Journal of Research in International Business and Management (ISSN: 2251-0028) Vol. 2(11) pp. 261-272, November, 2012 Available online @http://www.interesjournals.org/JRIBM Copyright ©2012 International Research Journals Review Linking small-scale farmers to markets in Benin: a failure of ICT-based initiatives? Evidence from case studies Anselme Bienvenu Adegbidi Department of Economics, Socio-Anthropology and Communication, Faculty of Agricultural Sciences, University of Abomey-Calavi E-mail:[email protected] Abstract This paper addressed how the organizations that promote the use of ICTs by farmers and traders in Benin approached the issue of linking smallholder farmers to markets and if they succeeded in their interventions. The main result was that farmers were not the main targets of the ICT-based market initiatives, nor were they intended to be the direct beneficiaries of the projects. Hence, the ICT impact on improving market linkages could be questionable. Nonetheless, there was hope that farmers would benefit through greater market transparency and greater access to highly rewarding value chains for traders. Keywords : Benin, ICT, market access, market information services, farmers. INTRODUCTION Market access is one of the most important factors term, market access can result in the production of influencing the performance of smallholder agriculture in marketable surplus and hence gains in income from developing countries, and in particular the least agriculture. In the medium to long run, the surplus from developed countries. Access to new and more rewarding improved market access can result in higher revenues, markets for agricultural products is vital in enhancing and savings and hence investment in productivity enhancing diversifying the livelihoods of poor subsistence or semi- technologies. The effect of market access for smallholder subsistence farmers. Such markets can be local farmers is even greater for high-value commodities (i.e., (including village markets), catering for the local non-traditional, non-staple crops such as high-value fruits populations, regional markets serving regional and vegetables and organic products). There is evidence consumers in counties/districts/provinces within one that access to such markets have benefits to smallholder country or between countries, and international/export producers (Okello and Swinton, 2007). Such benefits markets in both developed and developing countries. include direct income for smallholder producers and the Smallholder producers form the majority of both the indirect impacts at both the household and community total and rural poor in many developing countries, levels in terms of employment. And, it is recognized that especially Africa. Most smallholder farmers are engaged information and communication technologies can drive in subsistence and semi-subsistence agriculture with low market access to reach those benefits. productivity, low marketable surplus (hence returns) and Information and Communication Technology (ICT) is a low investment, a situation described as low equilibrium generic term used to express the convergence of poverty trap (Barrett and Swallow, 2006; Barrett, 2008). technologies and information services in Enhancing returns from agricultural production through telecommunications, information management, improved access to markets can therefore be a vital broadcasting; and the use of such technologies in the element of poverty alleviation strategy and livelihood delivery of social and economic products and services at improvement. Improved market access results in all levels of society Tamukong (2007). In other words, it is commercialization of agriculture, which has short, ICT for Development (ICT4D) – where technology is medium, and long-term benefits to farmers. In the short integrated in the national development and poverty 262 J. Res. Int. Bus. Manag. reduction agenda. This justifies applying ICTs in lessons learned from the cases and some policy agriculture as an economic sector. implications. In Benin, ICT-based market interventions were undertaken by various external organizations in support of a few farmers and traders organizations in rural and Literature review and background urban areas, with the aim of improving farmers’ access to markets of agricultural produce through reliable and up- Role of agricultural information in resolving market to-date market information, namely for major food crops failure and new cash crops. The latter emerged out of the government’s policy of diversification of agriculture for The literature suggests that smallholder farmers’ access improved food security and poverty reduction. Among the to markets is constrained by, among others, i) lack or organizations that took ICT initiatives, MISTOWA (Market asymmetry of information, ii) lack of access to productive Information Systems and Traders’ Organizations in West technologies: While lack of access to productive Africa) played the most prominent role. The MISTOWA technologies can constrain commercialization, we focus project aims to increase regional agricultural trade and here only on poor technology access due to lack of food security by improving and linking the existing information, iii) poor access to public and private goods regional efforts to generate, disseminate, and make (Barrett, 2008). Lack of information on the quantity and commercial use of market information. Effective Market quality of produce traded, commodity and input prices, Information Services (MIS) and traders’ organizations and credit sources results in opportunistic behavior by (TO) will also heighten farmer awareness of opportunities traders, input dealers and moneylenders. In the absence and technologies to increase production, and will facilitate of information, smallholder producers face problems of the demand drive for higher value and quality agricultural information asymmetry (such as moral hazard) that limit products. This project was submitted to USAID by the the performance of agricultural commodity and input Center for Soil Fertility and Agricultural Development markets, and in turn the participation of small producers (IFDC) in 2004. To improve the access to agricultural in these markets. Studies in Africa indicate that under business information in West Africa, the MISTOWA such circumstances, input and output markets are thin project supports on the one hand the existing public thus small quantities are traded and exchange is based Market Information Systems, in particular through their on visual inspection (Fafchamps and Hill, 2005; regional network (RESIMAO: “Réseau des Systèmes Fafchamps and Gabre-Madhin, 2006). The high d’Information sur les Marchés de l’Afrique de l’Ouest”). In transaction costs of such exchange process impede Benin, ONASA (“Office National pour la Sécurité access to better-paying markets and entrench poverty Alimentaire”) is the focal point of RESIMAO. In addition, (Barrett, 2008). In addition, poor investment in public and MISTOWA encourages the installation of Agribusiness private goods especially roads and telecommunication Information Points (ABIP and PICA in French language). further increase the transaction costs and risks (Poulton How do these organizations that promote the use of et al., 2006). As a result smallholder farmers, especially ICTs by farmers and traders in Benin approach the issue those in remote areas, are poorly connected to efficient of linking smallholder farmers to markets? Do they and competitive marketing channels. Therefore succeed? That is what is investigated in this paper. The smallholder farmers, when and if they participate in rest of the article is structured as follows. In section two, markets, are often obliged to accept low prices for their the theory behind the role of agricultural information in produce (Shiferaw et al., 2007). Furthermore, processors reducing market failure is contextualized in Africa. and traders are constrained by low quality Thereafter, the context of farming constraints to markets undifferentiated products, high cleaning costs and and market policies in Benin is presented. In section inadequate and unreliable supplies whereas market three, the methodology of the paper is summarized. In intermediaries in the supply chain face high assembly section four, the cases of ICT-based market initiatives are costs, high market risks and cash flow problems described according to their objectives, their conduct, the (Shiferaw et al., 2008). Lack of market information contextual problems they faced and the outcomes therefore reduces smallholder farmers’ ability to produce obtained. Success (or failure) of an intervention is high value differentiated products with desirable market assessed in terms of: sustainability of the program (long traits in addition to their inability to penetrate high value lasting), its appropriation by farmers, increased niche markets. It exacerbates the problem of low-level diversification of production, improved market access and equilibrium poverty trap that locks smallholder producers efficiency, and number of farmers reached. These are into subsistence production and imperfect markets where assimilated to program outcomes. In section five, a they typically trade in low volumes. Trading small synthesis of the cases is exposed along with a quantities of produce denies smallholder producers an comparison on the basis of the salient elements opportunity to exploit economies of scale and the (target groups, approaches/methodologies and bargaining power to