Fishermen's Digital Revolution: Bridging

Information Gaps in Kerala's Fisheries Industry

Mashhood Raza Khan

Lack of information among the economic agents can cause huge price differences in two
different markets and an insufficient supply of goods; this can be to some extent eradicated by
investing in ICT, and it can help increase the income level of people in poorly functioning
markets. It has become increasingly common to find farmers, fishermen, and other producers
throughout the developing world using mobile phones, text messaging, pagers, and the internet
for marketing output. [1]

In an Indian state, Kerala, where fishing is an important industry, over 70% of adults eat fish at
least once a day, making it the largest source of many important nutrients, such as protein
[Jensen 2007]. Further, over one million people are directly employed in the fisheries sector
[Government of Kerala, 2005].

In the late 1990s, economist Robert Jensen was recording fish prices across the coast and finding
markets 15 km away. He found these three markets where sardines were selling for 10/Kg in
region 1, ₹0/Kg in region 2, and again ₹10/Kg in region 3. What happened was that people were
showing up, but nobody bought their sardines, and they eventually had to dump all their sardines
back into the sea.
In the high-price region, the price was so high that a dozen people showed up, but the fish were
so expensive that they went home empty-handed. While in region 2, about a dozen fishermen
were throwing their fish into the sea because they couldn't find anyone to buy them. In region 2,
there was too much supply of the commodity in relation to the demand. On the other hand, in
region 1, there wasn't enough supply of commodities to meet the demand.

According to the “Law of One Price,” the price of a good should not differ between any two
markets by more than the transport cost between them. What was happening in Kerala? That
could be the case if we rely on roads, but back in the late 90s, roads weren't that great. But
fishermen were already out in the sea; they didn't need roads. The total cost of going up and
down the coast was found to be around ₹400 and in exchange, you get a benefit of approx ₹4000
as an average boat can carry 400 fish at once. The fishermen of region 2 can go on and easily sell
their fish in region 1, but it wasn't possible at all because the market closes before they reach
there.

The high fluctuation in prices between ₹14 and ₹0 was because fishermen didn't know what the
price of the fish would be when they went back to the market. They didn't know what they were
going to get—maybe ₹10, maybe ₹12, or maybe ₹0. They didn't go to the other market to sell
because they may get nothing plus pay for the trip; that's why they stayed in their region
(choosing the safer side); this is called the information problem. They didn't know what the price
and demand for the fish were in other markets.
Then came cell phones; it became very cheap for the fishermen to find the prices of fish at other
markets. The expansion in the cell phone market gave access to fishermen to fish for prices in
other markets. So these different regions got access to cell phones at different times, the spikey
graph got converted into a plain graph, and prices equalized because people were calling other
markets to analyze the price and figure out where they should be, making supply and demand
come to equilibrium.

References
[Jensen 2007]: Robert Jensen, "The Quarterly Journal of Economics" Vol. CXXII, Issue 3, Pg 3, Harvard
University, August, 2007.

[Government of Kerala 2005]: Government of Kerala, “Annual Profile: Draft Fisheries Policy,”
Thiruvananthapuram, Kerala, 2005.

[1]: To cite just a few examples from popular media sources, such behavior has been observed in Thailand and the
Philippines [Arnold 2001]; Kenya [England 2004]; Congo and South Africa [LaFraniere 2005]; Bangladesh and
China [Alam 2005]; and even the case of fishermen in Kerala examined here [Rai 2001].