Farmers, civil society organizations and government officials often accuse traders of exploitative behavior towards farmers by paying low prices for their produce and capturing most of the profit margin themselves. However, reliable information about farmgate prices is typically difficult to obtain in Malawi because smallholder farmers tend to make sales infrequently and informally.
In a virtual brown bag on the 23rd of June 2021, former IFPRI Malawi program leader Prof. Bob Baulch (now with RMIT University Vietnam) and Aubrey Jolex, one of IFPRI Malawi research analysts, described a new crowdsourcing method for monitoring farmgate prices. This method is suitable for low-income settings where farmgate sales usually go unrecorded and where internet connections are unstable but mobile phones are common. They also presented initial findings of an ongoing application of the method to farmgate prices of maize, legumes, and soybeans in Malawi. The data collected is an important resource for checking the prices farmers actually receive for their crops, as well as traders’ adherence to official minimum farmgate (MFG) prices.
The term crowdsourcing refers to a business model in which goods, services, or information that were once provided by employees are instead obtained from a large, often undefined, and rapidly changing group of non-specialists. The IFPRI’s crowdsourcing exercises use radio jingles to invite farmers to report their crop sales to a free call center operated by Farm Radio Trust. To encourage farmers to participate, their cell phone numbers are entered into a bi-weekly raffle for agricultural input vouchers.
When the method was first tested during the 2019 marketing season on legumes (chickpeas and pigeon peas) in southern Malawi, 637 sales were reported from 15 districts. In 2020, when the focus was shifted to maize (the main staple) and soybeans (a rapidly developing cash crop), 1,048 maize and 1,265 soybean sales were reported from 27 of Malawi’s 28 districts. In the current 2021, marketing season, 684 maize and 1,126 soybean transactions had been reported from 27 districts as of mid-June 2021. Soybean farmers are currently reporting higher sales prices than in 2020, unlike maize farmers who are reporting lower. Crucially, most soybean sales are made above the government-mandated MFG of 320 MK/kg whereas most maize sales are made below the MFG of 150 MK/kg. Interactive heat maps developed for this study, which illustrate the prices and volumes of maize and soybean sales reported by farmers during the main 2020 and 2021 marketing seasons at TA level, can be viewed here.
The authors conclude that crowdsourcing is a feasible, and efficient way of collecting farmgate prices, which is relatively inexpensive compared to the alternative of collecting the information from farmers in person. Applying the method to maize and soybean sales in Malawi revealed that most farmers received substantially less than the set MFG prices in 2020, when only 90% of soybean farmers and 75% of maize farmers received less than the MFG price for their produce. The situation improved for soybean farmers in 2021, with only 22% receiving less than the MFG price, but deteriorated for maize farmers,90% of whom received less than the MFG in 2021.
There is widespread consensus among policy makers and commentators in Malawi that MFG prices should be enforced by authorities. However, the question remains if the ministries of agriculture and trade, together with the Malawi Bureau of Standards have the capacity to enforce widespread adherence to MFG prices. The researchers, therefore, suggest that promoting competition is likely to be more effective than imposing penalties on traders in raising the prices farmers receive. Live interactive maps, like the ones presented in the webinar, can allow traders and other market participants to identify geographic areas where prices are lowest, and thus help stimulate competition.
