JAKARTA (ASEAN Features) – Many of the 200 million farmers and agriculture workers in the 10-nation Association of Southeast Asian Nations (ASEAN) will soon have the opportunity of going Internet — a tool that promises to make farmers earn more and buyers pay less.
In November 2000, the leaders of the 10 ASEAN member states signed the e-ASEAN Framework Agreement, a blueprint for the member states to develop an ASEAN information structure.
The e-ASEAN was also meant to facilitate the development of e-commerce, e-society and e-government; promote the liberalization of investment and trade in the information and communications technologies (ICT) goods and services; and build technological capacity through human resources development.
"Through this comprehensive framework cooperation, ASEAN also hopes to bridge the digital divide among its member countries and within each of them," says ASEAN Secretary-General Rodolfo C. Severino Jr.
In a short time, ICT has dramatically raised the productivity and standard of living of people in ASEAN’s cities. Unfortunately, those who live in the rural and agricultural communities of the region are unable to set up-to-date information and participate in the market itself.
As a result, the social inequalities between the urban and rural population has widened even more. "One of the most formidable challenges facing most ASEAN member states today is how to provide ICT services to the rural and agricultural communities," says Mr. Severino.
Last February, the ASEAN Secretariat launched the e-Farmers project here in Jakarta to help bridge that income gap. In partnership with a private group incorporated in Singapore -- the Agritani e-Hub Pte Ltd -- the ASEAN Secretariat started the ASEAN e-Farmers program to make available an Internet-based trading e-hub that will provide information and opportunities for farmers and producers.
Jailani Mustafa, business architect of Agritani and principal adviser to the ASEAN e-Farmers task force, says that the project aims to bridge the income gap by linking the trading needs of small farmers and large companies.
He cited as an example a fruit farmer in Bandung, Indonesia, who may earn 700 rupiah (US$0.07) for each pineapple he grows. "That same pineapple can fetch 30,000 rupiah (US$3.00) in Amman, Jordan, more than 40-fold," says Mustafa.
"As you move downstream, revenues and activities increase and you see a lot of the big boys, the big players. At their end the profit margin is high," adds Mustafa.
So what's the deal for the farmers of ASEAN where agricultural products account for US$150 – 200 billion worth of annual trade? What impact will the e-Farmers project have?
Through the Internet the farmer can earn more and the buyer can pay less. In theory, the Bandung pineapple farmer can get a new price equilibrium between 7,000 and 9,000 rupiah (US$0.70 to 0.90 for each pineapple). In Malaysia farmers can earn 2 1/2 times more than Indonesian farmers because the former have better market access through the Internet.
But the access is just one step and is only the tip of the iceberg. There has to be a combination of the Internet and physical infrastructure, tangible and non-virtual services, like trucks and warehouses. Integration of all these services can execute the trade, Mustafa explains.
The reason why Asian farmers get a low profit margin is they are saddled by the problems of fragmentation and poor information. Fragmentation means small land use that prevents the use of advanced technology for better output and services that are not fully utilized services like half-empty trucks that transport crops and produce fruit from the orchard or farm to the market.
Just as important, farmers do not get real time information on where they can get the best price. This lack of information creates an imperfect market, where there is a mismatch of demand and supply. "Middlemen take advantage. When you sell in small volumes, you can't demand a good price," says Mustafa. Farmers can overcome that disadvantage by getting good information on the e-hub.
How do farmers access the e-hub? The farmer can join a farmers' cooperative. In fact, the farmer does not need to be computer-literate. Indeed, Agritani's website, www.agritani.net, which has a page on auctions and inventory listing, can intimidate the non-expert. The cooperative or a local farmers' bank would have trained personnel to help the member-farmers get access, link them to buyers and arrange all the details from insurance and shipping to financial settlement.
Problems of logistics and certification have been identified and training is being conducted with help from the Munich-based Hanns Seidel Foundation. Meanwhile, in the province of Jambi in Indonesia, several sites involving hundreds of farmers’ cooperatives have been identified as part of the e-hub with the support of a joint government and non-government task force. Thai farmers have also begun the use of e-hub. Cambodia and Malaysia will join later in 2002.
Looking ahead, Mustafa says an issue to address is the honoring of commitments. Farmers can be trusted by buyers if they honor contracts that involve large volumes. Another issue is infrastructure. Telephone lines, the umbilical cord of the Internet, would have to penetrate into erstwhile isolated rural communities. Or wireless technology could be harnessed.
What is the reading of farmers? Chaerudin, 48, a small farmer in the south of Jakarta, appears excited. "Yes, I want to export. Getting information from the computer will help. But I don't want to deal with the details. I"ll supply the goods and let someone else do the marketing.” (ASEAN Features)
