Fri, Aug 12, 2011 - Page 8 News List

Rethinking marketplace agriculture

By Lo Chu-ping 羅竹平

The Council of Agriculture wants to see elderly farmers having more direct access to market information and it envisages them using smartphones to do this.

The idea in itself is a sound one, but there are literally dozens of -independent wholesale markets dotted around the country that predominantly serve the needs of their immediate vicinity. At present, there is no national system to bring all this information together.

The lack of integration and consistency across the board makes the smooth flow of goods from one area to the next difficult. It would therefore be useful if the government could consolidate these wholesale markets into four large regions, say north, south, east and west, making it easier to coordinate information.

However, getting elderly farmers online with computers or smartphones will inevitably be a bit of a hurdle. Much better, really, to exploit both the ubiquity of cable television and the Taiwanese penchant for dabbling in the stock market, to get this consolidated market information to TV sets in farmers’ homes in real time.

Even the more technophobic elderly farmers will be at home monitoring the latest commodities information on the TV. At the same time, using existing facilities would incur few additional costs when establishing a national system.

It is not just about lack of access to supply, distribution and retail information. Another key factor is the ability to negotiate selling prices. Theoretically, auctioning should produce reasonable prices set at the market level, because bids should be open and competitive, but the reality is that pooling or collusive bid-rigging could occur if there are only a few upstream wholesale suppliers purchasing or bidding.

In addition, as agricultural produce spoils easily, many small farms have to deal with middlemen or agents, which introduces another impediment to the pricing process, further inflating prices at the eventual point of sale.

To address these two problems, the lack of access to information and the inflationary constraints on pricing, I propose the establishment of a “farm direct” trading system which would provide non-bulk-volume farm produce direct to the customer at wholesale prices. The system would allow small farmers to sell directly to the several hundred thousand buyers for downstream wholesale distribution as well as millions of housewives looking to buy their week’s groceries in one go. When you have a few wholesale suppliers bidding against several hundred thousand, or potentially several million, buyers for wholesale distribution, the price is much more likely to settle at a reasonable level and better reflect production costs.

Cable TV and ordering over the phone are widespread in Taiwan, and this proposed system could make use of this to good effect. Elderly farmers can get the latest trading information from the TV, just like people check stock prices.

For example, a certain small farmer estimates that he will be able to harvest 50 catties (30kg) of yams, which he wants to sell for NT$35 per catty. He then phones an operator on the proposed system and asks them to fill out a sales form, or does it himself online, detailing the product he wants to sell, the volume, the grade and the price, just as he might if he were enquiring about shares.

In Taiwan pretty much everyone dabbles in the stock market, so it is not too much of a stretch to imagine even elderly farmers surveying stock prices on the TV and picking up the phone to place orders. -Customers are quite accustomed to researching products and pricing on the Internet and buying online. Just like when buying and selling shares, individual participants can decide on how many items are required and at what price. It’s important that this system also allows for the advance purchase and sale of a range of products in relatively small volumes.

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