Phones and farmers
IN the early 1990s, I was engaged in an empirical research work relating to the nexus between mobile phone and poverty in rural Bangladesh. However, friends used to tease me and raise their eyebrows on hearing about the project and my interest at that time. This was to be expected in the early 1990s when, not to speak of the poor, even the "solvent" could not afford to have a mobile set. It was treated as a "luxury" item, only to be monopolised by the moneyed people.
My research findings on village pay phones of the Grameen Bank at that time -- and as published in international journals in subsequent years -- 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 asymmetric information. However, as of today, about 40 percent 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, I was invited to comment on two research papers showing the impacts of mobile phones on farmers and traders in Africa. I understand that possibly 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 African context using relatively sophisticated models and rich data set.
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 panel data of rural Uganda where banana producers could reduce marketing costs and raise income with expansion of mobile phone coverage. The message is that the expansion of mobile networks increased market participation and sales of the perishable product, banana. More importantly, small producers and farmers in remote areas gained the most.
As information flow increases due to the expanded mobile phone coverage, the cost of crop marketing is expected to decrease, particularly in remote areas where potential marketing gains 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 centers 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 traders' reservation sales price and the number of markets over which they searched. This reduces price dispersion across markets. To be specific, grain price dispersion reduced by 6-7 percent and reduced intra-annual price variation by 10 percent.
What is important, and as revealed in both papers, is that every farmer need not possess a set. It could be the community, producers' organisations and others from where the price information could spread, either as a "public good" or as a "private good." A participant from the audience in that seminar informed us that in his village in Africa, a mobile phone is hung from the branch of a tree and interested persons could use it on payment of a fee. Second, even with access to mobile phones, full gains might not be reaped as farmers might need more information. The role of public authority and media in this respect is very important. Again, producers' organisations could form an information forum of their own to be more effective at bargaining than individual initiatives.
Coming back to the Bangladesh context, out of 150 million people, 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 is distributed among 6 other companies. The tariff rates are gradually going down to 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 for jobs and improving the quality of life.
The "luxury" item of the early 1990s transformed into a "necessity" within the span of just one decade. Mobile phone is now an essential instrument for reducing "rural penalty," not only in Bangladesh but also in other backward areas. But surely Bangladesh can boast about the dawn of an unimaginable era of communication for the farmers and the rural poor.
So, never make fun of technology; it could be a triumph for the downtrodden also.