Agriculture Marketing Information System in Nepal

Submitted to:
Rajesh Poudel
Professor, Department of Extension
IAAS, TU
Kritipur, Kathmandu

Submitted by:
Name: Subash Sunar
Roll No: R-2017-EXT-07M
1st year 2nd semester
Department of Agriculture Extension
IAAS, TU
Kritipur, Kathmandu
Tables of Contents
Abstract......................................................................................................................................2
1. Introduction............................................................................................................................3
2. Methodology..........................................................................................................................4
3. Result and Discussion............................................................................................................4
3.1. Types of MIS in Nepal....................................................................................................4
3.2. Significance of MIS in Agriculture Development...........................................................5
3.3. Role of MIS in improving Rural Livelihood in Nepal....................................................6
3.4. Challenges and Opportunities of MIS.............................................................................6
4. Conclusion..............................................................................................................................8
5. References..............................................................................................................................9
Abstract
Agricultural market information systems (MIS) have been promoted to facilitate efficiency
in the marketing of agricultural products and provide information for food security
monitoring and policy formulations. This study sought to explore the functioning of MIS and
to document lessons learned. There are four different models of MIS which disseminate the
price information in their particular way. MIS have the significant role in agriculture
development and also helps to reduce the marketing cost by providing the price information
and information regarding to different variables. MIS help to empower rural farmers and help
in market liberalization. MIS have many challenges and opportunities in the developing
country like Nepal. Some of them are inadequate market information, market asymmetry,
lack of credit, market fragmentation, high postharvest loss, less remunerations to the farmers,
high market fees, high charge by middle man and MIS have great opportunities in the
developing countries to tackle all these challenges by introducing different interactive
disseminating tools.

Key words: MIS, market liberalization, challenges and opportunities, significance, rural
farmers
1. Introduction
Market information systems (MIS) developed in two steps in developing countries like
Nepal. Initially, MIS emerged in the 1980s when most developing countries liberalized their
agriculture and second generation was emerged during 2000s to overcome the drawbacks of
first generation(Galtier, David-Benz, Subervie, & Egg, 2014). The second generation MIS
introduce the ICT-internet and cell phone and increasing organization of market players such
as farmers organization, interpersonal organization, innovative organization and so
on(Chiatoh & Gyau, 2016). Agricultural market information systems (MIS) are designed to
collect, process, and disseminate information on the situation and dynamics of agricultural
markets. MIS may have two objectives: improve public policies by helping policymakers
take better account of market realities, and render markets more transparent such that
resources may be better allocated (more efficiency, greater equity). The first objectives is
older and the second objective is far more novel and recent. The vast majority of MIS
innovations were very clearly aimed at market players, and thus today the aim of increasing
market efficiency by providing market players with information is shared by all
MIS(Developed & Ldcs, 2010). Effective MIS leads to enhance the good marketing system.
A good marketing system is one, where the farmer is assured of a fair price for his produce
and this can happen only when the following conditions are obtained, the number of
intermediaries between the farmer and the consumer should be small; the farmer has proper
storing facilities so that he is not compelled to indulge in distress sales, efficient transport
facilities are available, the malpractices of middlemen are regulated, fanners are freed from
the clutches of village moneylenders and regular market information is provided to the
farmer(Magesa, Michael, & Ko, 2014). Many MIS are now supported by professional
organizations, NGOs close to these MIS, or private service provider companies, rather than
by public bodies.
The success of mobile telephony in rural areas, and the spread of the
Internet, have led to major technical developments in MIS. ICT tools made the data
transmission from collection point to center more efficient, timely, cost effective, and reliable
and minimize the risk of errors(Pokhrel, 2010). Introducing a MIS would allow farmers to
obtain a higher price by :I ) intensifying competition between collectors; ii) generating better
spatial arbitrage (some farmers could for instance sell on markets further away); and iii)
increasing farmers’ bargaining power (this last impact would not result in an increase in the
economic surplus generated by trade, but in a change in its distribution). .Similarly, may give
better informed consumers the chance to obtain lower prices. MIS is developing country like
Nepal mostly focused on business performance of small holder farmers(Islam & Grönlund,
2007). Almost all MIS today tend to focus primarily on information for private market
players. MIS can be the valuable tools if it is generated by the multi- sectoral linkage between
researchers, farmers, extension agent, traders, agro-input delivery system, NGOs, CBOs,
professional organization, etc(Amer, Odero, & Kwake, 2018). And also if they use the
interactive methods of dissemination (presentations/discussions, radio or television programs
with interviews by journalists and calls from listeners, etc. MIS are an accompanying
measure to economic liberalization, in order to create more (price) transparency and to foster
price competition. Timely, accurate and representative market information is a powerful tool
in the empowerment of farmers in a liberalized marketing system(Ibrahim, Jing, Abdu,
Sanusi, & Bala Sanda, 2013).
2. Methodology
This study of Agriculture Marketing Information System in Nepal was done in order to fulfill
the requirement of term-paper for internal assessment. To prepare this term-paper various
books, journal articles, thesis and research paper were thoroughly studied. The information
collected is mentioned under the introduction and result section. Referencing was done with
the help of software Mendeley in the referencing style of APA.

3. Result and Discussion

3.1. Types of MIS in Nepal
There are mainly four types of MIS system based on institutional position, major objectives
of MIS and the technology and organizational methods used.
A. Public MIS
Public MIS, also known as first generation MIS, were generally set up in the 1990s by
governments after the liberalization policies to reduce information asymmetries between
farmers and traders. These MIS are mostly managed by government departments and
ministries and are hosted in public institutions and are funded (at least partially) by the state
budget(Hatai & Panda, 2015). When they serve the dual purpose of improving public policies
and ensuring market transparency, their products and the methods they use to disseminate
information are particularly suited to institutional players. MIS providers at the federal
context of Nepal is local and province government. They have long been providing the
information on conventional channels such as radio, written bulletins, newspaper, etc(Rice,
n.d.). Recent days they have been providing internet and mobile for dissemination of the
information through the websites. The MIS were designed to have a national coverage,
collecting market information from markets in different regions in the country. The main
means of data collection by public market information systems is through interviews at
market level and also through observation The key information disseminated through this
MIS is price availability, product flow, transport costs, price and exchange rate, Date, time,
grade, price and volume traded(Zoltner & Steffen, 2013).
B. Private MIS
These are supported by the private enterprises and goal is to produce marketable information
for private market players such that they may improve their production and trade decisions,
thereby increasing market efficiency. They are mainly profit-oriented and aim at better
linking farmers to traders at national and even regional levels(“In Reply: BEHAVIOUR
THERAPY,” 1966). Private MIS collect information from a wide variety of commodities
ranging from fertilizers, livestock, cereals, vegetables, etc. Private MIS get their funding from
shareholders, subscription fees from members, proceeds from their activities, franchises,
governments and other donors. The information is collected through the interviews and
observation by the reporters and then disseminate the information regarding the price and
availability of the commodities. The ICT tools generally used are Market resource centers,
SMS, IVR, Internet, database system, radio, etc(FAO, 2017).

C. Farmers organization base MIS

Farmer-based organization MIS (kalimati vegetables centers) were set up by farmers’
organizations with the help of donors. Their main objective was to promote sustainable
economic development amongst members and smallholder farmers by increasing their
bargaining power to negotiate for better prices, and to link them up with traders. These MIS
are owned and managed by the respective farmers’ unions. Farmer-based organization MIS
use either physical (interviews, observation)(Ferris, Robbins, & Fautrel, 2005) or telephone
interviews to gather information in various markets across the country. Notice boards,
bulletins, television, radio and websites are used in disseminating information collected. The
main source of funding for these MIS include users’ subscription fees, NGOs and other
donors, governments and proceeds from other income-generating activities. The information
related to price, exchange, quality, quantity, market trends, and availability is
disseminated(Poor, People, Minot, & Hill, 2007).
D. Trader- and NGO-based market information system
MIS supported by professional organizations and NGOs are mainly focusing their efforts on
disseminating information for private decision-making. It provide the market information
through different graph, comments to the engaged members in the trade and organization.
The main means of information collection by these MIS is through Phone interviews,
questionnaires mailed to market participants, other administrative sources, interviews and
observation by the reporters then after gives information on informal trade data, formal,
inter-regional, cross-border trade and wholesale market prices. Information is disseminated
through bulletins, economic situation reports, SMS and email, radio, television, and
Internet(Dhamma & Murtad, 2015).
3.2. Significance of MIS in Agriculture Development
Marketing information informs about the price, production, processing, storage and
marketing decisions, facilitates the spatial and temporal distribution of products and can
strength the bargaining power of producers. MIS help to increase the income of the farmers
and generate the intrinsic motivation for the investment in agriculture sector. It is generally
for the farmers with large scale agro enterprises and also provide the information for the price
equalization in rural areas(COMCEC, 2017). MIS helps to control the supply of the
commodities and use to recognize the consumer preferences also encourage the producers to
increase the production. From an economic perspective, market performance depends on the
quality of the circulation of information between the various actors involved in the
agricultural value chains. Market information (primarily on prices, but also on stocks and
trade) is particularly useful in the context of obtaining early warnings of food security
difficulties(Lalani, 2018). The development of efficient agricultural markets information
system has a large impact on the economic opportunities of rural households. MIS may lead
to improved production and marketing decisions and thus improve market efficiency and
resource allocation. MIS increase in the accuracy of the price information and disseminates
the buying and selling price of specific markets(Gesare, Chelanga, & Banerjee, 2017). It
helps to provide the information regarding price of imported and exported goods, exchange
rates, transport cost and price of the day as well as short term price fluctuation indicators.
MIS introduce the new information technology i.e. ICT which is enhancing the agriculture
productivity as well as empowering the individual farmers in the holistic approach(Adhikari
& Adhikari, 2005). MIS information can be used by farmers both for advocating for more
producer-friendly policies (through farmers’ organization) and to guide their production and
marketing decisions (choice of what, when and where to sell)(Dolma Development Fund,
2014).
3.3. Role of MIS in improving Rural Livelihood in Nepal
Agricultural markets information play a key role in the lives of poor people in developing
countries. All farmers, wherever they are in the world, face numerous risks. They obviously
have the risk about the bad weather, destruction of their crops, market price, transportation
risk etc(COMCEC, 2017). The availability of historical price information can also help
minimize risks. For instance, it can reduce the risks associated with deciding to store a crop
for sale later in the year or with deciding to grow new crops. A further advantage of having
historical data on seasonal price trends is that farmers can make informed decisions about
when to produce(David-Benz, Galtier, Egg, Lançon, & Meijerink, 2011). Seasonal price data
will give farmers a good idea of the prices they are likely to get from out-of-season
production. Improved information enables farmers to plan their production more in line with
market demand, schedule their harvests at the most profitable times, decide which markets to
send their produce to and negotiate on a more even footing with traders. Consequently, better
information should lead to higher profitability although, for most small farmers, information
systems will have to be supplemented by extension services, which are able to assist them to
interpret price data for decision-making in the production process(Binayee, 2005). MIS can
make markets more competitive (see previous point), and can thus help the poor benefit from
better prices even though they do not themselves directly receive the MIS information. Also,
MIS can strengthen the bargaining power of the poor by providing them with information on
prices and trading opportunities(FAO, 2011). Adequate knowledge of prevailing prices,
quantities, qualities and conditions of sale in the markets are indispensable for rational
production and marketing decisions. Market transparency allows them to adjust their
production and consumption decisions, to derive the proper incentives from the market and to
adjust their sales strategy in order to maximize their welfare(“MIS,” n.d.).
3.4. Challenges and Opportunities of MIS
The challenge for MIS is to find a suitable method to convey the information, given that the
methods of dissemination most commonly used by 2GMIS (cell phones, websites) are based
on technologies to which the poor may not have access(Tollens, 2006). Some of the major
challenges and opportunities of MIS are listed below.
Challenges
A. Markets highly fragmented
The market of agricultural produce has become highly fragmented, not only across the
country but even at the level of the State itself, which hinders both, proper market access for
farmers and also the development of required infrastructure for handling the produce. .
Multiple license requirements for trading in a State and levy of market fee at multiple point
points along with high incidence of fee and charges further have an incremental impact(Juma
et al., 2017).

B. Insufficient Number of Markets

The extant system has failed to provide adequate number of markets to handle ever increasing
marketed surplus efficiently and easy market access to farmers
C. Inadequate Marketing Infrastructure
There are very few marketing infrastructure such as cold storage materials, electronic weigh
bridges, grading and standardization tools labelling and postharvest techniques in Nepalese
society.
D. High Incidence of Market Fee/ Charges
Market committee is authorized to collect the market fee, commission agent collect the
commission fee and In addition to these, other charges, such as, various types of development
case, entry tax, purchase tax, weighment charges, etc. are also required to be paid resulting in
to higher transaction cost and low price realization by the farmers in a regulated
market(Thatigutla, 2018).
E. High Post—Harvest Wastages
F. Restrictions in Licensing
The traders, commission agents and other functionaries organize themselves into
associations, which generally do not allow easy entry of new persons, stifling the very spirit
of competitive functioning.
G. Less Remuneration to the Farmers and High Intermediation Cost
Long supply chain (normally 5-6) incurs disproportionate marketing cost and margin In order
to provide the remunerative prices to the farmers, there is a need to reduce the intermediation
by providing alternative marketing channels like direct marketing, contract farming etc. for
which reforms in agricultural marketing system is necessary(Alemu, Alemu, De Groote, &
Bacha+, 2006).
H. Market Information Asymmetry
Due to the market information asymmetry the trader generally offers less than the price
quoted by the Government news media.
I. Inadequate Credit Facilities
Due to the poverty and lack of adequate credit facilities Nepalese farmers tries to sell his
produce immediately after the crop harvesting though prices at that time are very low.
Opportunities
MIS have great opportunities to tackle this all the above listed challenges in the developing
countries like Nepal. Apart from it, MIS information regarding price and market transparency
will increase the framers socio-economic status. MIS can utilize its tools to facilitate farmers
with the market centers, selling and buying the products more effectively. It can also involve
the private sector to enhance the market liberalization as well as hasten the local marketing
process. Furthermore, it will guide the farmers with the price data of the each and every parts
of the country and allow to sell the commodities at the profitable amount(Nakasone, 2013).

4. Conclusion
Market was developed in two steps in the developing countries like Nepal i.e. first generation
MIS and second generation MIS. MIS have two main objective where first objective is to
bring the market transparency, equity and improve the public policy where second objective
is to liberalize the market which is far novel and recent. Effective MIS leads to enhance the
good marketing system. MIS with the use of ICT have allow farmers easy access with the
market price data. MIS in the developing country must focus to small holder farmers with
multi-sectoral linkage and interactive dissemination of information. There are mainly four
types of MIS i.e. Public MIS, Private MIS, Farmers organization base MIS and Trader- and
NGO-based market information system. Public MIS is also known as first generation MIS
and mostly managed by government, private MIS is supported by the private enterprises and
the goal is to support he private market traders, Farmer-based organization MIS (kalimati
vegetables centers) were set up by farmers’ organizations with the help of donors and traders
and NGO-based MIS is supported by professional organizations and NGOs are mainly
focusing their efforts on disseminating information for private decision-making. MIS provide
the information regarding the processing, storage, transportation cost, improve the production
by introducing the knowledge about the new technology, disseminate the knowledge about
the selling and buying price, empower the farmers and increase their socio-economic status.
MIS can strengthen the bargaining power of the poor by providing them with information on
prices and trading opportunities and increase the economy of the rural farmers by decreasing
the cost of production and marketing cost. There are many challenges such and opportunities
which include highly fragmented markets, insufficient number of markets, inadequate market
infrastructure, high market fee, high postharvest loss, asymmetry market information, low
credit etc. MIS can create the opportunities to tackle all these challenges. Hence MIS should
be utilize in the understandable form from the grass root level.
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