Internet could revolutionize rice farming

From...

by Anya Schiffrin

(IDG) -- For 3 billion people across the globe, there is no more essential food than rice. In Vietnamese, the word for rice literally means "food." In paddies throughout Asia, it's planted and watered by farmers knee-deep in mud, sometimes with a little help from their water buffalo.

After harvest, farmers sell their crop at local markets to the nearest available buyer, reaping a fraction of what it might fetch on the international commodities market. It's a classic inefficiency that's a fact of life from Jakarta to Saigon -- and it prompts a question: What if the farmers could close that loop and get directly in touch with those overseas buyers or the major exporters at home? What would happen if they knew -- and could command -- the true price of their rice?

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Some believe the Internet will help farmers make that connection, revolutionizing the rice market -- and other commodity markets -- the same way it has equity markets. Farmers would better know what kinds of rice are in demand, what market trends are emerging and where prices are moving. They could grow varieties of rice and earn more for what they sell. They could graduate from rudimentary farming to more informed, more technological farming science and harvest the profits.

Such changes won't happen quickly, but some people are already trying to bridge the chasm between the fields of Southeast Asia and markets in the United States. As it is now, a farmer in the U.S. and another in the Mekong Delta, planting the same strain, will have totally different yields. That's because the American farmer has far more information about how to raise the most abundant crop and what are the latest agricultural practices. Many farmers in poor countries don't have access to the latest advances on how best to grow rice or corn. They don't have money to buy new types of seeds, machinery or fertilizer. Moreover, many developing countries are more interested in developing heavy industries than agrarian ones. As a result, government efforts at educating peasants about farming have dropped off in many parts of the world.

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The yield gap is really a knowledge gap," says Paul O'Nolan at the International Rice Research Institute in the Philippines, a nongovernmental organization that is a center for international rice experts. "That is where the Internet can play a role."

Agronomists at the institute have set up a program geared toward farmers that provides information via the Internet on everything from pest control to irrigation. Currently only the more prosperous farmers use the TropRice Web site -- they send in e-mail asking for information about different rice strains or what types of equipment to buy. But development economists hope some day even the poorest farmers will have wireless technology and receive planting information via their mobile phones as they toil in the rice paddies. It's an optimistic dream, given that many farmers in the world don't have running water or electricity.

"Farmers are in a situation where they are starved for information," says IRRI's Mark Bell, who developed TropRice. "Our job is not to say, 'Here, do this,' but to provide them with options. Once they have information, they can see what they can afford."

In rural Vietnam, growing rice takes months of backbreaking work. After the grain is harvested, it's spread out by the side of the road, where it dries on plastic sheets and is often run over by passing trucks. Farmers pile 50-kilogram bags of rice onto the backs of their battered old bicycles or motorbikes and take them to market or to small traders. The rice is put on boats and floated down the Mekong River to mom-and-pop processing plants, where it is polished and stored in piles before being shipped to Saigon Port for inspection by international agencies, which verify the quality before it is exported around the world.

Every harvest season, the Vietnamese government sets a minimum price that middlemen must pay for rice -- usually around 7 cents a pound. The idea is to protect farmers from price fluctuation and set a floor for what farmers will earn. In practice, though, this floor is where most farmers end up. Even though the commodity prices are broadcast over the radio or listed in the newspaper, farmers depend on middlemen for everything from trucking their crop to market to letting them know the latest rate. It works much the same way across Asia, in the Philippines, Indonesia and Thailand. "Agriculture is in the power of middlemen," says Pisuth Paiboonrat, director of the Thailand Department of Agriculture's Information Service Center. "We should reduce the power of the middleman."

That's exactly what Arvind Narula, a businessman in Thailand, is trying to do. He has been growing organic basmati rice and exporting it to the United States for a number of years and was frustrated to find there was no useful information on the Internet about rice. He raised about $40,000 with friends and last August launched his own Web site, Riceprice.com. A one-stop shop for rice traders and growers worldwide, Riceprice posts global market prices, introduces buyers and sellers, provides shipping and trade finance -- and gets a cut of the deals done through the site.

Armin Bauer, a poverty-reduction specialist at the Asian Development Bank, doubts the utility of such sites, saying poor farmers are poor because they don't have access to export markets, not because they're ignorant of global prices. He also doesn't believe that a government representative of a country importing rice would bother buying from small exporters who advertise on the Web.

"If Iran goes to Vietnam or Thailand to buy rice, they'd never go to 20 private companies," Bauer says. "They would go to one big seller."

But proponents believe the Internet could revolutionize the way rice is traded in the same way that it could radically alter the bond market or other markets in which prices are not standardized and deals are often based on personal relationships. Much rice is bought and sold between governments in deals behind closed doors, a notorious breeding ground for corruption. If government-to-government transactions were done instead through auctions on the Web, it could be harder for officials to ask for kickbacks or add bribes into the price.

"Reducing corruption could be a good side effect, and there will be less profiteering by brokers and dealers," predicts Datuk Haron Siraj, deputy director general of the Ministry of Primary Industries in Malaysia. "People will accept smaller margins as the market will be more transparent and more information will be available."

That may eventually happen, but even those who advocate technology to empower rice farmers in developing countries admit that it will be years or decades before it becomes pervasive enough to thoroughly transform markets.

Paiboonrat of the Thai government says it will take more than 10 years for poor farmers to gain access to computers. But that doesn't diminish the importance of doing this work now, he says. "We are laying down the benefits for the next generation."

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