Role of AMIS in resolving information asymmetries in agricultural markets: Guidelines for AMIS design

Abstract

Agriculture is an economic activity in which information plays a very important role as critical information asymmetry exists in transactions between various stakeholders – farmers, traders, government, policy makers and consumers. In this paper we analyze the information asymmetries in agricultural markets and how proliferations of Information and Communication Technologies (ICT) based Agricultural Market Information System (AMIS) can help reduce these asymmetries. We also see how spatial and temporal arbitrage opportunities of perishables and staples vary with increase in available information.

We note that socio-political situations limit the effective utilization of market information by the farmers. They have limited outlets for their produce and they are bound by traditional trading relationships with middlemen. Thus the success of such an information system also depends upon the wider policy environment that prevails in the country.

Though many attempts have been made by a number of governments to provide AMIS, the success rate is poor. Two major reasons are economic unsustainability and ineffective implementation. There are not many farmers who can pay for these services. These services have to be offered as a 'public good'. At the same time, when such services are not financially sustainable, they are a drain on public resources. From a review of existing literature, we come up with some guidelines for designing AMIS for economic sustainability and effectiveness while defining the processes for data collection and information dissemination.