Price transparency + AI = Hope for agri

Promoting price transparency in agricultural supply chains is the most recent pilot by the year-old Makati Business Club Agriculture Committee (following our pilot with the Department of Agriculture on cooperatives). MBC has long advocated for free and transparent markets to level playing fields in various industries. We believe applying such an approach to agriculture, given what we have learned so far—that it is fragmented, multilayered, and opaque—would have a significant effect.

With 5 million farmers tilling a hectare each (due to land reform), and three to eight trading layers between farmers and market vendors, the 10-20 percent increase in farmer incomes estimated by the United Nations’ Food and Agriculture Organization in 2008 from trading post price boards could be surpassed; allowing artificial intelligence (AI) to crawl the resulting price data could push upsides even higher.

One would assume fresh produce “bagsakans” would have boards with bid/ask prices posted for various crops, like any exchange. Yet there were none that we could find; instead, prices were individually negotiated, and transaction data was disseminated only among insiders. Such insider trading is illegal in most exchanges because it benefits insiders at the expense of outsiders—in this case, farmers who are not even present, their farms too small to reach the bagsakan without a middleman.

We are now actively seeking a local government unit partner with jurisdiction over a major agricultural produce bagsakan to put up a price board that other LGUs might emulate. LGUs often control or own bagsakans, and are in the best position to bring this about.

The project was conceived following a presentation to the committee by my daughter, Bee, who visited Card’s farmer clients in La Trinidad, Benguet, with a portable Starlink (available only recently) to see how they might use AI.

Here is some of what she had to say: Ate Erlinda uploaded a picture of the rot that had blighted her cabbage for generations. An issue she had once believed incurable was easily addressed by AI, which suggested neem oil–an organic solution that could be bought for P180/liter online. My grandkids will be free of at least this problem, she exclaimed. Many told me farmers were too uneducated to use a complex tool like AI. I can now tell them they have grossly underestimated both.

We presented the technology at Card’s group borrower meetings. Out of the typical 15 participants, three to four were illiterate and thus excited that they could now access information by talking to AI in Ilocano. Surprisingly, the most engaged tended to be women in their 50s and 60s, who worried for their grandchildren’s increasingly bleak future in farming. On the lighter side, a joke that it might help them better pick lottery numbers elicited much laughter.

“What do I plant, and when?” was by far the most frequently asked question. AI first asked for soil test kit results—none had them, but many seemed convinced the P500 they cost was now worth the investment if AI could tell them what crops suited their soil best.

Answering the question of when to plant was far more complicated, as it is a function of estimated market pricing. Though AI provided a range of values (with a wide range of error), the AI prefaced its answers with a warning that there wasn’t enough information available online to provide more concise estimates.

This did not surprise them. One farmer shared how, after selling her potatoes for P20 per kilo to the trader who would bring them to the trading post, she later found out the market price was actually P35.

Nor did it surprise me. At the La Trinidad Trading Post, despite all the noise of trucks coming and going, loading and unloading, I sensed a different kind of silence in the absence of the price board I had expected—whispers between traders that I thought would’ve been shouts to secure the best deals. A single whispered price could decide an entire week of meals and school supplies, it seemed.

Farmers may not understand that they suffer from what my economics class refers to as information asymmetry, but they told me they were hopeful prices would become more transparent someday. Sharing those hopes, I spent the rest of my summer interning at MBC.

The MBC agriculture committee shares those hopes as well, and more. If AI can help even illiterate farmers with neem oil and soil tests, we imagine what it might do if it had access to price data. Could it result in fairer pricing from middlemen, harvests timed to market demand that even out prices, reducing the scarcity that necessitates imports?