Impact of Information Technology on Agricultural Commodity Auctions in India

Empirical research on the value of information technology investments in the information systems literature has primarily focused on the use of IT by businesses and multinational firms. The impact of IT on the global agricultural supply chain has largely been ignored in the IS literature. Auctions to buy and sell large volumes of agricultural commodities are widely prevalent in diverse regions of the world and are an important part of the agricultural supply chain. In an effort to increase efficiency, commodity auctions have been experimenting with online formats in recent years. Such online auctions have generated significant interest in the trade press because of their potential to generate higher commodity prices for producers, reduce unfair trading practices by middlemen, and bridge the digital divide. We analyze transaction data from a recently set up online auction in India that trades in various grades of coffee. We model the impact of lower transaction costs, daily operations, less collusive behavior among buyers, and learning curve effects on the selling price of coffee in the online auction. We estimate the parameters of the model by comparing the prices in the electronic auction with those of the same grade of coffee at physical auctions held weekly. We find that electronic auction prices are 4 percent higher and the difference is statistically significant. Further, we find that the price differential is higher for coffee grades that have higher price volatility and that are traded less frequently in the physical exchange. We also find that the price differential increases over time as buyers become more familiar with the benefits of the electronic trading format

Linking urban consumers and rural farmers in India: A comparison of traditional and modern food supply chains

"Food supply chains are being transformed in a number of developing countries due to widespread changes in urban food demand. To better anticipate the impact of this transformation and thus assist in the design of appropriate policies, it is important to understand the changes that are occurring in these supply chains. In a case study of India, we find that overall urban consumption is increasing; the urban food basket is shifting away from staples toward high-value products; and modern market channels (modern retail, food processing, and the food service industry) are on the rise. We document differing practices in traditional and modern food supply chains and identify an agenda for future research." from authors' abstractAgricultural marketing, Market transformation, Rural-urban linkages, Globalization, Markets,

CONSUMERS' RESISTANCE TO GENETICALLY MODIFIED FOODS IN HIGH INCOME COUNTRIES: THE ROLE OF INFORMATION IN AN UNCERTAIN ENVIRONMENT

This paper examines the market characteristics that push consumers in high income countries to resist GM foods, with an emphasis on negative information from environmental groups and third-party, verifiable information. For this study, unique data were collected from adult consumers in the United States who participated in laboratory auctions of three food types with randomly assigned labeling and information treatments. Using U.S. consumers is important because U.S. consumers are generally supportive of GM foods and free from the BSE "food scare" fears and bias towards "natural" that are hypothesized to lead Europeans to reject GM foods. Key findings are that negative GM-product information supplied by environmental groups pushes some consumers out of the market for GM products and increases the probability that all consumers are out of the market for GM-foods. Verifiable information dampens the effectiveness of negative GM-product information. An important finding is that negative information on GM foods from environmental groups, an interested source, can stymie technology adoption in both rich and poor countries, and increase the probability of malnutrition and starvation in poor countries because of both the failure to accept food aid and new GM-technology.Consumer/Household Economics,

Tea Industry of India: The Cup that Cheers has Tears

Indian tea has virtually lost all global markets because it continues to be traded as a commodity. The much talked about value addition is limited and rather late. Only the markets that have consumers with shallow pockets buy tea as a commodity and that share is fast depleting. The industry needs to be competitive in production, marketing, logistics and product forms. India, despite being a large producer of tea, lacks properly organized production systems in which small tea producers find a respectable place. The industry must have access to capital at globally competitive rates. The subsidies in any form are undesirable. The Indian tea industry must face the market realities, redefine its business strategies and reposition its products. The first step in that direction is a complete restructuring of the tea industry, redefining the roles of various agencies like the Tea Board and Producers’ organizations, and developing a healthy partnership with the labour. There are the problems of market access and discriminatory treatments through non-tariff trade barriers such as maximum residual limits (MRL) and social clause.

The supply response to exchange rate reform in sub-Saharan Africa (empirical evidence)

In the diversity of exchange rate regimes in sub-Saharan Africa (SSA) in the 1980s, there was a trend toward more flexible regimes and smaller parallels markets. How particular exchange rate arrangements affect such factors as output supply cannot be determined for SSA countries on the basis of experience in other developing countries, because SSA countries differ in the composition of their exports and imports, in level of industrialization, and in development of the financial sector. The authors supplement a survey of the literature with empirical testing, using pooled time-series and cross-section data for 22 countries in SSA for 1971-91. Among their findings: (a) When macroeconomic policies are inconsistent and there is a failure to adjust to adverse shocks, fixed regimes lead to overvaluation and the development of widespread parallel markets for foreign exchange. (b) SSA countries have attempted exchange-rate unification through occasional devaluations, a crawling peg, official dual markets, foreign exchange auctions, and a market pricing rule. Most such experiences have been gradual, and their outcomes mixed. Success in exchange-rate unification (as experience in Ghana and Uganda shows) depends on three crucial elements: supportive monetary and fiscal policy, external budgetary and balance-of-payments support, and official commitment to a credible reform process. (c) In the face of significant adverse real shocks (internal and external), built-in monetary and fiscal rules in fixed exchange rate regimes with currency convertibility (as in the CFA zone) may be inadequate to bring about the required short-term adjustment. As elsewhere in the developing world, the effect of real devaluation on output in SSA is mixed in the short run (contractionary when demand elasticities are low) and neutral in the long-run. Real depreciations have neutral effects on per capita growth of real output in the transition to steady state. (d) Farm producers in SSA respond to price incentives for a single agricultural crop as farmers do elsewhere in the developing world: they behave rationally. And econometric evidence confirms that growth in agricultural exports is not achieved at the expense of food production. (e) Applying the Granger-causality test to this data set reveals strong causality, running in both directions, between money growth rates and inflation. It also shows causality running from output to inflation, and from inflation to nominal devaluation.Economic Stabilization,Macroeconomic Management,Economic Theory&Research,Fiscal&Monetary Policy,Environmental Economics&Policies

Expert Consultation on Market Information Systems and Agricultural Commodity: Exchanges: Strengthening Market Signals and Institutions. Proceedings of an expert meeting held in Amsterdam, The Netherlands, 28–30 November 2005

The Expert Consultation on Market Information Systems and Agricultural Commodity Exchanges: Strengthening Market Signals and Institutions was convened to review CTA’s investments in MIS and ACEs within a broad perspective to determine which are the more successful systems, what conditions have enabled them to function well, and how they are being used by farmers’ organisations, traders and other development partners..

Commodity Exchanges and the Privatization of the Agricultural Sector in the Commonwealth of Independent States—Needed Steps in Creating a Market Economy

Pre-revolutionary commodities exchanges in Russia and their extinguishment by the Bolsheviks are examined, and the role thereafter by Soviet central planners in the distribution, import and export of agricultural commodities is described. It is argued that the privatization process in the CIS must include incentives for the development of an exchange system for agricultural goods

Abstracts : policy research working paper series - numbers 1936-1988

This paper contains abstracts of Policy Research Working Paper series Numbers 1936-1988.Health Economics&Finance,Health Monitoring&Evaluation,Achieving Shared Growth,Environmental Economics&Policies,Poverty Assessment