Adoption of ICT-based market information and farm-gate prices received: The case of smallholder farmers in Uganda

The bulk of the previous work on how to improve smallholder farmer welfare in Sub-Saharan Africa has mainly focused on improving these households' access to yieldaugmenting agricultural technologies. There has been very little commensurate effort done to improve the same households' access to ICT-based market information on the continent. In this chapter we show the need to improve access to ICT-based market information and the welfare implications. Data were collected in 2007 from five districts in Uganda, namely Luwero, Busia, Tororo, Iganga, and Mukono which are among the major producers of maize, groundnuts and beans. A total of 400 farm households were randomly selected and interviewed. We considered only the maize, beans and groundnut enterprises and used propensity score matching techniques to determine the impact of adopting ICT-based market information on farm-gate prices received by smallholder farmers. The results from the Epanechnikov Kernel matching algorithm show that farmers who adopted ICT-based market information consistently received higher farmgate prices than those who only used market information given to them by traders and brokers. The difference in the maize, beans and groundnut prices received between those using ICT-based market information and those using information from traders is statistically significant. The average increment obtained in the farm-gate price of maize, beans, and groundnuts due to adopting ICT-based market information is US$33.89, US$60.56, and US$107.00 per metric ton, respectively, in 2007. One implication from these results is that to improve farmer welfare, the promotion of adoption of yieldaugmenting agricultural technologies should be coupled with the promotion of improved access to ICT-based market information. This should effectively raise farm incomes of smallholder farmers in Sub-Saharan Africa. There is more to gain from this dual approach than focusing only on the promotion of yield-augmenting agricultural technologies, as is the case in many development programs in Africa.