Asymmetric information, relational contracts, and prices in fresh produce supply chain in Pakistan

In Pakistan, small-scale potato farmers often sell their produce at low prices. One reason may be that farmers are unaware of potential price gains by selling to a different wholesale agent or varying the timing and/or location of their sale. Farmers may sell to wholesale agents that provide important services such as credit, packaging, and labor which can alter farmers’ incentive to sell to competing buyers, instead accepting a possible lower price from a consistent buyer. Do farmers receive better prices in response to dynamic pricing and wholesale agent information, and what prevents farmers from acting upon such information?

Utilizing government records with daily information on auction prices from agriculture produce markets in Punjab, Pakistan, researchers will design and deploy a platform to introduce dynamic pricing information to small-scale potato farmers. As part of the program, farmers will also receive a directory of nearby licensed wholesale agents with facilitation in forming linkages. This pilot will help the researchers to understand if small-scale farmers are able to utilize the dynamic pricing information and increased market access to obtain better prices for their produce. Based on the success of the pilot, a subsequent large-scale randomized evaluation will seek to generate new evidence on the impact of pricing and market linkages information intervention in the fresh produce supply chain.