Impact of Building Market Linkages in Uganda
Mobile phone-based marketplaces are designed to enhance smallholder farmers' ability to access buyers directly (creating “market linkages”). Can such a digital platform benefit smallholder farmer producers, by helping them sell their goods at better prices, and help consumers by improving the efficiency of food trade? Researchers carried out one of the largest market information experiments ever conducted to understand the impacts of such a digital marketplace in Uganda.
About the research
This ATAI-funded study, was conducted by Prof. McIntosh and Prof. Lauren Falcao Berquist (University of Michigan) in collaboration with AgriNet, a major food intermediary in Uganda, and Kudu, a digital food trading platform created by computer scientists at Makerere University. This highly scalable mobile-based trading platform functions similarly to a digital auction-place, matching farmers and buyers based on price and distance, while also bulking nearby bids to encourage successful trades. To understand whether the platform could improve market integration and benefit farmers, the platform rollout was randomized across 110 sub-counties in northeast, western and Central Uganda, covering approximately 14% of the surface area of Uganda. researchers partnered with Innovations for Poverty Action Uganda (IPA) to evaluate the extent to which the digital trading platform would facilitate trade by reducing search costs, easing credit constraints, or reducing contractual risks in agricultural markets.
Results from the study indicate the platform generated significant increases in revenues among the farmers most likely to use the platform who are larger-scale producers, whereas small-scale farmers find it difficult to reach the scale necessary to find buyers on the platform. However, the researchers conclude that such highly scalable mobile-based marketplaces are strongly cost-beneficial from an overall welfare perspective given low costs per-farmer. You can hear more and pose questions during the session, and find the details in their academic working paper, here.