Department of Agricultural, Food, and Resource Economics Food Security Group

IDWP 124. Andrew M. Kizito, Cynthia Donovan, and John M. Staatz. 2012. Impact of Agricultural Market Information Systems Activities on Market Performance in Mozambique. Mozambique Country Report.

EXECUTIVE SUMMARY:
The objective of this research is to analyze the impact of agricultural market information
systems (MIS) activities on market performance in Mozambique. This report analyzes factors
that are associated with reception of improved agricultural market information from the MIS
and other sources among farmers in Mozambique; and how the reception of improved
agricultural market information affects prices obtained by sellers of maize in Mozambique.

From the econometric analysis of a two-year panel household data set for four provinces in
Mozambique, the study finds that the generic factors that are associated with the reception of
improved agricultural market information include: (a) growing maize and large and small
groundnuts; (b) owning a radio; (c) presence of a cell phone network in the village; (d)
membership in a farmer association; (e) access to extension services; (f) proximity to a road
with public transport; (g) being nearer to a village administrative post; (h) level of education;
and (i) the agro-ecological zone in which the household is located. The analysis indicates
that, holding other factors constant, reception of market information by staple crops farmers
in Mozambique is associated with a higher probability of market participation of up to 34%.
From the econometric analysis of the effects of receiving information on prices received by
smallholder farmers, the study finds that the mean price difference per kilogram of maize
sold between households with and without information (also referred to as an information
premium or information rent) is 12%. This premium translates into an average income gain of
0.32 meticais per kilogram of maize sold, or an income gain of $2.96 per household per year
(about 1% of average gross household income in 2005 meticais, which was $361) for an
average household that sells about 214 kilograms of maize in the main growing season per
year. The estimated aggregate marginal population gain in income by an estimated a quarter
million households that received information and sold maize is estimated to be $723,121 in
the main marketing season per year. These gains are approximately six times more than the
operational costs in MIS of $130,000 in 2002. This suggests that even if as little as 1/6 of the
information received by Mozambican farmers in 2002 came from the SIMA and only maize
price gains are included, that MIS was a socially profitable investment.

These results are consistent with the observation that providing improved agricultural market
information helps to link farmers to markets, a process that improves their welfare, and
moves them to more efficient market outcomes. Based on these findings, the following
actions may increase reception of improved agricultural market information, and
consequently market participation and increased incomes among users: (a) The MIS provides
information on major marketable staples; (b) The MIS prioritizes radio as its most important
diffusion channel of market information; (c) the MIS moves to include cell phones as an
additional diffusion channel; (d) The MIS considers farmer associations and farmer groups as
an important MIS clientele; (e) The MIS considers government and NGO extension staff as
an important MIS clientele; (f) Information diffusion is focused in areas with potentially high
supply response. Some of these options, such as cell phones, are likely to benefit more
commercialized farmers with larger volumes to trade and greater assets, however these
options contribute to a dynamic rural economy and increased opportunities across a broad
spectrum of rural households