Authors: Neil Newman, Nicole Immorlica, Kevin Leyton-Brown, Brendan Lucier, Quinn, and Richard Ssekibuule
This chapter describes our experiences designing an electronic market platform for agricultural trade, branded in Uganda as Kudu. A significant challenge facing rural development is inefficiency in agricultural markets. One potential driver of such inefficiency is farmers lacking information about the national market for their crops and therefore selling in local markets at suboptimal prices. The result is not only lower prices for farmers (often a huge group, since 80% or more of the population in many African countries work in agriculture), but also intra-seasonal and cross-locational price fluctuations that distort the market and reduce incentives for investing in productivity-enhancing inputs. Prior work has demonstrated the existence of arbitrage opportunities both via buying and selling in different parts of the country as well as via paying for crop storage between seasons. Such inefficiencies are driven by information failures: market discovery occurs almost entirely through word-of-mouth interactions; buyers and sellers settle on prices through negotiation. Most gains from trade are captured by better-informed intermediaries. Worse still, when both parties are insufficiently well informed, mutually beneficial trades simply may not occur. In the long run, without accurate knowledge of nationwide agricultural demand, it is difficult for farmers to make good decisions about which crops to plant.