An SMS market information service recently launched in Zambia could be the first step towards creating a mobile phone commodity market for the whole of Africa and link up previously isolated small farmers.
After a year of pilot testing, the SMS trading system is showing great promise in Zambia's rural regions. "From the beginning, we realised that there was a great potential for the system to develop and engage small farmers," said Dick Siame, manager of the market information development programme in Zambia. "Because Zambia is sparsely populated, it is very difficult for them to get information and to be an active part of the trading process."
Until the system was put in place, farmers had very little knowledge about market prices and had to sell their crop to intermediary buyers at prices often well below market rates. With the new system, they can request the latest market price being sent via SMS for any given commodity. Within seconds they receive information on best prices and the best buyers in a specified province or district. The SMS service, which costs $0.15 for each message, enables farmers to compare prices and selected buyers to start-trading. "The system is very accessible for small farmers because mobile phone technology is cheap. A SIM card cost $1 here, and a telephone about $25. If they can't afford a phone, they borrow their friends,'" explained Gibson Kapili, in charge of the programme's contract management and procurement.
The system is managed by Zambia Farmers Union (ZFU) and financed by the UN's International Fund for Agricultural Development (IFAD), under an agribusiness development programme for Zambia. The ZFU manages the database and updates prices on a weekly basis, providing the same information on its website (www.farmprices.co.zm) for those who have internet access.
Commodities that are part of the market information service include maize, beans, groundnuts, soybeans, sunflower, sorghum, cassava, beef, sheep, pigs, goats and wheat.
By the end of August, which corresponds more or less to the end of the pilot testing period, about 15,000 SMS messages had been registered and the website received about 25,000 hits. It was estimated that more than 15% of SMS messages led directly to a transaction between farmers and traders.
Furthermore, the system has introduced tighter competition between traders and buyers who constantly monitor prices online to check their...