Agricultural Market Information: Economic Value and Provision Policy

In developing countries, farmers lack information to make informed production, manufacturing/selling decisions in order to improve their earnings. To alleviate poverty, various non-governmental organizations (NGOs) and for-profit companies have developed different ways to distribute agricultural information about market price, crop advisory, and farming technique to farmers. In this chapter, we first evaluate the economic value of private and public information and then explore the government’s optimal information provision policy to enhance farmer’s welfare. Specifically, we examine the following two questions: will public agricultural market information create economic value for farmers? and what is the optimal way to disseminate the public information to help farmers? By examining the equilibrium outcomes associated with a Cournot competition game, we show that private signals do create economic value for farmers. However, this value deteriorates as the public signal becomes available (or more precise). To enhance farmers’ social welfare, it is optimal for the government to limit the number of farmers who can access to public information.