). With the current need
of efficiency in understanding market price trends, accessing inputs and support services, rural
smallholder farmers, extension agents and traders need to use more efficient and appropriate new
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information and communication technologies (ICTs) to take advantage of the existing

opportunities.
In Malawi, both the public and private sector have designed projects and programs that aim at
harnessing the potential provided by ICT to spur development in agriculture market services. The
projects include mobile phone based market information system that aimed at providing farmers
and other agricultural service actors with market information. These initiatives have been set up
for smallholder farmers in rural areas to follow market changes, reduce the risk of loss, and
reinforce price negotiation capacity (Manda, 2009).

However, the usage of ICT- based

agricultural market information service among smallholder farmers in Malawi remain low
(Katengeza, 2011). Nevertheless, the mobile phone based market information service projects
cannot bring about the expected outcomes unless the intended beneficiaries are aware and use the
services. The service can only translate into improved market efficiency and link if smallholder
farmers are using them.

To solve the problem of market information assymetricity, the government of Malawi and
development partners introduced efforts that promote access to agricultural market information
through ICTs such as mobile phones and web-based applications. ICT-based interventions are
viewed to be more effective in communicating knowledge to rural farmers and are more costeffective (Katengeza et al., 2011).

Although ICT-based interventions in rural areas have been highly commensurate with increased
penetration of mobile phones, there have been little efforts in assessing interventions of ICTs in
linking farmers to agricultural markets. Looking at the importance of effective and efficient
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agricultural markets to Malawis economy at large and smallholder farmers welfare in

particular, this paper assess smallholder farmers use of mobile phone based market information
service in linking to market access.

Use of ICT in Agriculture

Information and

communication technologies (ICTs)

play an

important role

in the

development process. ICTs have revolutionized life whereby the acquisition and usage of
ICTs by actors in the agricultural sector including farmers is increasing very rapidly. The
adoption and use of ICT is setting an unprecedented pace despite the poorly developed rural
electrification (Sife et al., 2010). Furthermore, some rural areas in Malawi like in many other
developing countries are making use of telecentres to access different information in various
formats and or as a meeting place. Telecentres are known to be suitable for communication and
knowledge sharing as they can provide multiple services including internet, telephony,
radio and print resources (ITU,2006). These constitute the agricultural communication systems
which are important because they facilitate sharing of information among stakeholders
(Richardson et al., 2000; World Bank, 2007; Saravanan, 2010).

Previously

the

agricultural

communication

system

was dominated by human

interaction and paper based information systems which have hailed to create important
linkages among actors of the agricultural sector. ICTs used in agriculture include computers,
mobile phones, radio, television, internet, CD-ROMs and telecommunication networks (Shetto,
2008). Current technological convergence enable users to access radio through mobile phones
which are known to be owned and used by almost half of the Malawi population
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(Katengeza,2011). There is strong correlation between use of ICT and farmers productivity.
Farmers can even develop knowledge regarding crop choices, develop products for the niche
markets and even

market the products directly to the consumers.

ICT based Agricultural market in Malawi

Marketing challenges in least developed countries, such as Malawi, include poor transport and
communications infrastructure, poor market access, and difficulties in accessing extension
information. The transport and communications infrastructure challenges are aggravated during
the rainy season as most of the roads become impassable. The Malawi government has embarked
on a programme to build roads infrastructure to improve transportation to markets, however,
road infrastructure alone will not suffice, other improvements are needed to solve these multiple
problems. One of such improvements is the availability of reliable and

accurate market

information. Many smallholder farmers are not currently integrated into the market system
(Chirwa et al., 2006).

The Malawi government introduced the marketing information system. This begun in 2004 by
the Malawi Agriculture Commodity Exchange (MACE) as an effort to provide relevant and
timely market information for smallholder farmers and other marketing intermediaries such as
smallholder commodity traders. The central office is in Lilongwe (Capital City), with branches
(farmer-managed Marketing Information Centers, Marketing Information Points, and Market
Resource Centers) dispersed throughout the country.

The objectives of this project were listed as

1.

Facilitating linkages between sellers and buyers of agricultural commodities

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2.

Empowering farmers, traders, processors, and other market participants with

market price information and intelligence that enhances their bargaining power

3.

Providing a transparent and competitive price discovery mechanism through the

operation of the exchange trading floor, and

4.

Utilizing the power of ICTs as a tool for rural value addition and empowerment

(Manda, 2009).
Two main components of the MIS were the daily price information provision and trade
facilitation servicesmatching supply (commodities available for sale) with demand (bids, or
prices offered). The ICTs used in the Market Information Center offices, SMS via mobile
phones, a website (www.ideaamis.com), and a weekly interactive radio program.

Posting marketing information on chalkboards in the offices begun in 2006, and was important
source for those users who visit the offices. SMS became as attracted method used to access
market information with almost 44% of contacts are SMS messages through cell phones. It is
convenient, can be used 24/7, and is probably the most cost-effective method. One SMS message
costs approximately 85 Malawi kwacha (40 Cents), as compared to the costs in time and money
required to travel to a branch office. The website and e-mail outreach is quite limited, since few
farmers have access to or knowledge of using computers. But they are useful in transmitting
information between the central and branch offices.

The radio programs started in 2004 as a weekly 15- minute broadcast of market news. By the
following year, it had increased broadcasting time to 30 minutes. I in 2008, it evolved into an
interactive, 1-hour program called Msika wa pa wayilesi (Supermarket on the Air) whereby
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listeners could call in to place offers of commodities for sale or bids to buy. MACE staff
members broadcast and coordinate the offers to buy and sell. Approximately Mk 15 million in
transactions were arranged during the weekly programs in 2008, with another 22 million
arranged by the buyer and seller themselves after listening to the program.

Market Information Service provided a needed service to smallholder farmers. Compilation of

data showed the majority of sellers who used the trade linkage services had fewer than 5,000
bags or less than 250 tons of commodities to sell (Manda,2009). The Market Information
Service-Malawi was instituted as a 5-year project and that time period elapsed. It is hoped that
NGOs, such as National Agricultural Smallholder Farmers Association Malawi, perhaps in
collaboration with agricultural extension staff, can develop a program that can continue to
provide marketing information to smallholder farmers. Such a program would need to be
economically sustainable. A percentage assessment charged to farmers, traders, wholesalers, and
other market participants would seem to be the most equitable funding system.
METHODOLOGY
The non-probabilistic, purposive sampling technique that was adopted to recruit respondents for
the study ensured only relevant respondents who were farmers most likely to provide rich,
quality and fruitful data in the context of examining causal relationship between the independent
and dependent variables ( mobile phone based MIS and access to markets) were recruited.
Also, this procedure was strategically adopted with a view to ensuring there is a match between
research questions and sample of respondents. In other words, the relevance of respondents
towards addressing research objectives and research questions guided sample recruitment
(Bryman, 2008).

The study adopted elements of both quantitative and qualitative paradigm mixed method
strategy. This was for the purpose of: triangulation (to enable the possibility for findings
corroboration); offset (to allow potential weaknesses of methods associated with each
strategy be offset by each other); completeness (to allow an in-depth, broad and
comprehensive investigation as well as better understanding of phenomenon); credibility (to
enhance the likelihood of results/findings integrity) and to be able to elicit diversity of
views/responses from the sample (Bryman, 2008).

One hundred and twenty seven participants which are fifty farmers currently subscribing to
mobile phones based Market information Service (MIS-Farmers) and seventy seven farmers not
subscribed to the service (Non-MIS Farmers ) were involved in the research questionnaire
interviews. They were interviewed for 30 to 40 minutes in different villages of the research
areas. They represented different age groups: 33 participants up to 29 years of age; 71
participants from 30 to 49 years of age, and 26 participants of above 55 years of age. Two Focus
Group discussions with 12 farmers each group were conducted from MIS and Non-MIS farmer
groups. The researchers participated in all the sessions, focus group discussions enabled
respondents to challenge information from others in the discussions leading to arguments that
yielded data that was left out in questionnaire interviews.
RESULTS
Majority of farmers were functionally literate as none of the farmers had reached tertiary
education level (0 percent) and only 14.2 percent had reached secondary education. The main
source of income for about 99 percent of the sample farmers was farming. The main reason for
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the existence of such income source in the areas of study is attributed to the fact that there are
high illiteracy levels that cannot facilitate formal employment among majority of the
respondents from Mbowela and Chimbalanga area. All of the respondents were involved in
multiple cropping, with maize as the most common crop grown amongst these farmers in the
study.

Table 1: Farmers membership to Farm Group

MIS FARMERS

Non-MIS Farmers

Total Percentage

NO

YES

TOTAL

Count

15

32

47

Percentage

31.9%

68.1%

100.0%

Count

44

32

77

Percentage

57.9%

42.1%

100.0%

48.0%

52.0%

100.0%

Table one indicate that 52 percent of the farmers belong to farm groups, this suggests that in
most agricultural projects, farmers preferred working in groups and therefore targeting farm
groups could be a reliable way of reaching out to smallholder farmers in the rural areas in
Malawi.
Table 5.2.4: Farmers mobile phone ownership

MIS FARMERS

Non MIS

Total Percentage

NO

YES

TOTAL

Count

17

33

50

Percentage

34.0%

66.0%

100.0%

Count

48

29

77

Percentage

62.3%

37.7%

100.0%

51.2%

48.8%

100.0%

The research data in table 2 show that 48 percent of respondents own mobile phones which
indicates acceptance of use of the mobile phones among rural farmers. This implies that the
perception of the farmers towards use and benefit of ICTs was important. The respondents that
do not own mobile phone have access to mobile phone services through other sharing
mechanisms among friends, colleagues and family members. They face some challenges in
relation to the use of mobile phones for accessing relevant information as they depend on
willingness of owners to share or borrow those phones to use.
Table 3: Mobile phone based - MIS use to gain market information

1
0

S.E.

Wald

dfSig.

Exp(B)

Get Market Info Timely?

-3.166

1.229 6.629

1 .010

.042

Enquire Market information?

-2.591

1.286 4.056

.044

.075

1.030

.036

1
Market Information accurate?

-1.487

1.526 .950

Constant

1.999

.480

17.311

1 .000

7.382

The analysis from table 3 indicate that mobile phone based MIS attributes to the agricultural
production among the respondents in access to relevant information on agricultural production,
processing and marketing, which are important in improving their farming activities. Non-MIS
farmers reported that their mobile phones were primarily used for social purposes, while MISfarmers were using their mobile phones for at least some agricultural activity, with some
respondents citing significant productivity gains as getting timely market information, accurate
market information and enquire market information. The MIS-Farmers reported some increase in
convenience and cost savings by using their mobile phones as basic communication devices to
seek information like input availability or market prices which increased their farming business.
Beyond basic communications, however the researcher found differences in mobile phone usage
and benefits gained by the farmers across the study areas.
The research found that non-MIS farmers had access to a variety of agricultural information
sources that were not mobile phone-based; however, the perceived quality and relevance of the
information provided by these sources was highly variable. Most of the non-MIS farmers
reported lack of consistent and reliable information source and they often rely on a combination
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1

of traditional knowledge, experience and guesswork to make decisions. One maize farmer from
Mbowela area was quoted saying,
...the community mobilization at the chiefs compound enables me acquire some
informal information regarding markets and agriculture from my fellow villagers.(Maize
farmer).
Table 4: Use of mobile phone based MIS for market access assistance

Observed
Use

Mobile Phone
Gain Agr Market Access Assistance

No

Yes

Correct %

43

84.3

11

34

75.6

Overall
mation Percentage

80.2

a. The cut value is .500

Table 4 data model classifies 84.3% of cases that do not use mobile phones to gain agriculture
market information. For farmers who use mobile phone based MIS to gain agriculture market
information, the model correctly classifies 75.6% of them with an overall accuracy of
classification of the model being the weighted average of 80.2%. The results were tested to be
statistically significant at significance level of 0.05 as the constant and the coefficient gave
significant P-values which were both less than 0.001.
The model effectively described the MIS farmers benefit a lot from the mobile phone based MIS
by gaining agriculture market information and accessing new markets with 75.6% and the
statistical significance provides evidence that

can be 95% sure (based on p value) that the

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model help to describe the effectiveness of using mobile phone based MIS over the non MIS
farmers .
In analyzing the challenges the respondents meet as they are using the mobile phones, the
research showed that the major challenge these farmers face were unstable network coverage
(39.3%), fees for charging the phones (16.1%), having no electricity (5.4%) and walking long
distance to access airtime as indicated in table 5.6.1 .

Table 5.6.1: Respondents challenges on use of MIS

Cumulative
Frequency

Percentage

Percent

No electricity

5.4

5.4

Unstable Network coverage

22

39.3

44.6

Long distance to access airtime

5.4

50.0

Phone charge fees

16.1

66.1

1
3

Others

19

33.9

100.0

The study revealed 66 percent of the respondents indicated mobile phones were too expensive in
terms of money paid to charge phone, long distance to access airtime and running costs. Lack of
electric power for charging mobile phones was mentioned by 5.4 percent of respondents, while
44.6 of

the percent respondents reported that there was poor unstable network coverage.

Respondents still find it expensive to charge the batteries of their phones since they have to pay
for that service.

The study also revealed that 65 percentage of the farmers feel that the

subscription fee for the MIS is not affordable of which currently is at 550 Kwacha (1.30 dollars).
DISCUSSION and CONCLUSION
This study has provided a first look at the potential of mobile phone based market information
service in affecting the agricultural market sector as a whole. As mobile phone penetration
continues to increase among the farming community and information services continue to adapt
and proliferate, sufficient potential exists for a much deeper smallholder farmer productivity
impact in future. Achieving full productivity potential will depend on reducing other constraints
which limit the use of information that farmers can obtain through their mobile phones.
The research empirical data show that the improved access to mobile phone based market
information has resulted in great changes across the entire cyclic farming life and market
chain and hence helped the farmers in controlling their products market situation. Better
access to market information service via mobile phones has increased the amount of
opportunities available. Therefore farmers and traders use mobile phones in market facilitates
coordination and this is consistent with Singh (2006) who established that new ICTs complement
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old ways of market access in enabling farmers access to timely and reliable information. These
positive changes have led to higher monetary income for the farmers and in turn improved the
livelihood indicators. This new and systemised information might enable all the stakeholders in
agriculture to further exploit the potential that the mobile information technology represents.
The experience gained during data collection laid the groundwork for giving some
recommendations on how mobile phone use can best continue to improve farmers access to
markets. Some information providers (e.g. The Ministry of Trade and Industry, World Food
Program) have tried to send updated market information via Esoko to the farmers which is
market link project run by Agricultural Commodity Exchange for Africa (ACE), but this effort is
not effective and researchers observations show that most farmers in Chimbalanga areas are not
aware of the market information service.
The study found that the level of use of mobile phones among the farmers in rural areas was
quite high with 48 percent of the farmers owning mobile phones while the rest of the farmers
accessing the mobile phone through their relatives, fellow farmers and farm groups. This is in
line with Okello et al., (2009) found that there is a high level of awareness and widespread use of
mobile phones among rural farmers in Sub Saharan Africa mainly for social purposes. The
results contradict findings from Jenny and Aker (2010); ITU (2012), who found individual
ownership of mobile phones is low and costly in most developing countries. However, the level
of usage of mobile phones has not translated into usage of the mobile phone based market
information service as only 39 percent of the farmers were found to be ESOKO-mobile phone
based MIS subscribers.

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Farmers who used the market information service were found to have increased access to
available markets as the market information service helped integrate farmers to high value
markets by reducing their transaction costs of exchange. Not surprisingly, the mobile phone, as a
many to-many medium, has shown promise as a way to

increase

interactivity

and

the

participation in agricultural market activities (Richardson, 2003). As a result, smallholder

farmers substantially increased their margins. Hence by including a formal marketing
arrangement as part of the project, Esoko-mobile phone based MIS provided assurance of better
price and resolved market failure.

There is need for government to invest more in formal and informal education among the rural
communities. The results indicate that most of the farmers interviewed had not completed even
primary level. However, education enhances a farmers synthesis of information about new
technologies, thus influencing their decision making process especially regarding relatively
complex technologies. There is also need to improve on the technology information
flow/exchange

among relevant and interested parties including farmers, mobile phone services

providers and government agricultural extension agents.

The implication of these findings is that there is need to expand the coverage of mobile phonebased market information service in rural areas since it resolves one idiosyncratic market failure
farmers face namely; access to available market information. Mobile phone-based market
information service provides an example of a commercially sound, affordable and effective way
to offer access market services to all. This supports Khalifa and Cheng (2002) who observed
with mobile phone diffusion in developing countries individuals are likely to use mobile
technology for agricultural needs, so is the case among
some of the respondents
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The findings from the study clearly indicate that farmers who belong to farm groups benefit from
using the MIS. Therefore it is much easier to make any intervention in terms of expanding
ICT-based market information services to farmers when they are organized into associations or
cooperatives since the transaction costs of delivering this information to any individual farmer is
reduced. In addition, it is also easy for the associations to organize themselves into groups that
can take better advantage of collective marketing approaches.
The study specifically found that increase in access to other available markets in farming
business was higher for users of mobile phone- based market information service than non-users.
The findings are supported by Myhr and Nordstrm (2006), who mention that mobile phones
empower farmers through control over external events and increased market opportunities. The
study concluded that use of mobile phone-based MIS significantly impacted on access to other
available markets in farming business.
The study therefore provides evidence that participation in ICT-based market information service
improves the livelihood of smallholder farmers. The implication of these findings is that there is
need to adopt policies that encourage investment in ICT-based market information service. It
also underscores the need to develop a system of regulations that

promote

efficient

commerce and that protect smallholder farmers from opportunistic actors.

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