• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
The impact of mobile phones on profits from livestock activities – evidence from puno, peru - Roxana Barrantes (2010)
 

The impact of mobile phones on profits from livestock activities – evidence from puno, peru - Roxana Barrantes (2010)

on

  • 1,202 views

Besides the work of Jensen (2007), there is little quantitative evidence on the impact that mobile telephony has had on ...

Besides the work of Jensen (2007), there is little quantitative evidence on the impact that mobile telephony has had on
household welfare. In considering the rural household welfare, the possibility is open of finding impacts of information that is
accessed via mobile phone in several markets where rural households are usually inserted: agricultural product markets,
agricultural services markets, agricultural byproducts; but also in labor markets that often supplement income diversification
strategies of these households. Using a database collected to measure the impact of mobile telephony in the welfare of rural
households in Puno, Peru, this paper seeks to focus attention on the markets for agricultural products and by-products. The
aim is to measure the contribution that has the use of mobile telephony in the profits resulting from the development of
agricultural activities, using econometric techniques associated with quasi-experimental methods of impact assessment. How
much does the mobile phone contribute to agricultural earnings? What is the differential impact of mobile phone use vis-a-vis
scale variables such as farm size or the number of cattle, or diversification, as the total number of crops, or vertical
integration, as the production of agricultural products, on the results of farming? We expect to find different impacts
depending on the type of use of mobile telephony, ie if used for information to affect the agricultural production function or
is used to make marketing decisions. The results can help justify public policy efforts to include mobile telephone service as
a basic service as well as the development of specific mobile livelihood services for farmers from the mobile communication
technology, yet absent in Latin America.

Statistics

Views

Total Views
1,202
Views on SlideShare
1,202
Embed Views
0

Actions

Likes
0
Downloads
15
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

CC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike License

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    The impact of mobile phones on profits from livestock activities – evidence from puno, peru - Roxana Barrantes (2010) The impact of mobile phones on profits from livestock activities – evidence from puno, peru - Roxana Barrantes (2010) Document Transcript

    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru The impact of mobile phones on profits from livestock activities – Evidence from Puno, Peru Roxana Barrantes Instituto de Estudios Peruanos roxbarrantes@iep.org.peBIOGRAPHYPhD-University of Illinois at Urbana-Champaign. Currently, Principal Researcher at Instituto de Estudios Peruanos (IEP),and Associate Professor, Department of Economics, Pontificia Universidad Católica del Perú. She is member of the SteeringCommittee of DIRSI (Regional Dialogue for the Information Society) and member of the Scientific Committee of thePICTURE-Africa Research Project.ABSTRACTBesides the work of Jensen (2007), there is little quantitative evidence on the impact that mobile telephony has had onhousehold welfare. In considering the rural household welfare, the possibility is open of finding impacts of information that isaccessed via mobile phone in several markets where rural households are usually inserted: agricultural product markets,agricultural services markets, agricultural byproducts; but also in labor markets that often supplement income diversificationstrategies of these households. Using a database collected to measure the impact of mobile telephony in the welfare of ruralhouseholds in Puno, Peru, this paper seeks to focus attention on the markets for agricultural products and by-products. Theaim is to measure the contribution that has the use of mobile telephony in the profits resulting from the development ofagricultural activities, using econometric techniques associated with quasi-experimental methods of impact assessment. Howmuch does the mobile phone contribute to agricultural earnings? What is the differential impact of mobile phone use vis-a-visscale variables such as farm size or the number of cattle, or diversification, as the total number of crops, or verticalintegration, as the production of agricultural products, on the results of farming? We expect to find different impactsdepending on the type of use of mobile telephony, ie if used for information to affect the agricultural production function oris used to make marketing decisions. The results can help justify public policy efforts to include mobile telephone service asa basic service as well as the development of specific mobile livelihood services for farmers from the mobile communicationtechnology, yet absent in Latin America.Keywords (Required)Mobile phone use, agriculture, rural areas Latin America, Peru1. INTRODUCTIONIn less-developed countries, mobile phones are the preferred means of access to telecommunications services, particularlyamong the poor, who show different strategies that combine mobile phones to receive calls and public telephones to makecalls (Galperin and Mariscal (2007), Barrantes (2007), Gutierrez y Gamboa (2007), Ramírez and De Angoitia (2008), amongothers). In rural areas, which usually lack fixed telephony and public phones, there was a delay in the expansion and,therefore, adoption of mobile phone service. In addition, poverty is concentrated in rural areas, making them unattractive forcommercial service expansion. Despite these difficulties, mobile phones are widely used in rural areas, although subscriptionto pre-paid phones lags behind use, and post-paid service is almost non-existent. The discrepancy between use andsubscription is partly explained by the widespread availability of mobile call services offered by street vendors; this service isessentially a substitute for public phones.Using quantitative data gathered in the area of influence of two rural markets in Puno, in southern Peru, where livestockraising is as important as crop farming, this paper aims to identify the contribution of mobile phone use to profits derivedfrom agricultural activities. The impact of ―directly productive‖ uses, such as communicating with clients, suppliers orproducers‘ associations, on agricultural profits is identified. Based on previous work (Barrantes, Agüero, Fernández-Ardevol,2009) which examined the effect of mobile phone use on household welfare, this paper focuses on the productive side of theProceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 181
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peruagricultural household, and does not consider the possible contribution to family welfare of the inclusion of householdmembers in labor markets. This paper builds upon Barrantes (2010) by focusing on mobile phone users and refining theeconometrics for households whose main activity is livestock husbrandry.The evidence shows a strong effect of mobile phone use on profits from livestock, that does not extend to explaining profitsfrom crop farming. Moreover, the distinction introduced in this paper between mobile phone use for obtaining informationrelevant for the production function and the information needed to marketing decision making is proved to be significant inthe case of livestock husbandry. As expected, variables such as the household‘s commercial orientation or the verticalintegration of the production process are also important in explaining the level of profits attained. Because mobile phone useis very recent for these producers, the median length of use being 12 months, information relevant to production processesthat is gathered by using the mobile phone does not yet have a significant impact on crop production and does not have theexpected effect on livestock production.The structure of the paper is as follows. This introduction is followed by a brief description of the study area. The nextsection describes the analytical framework. Econometric results are presented in the fourth section. The paper ends with finalcomments and pending research questions.2. DESCRIPTION OF THE STUDY ZONEThe information used in this study was collected in June and July 2008 as part of the study of ―Mobile Communications andDevelopment in Latin America,‖ funded by the Fundación Telefónica and led by the Universitat Oberta de Catalunya (UOC).A random sample of homes was chosen in the areas of influence of two markets in the Puno region, in southern Peru 1, toevaluate the impact of the introduction of mobile telephones on daily life in rural homes. One person between ages 13 and 70was randomly chosen from each household to learn about mobile phone use. This informant was given an additionalquestionnaire about the use of mobile phones and other ICTs in general.The markets were chosen controlling for similar key characteristics: altitude and population. Altitude is a very importantgeographical constraint in the area of the Collao Plateau, which is part of the Lake Titicaca ecosystem. 2 Local altitudes on theplateau exceed 3,500 meters above sea level. Unlike the rest of the Peruvian Andes, it is basically flat, with few of the steepslopes that make productive activity difficult. Although the slopes are relatively gentle, households in this area of Puno faceextreme weather conditions during the day and/or throughout the year. In winter, they suffer ground frost, which hits themhard and for which they are not prepared. Besides geography, the study looked for similarities in the size of the villages,measured by number of inhabitants, and the poverty level of the households, using unmet basic needs as the indicator.3 Themarkets were chosen based on those three basic criteria.The markets chosen were in Asillo and Taraco, in the provinces of Azángaro and Huancané, respectively. From Juliaca, thecommercial capital of Puno, it takes about an hour to reach either of them on a paved road.4 Asillo‘s market day is Sunday,while the Taraco market is on Thursday. Both are held from 5 a.m. to 3 p.m. Six districts were identified in the Asillo marketarea and 10 in the area near the Taraco market.Table 2.1 shows the poverty indicator based on the number of unmet basic needs (UBN) for the households in the samplesurveyed for the qualitative study. Three of every four households have at least one UBN, which is well above the national-level indicator. Table 2.1 Unsatisfied Basic Needs (UBN) in the study area Indicator Sample* Asillo* Taraco* Puno** Peru** No UBN 24% 20% 27% 26% 41% 1 UBN 33% 33% 32% 20% 19% 2 UBN 29% 28% 30% 24% 18%1 A map can be found in the annex.2 See Parodi (1995).3 See Feres y Mancero (2001).4 Both villages can be reached from Lima via Juliaca (San Román province), which has an airport. The flight takes about anhour and a half. Once in Juliaca, visitors can travel to Asillo by public transportation (bus). The fare is S/.4.00 Sol (US$ 1.30)and the journey takes about two hours. Visitors can travel to Taraco from Juliaca by rural vans (called ―combis‖), a trip thattakes about 45 minutes and costs S/.2.50 (US$0.83).Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 182
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru 3 UBN 11% 15% 8% 18% 14% 4 UNB 3% 4% 3% 10% 8% 5 UBN 0% 0% 0% 1% 1% Source: * Survey (Barrantes, 2008) and ** ENAHO (National Living Standards Survey) 2007, for Puno and Peru.3. FRAMEWORK FOR ANALYSISIt is widely recognized that in developing countries, mobile telephony, chiefly for low-income sectors and rural areas, hasgiven people their first opportunity to access telecommunications. When people use mobile telephones, they obtaininformation and lower the costs of communicating, helping them establish more solid positions in markets, gain access tonew markets, and increase their income by reducing losses from price dispersion.Jensen (2007) conducted the study that has had the greatest impact on knowledge of the effects of mobile telephones, bydemonstrating that rent dissipation caused by incomplete information is reduced by using mobile telephones, which supportsthe law of a single price and the efficient working of markets, in the context of fresh fish markets in Kerala, India. Similarly,with evidence collected in Niger, Aker (2008) found that the use of mobile telephones reduced price dispersion in the grainmarket; the decrease was greater in more remote markets with less access. It is important to note that these two studies focuson the role of the information mobile telephones provide in marketing activities, not in those related to what economists willcall the production function.Esselaarc et al. (2007) studied the impact of ICTs in small businesses and microenterprises in 13 countries in Africa. Themain finding was that these technologies are highly productive inputs, because they reduce transaction costs and providegreater market access both for the formal and informal sectors. They stress the use of mobile phones, reporting an immediatebenefit because they are easy to use and are widely available.As in other research (Galperin and Mariscal, 2007; De Silva and Zainuden, 2007), this study distinguished between the ownerof the telephone (subscriber) and the user. Due to affordability constraints, the user may not necessarily be the subscriber. Infact, survey figures show that 76 percent of interviewees are service users, and of these, just two-thirds are subscribers. Themobile telephone is shared by members of one family or by various friends. There is also a considerable supply of callsthrough mobile phones for public use, by street vendors or chalequeros who offer the service, or through phone booths ortelecenters.5This study begins with a simple household production function model, to explain not the level of production, but the level ofprofit from livestock and crop farming. While the interaction between those activities is recognized, this study separates theestimated profit from crops from the profit from livestock. In each case, direct sales and by-products are added. While theformer constitute a primary activity, the latter represent processing, postulated to give greater added value to primaryproduction.Profit (the difference between revenue and costs) is therefore due to two factors: production and marketing. In the area ofproduction, I argue that profit depends on the level of certain stocks of human and natural capital. Marketing management isalso the outcome of decisions linked to stock flows, reflected in the degree of insertion in markets. Besides these variables,which are typically discussed in the literature, and which explain small farmers‘ production decisions and outcomes, thisstudy also includes characteristics and perceptions of the use of mobile phones for obtaining information for production andmarketing decisions. The variables, their definitions and the underlying hypothesis are summarized in Table 3.1.The variables chosen to reflect human capital stock are: total size, indicated by the number of household members; theproportion of adults, which reflects the importance of the most productive labor; and accumulated human capital, based onthe educational level of the household member with most years of schooling.I also consider variables associated with the use of the mobile telephone as a production input:using the mobile phone tocommunicate with clients, suppliers or producers belonging to associations, which indicates a connection with marketing5 Chalequeros are people who hire out mobile telephones by the minute. They usually work in village squares or on busystreet corners and they wear bright-colored vests (hence the name, which comes from the Spanish word for vest, chaleco).Their rates are lower than public telephone and pre-paid phone rates.Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 183
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Perudecisions; using the mobile phone to obtain information about crop or livestock production, which indicates a connectionwith production decisions; or a perception that communication has improved with the use of the mobile telephone.The models include a dummy variable that places the household in the area of influence of a particular market, with Taracohaving a value of zero.In the case of natural capital, crop farming is distinguished from livestock raising. For crop farming, the model considersaverage farm plot size, which indicates the possibility of achieving economies of scale in production; the number of plots,which reflects both a possible strategy for reducing climate risks and the division of land, which is an obstacle to theincreases in efficiency that are possible with a higher productive scale; and the number of crops, which shows crop diversityand risk reduction, as well as a lack of specialization, which can negatively affect profit.Market orientation and production results are measured by various ratios. First, as an indicator of the importance of primaryactivities, is the relative importance of crop sales in total sales. Second is the relative importance of crop production formaking agricultural by-products, which shows vertical integration; and the proportion of fodder crops in total agriculturalproduction. The third factor is the importance of the main crop as an indicator of specialization and possible associatedefficiencies.The analysis of livestock husbrandry differs from that of crop farming in the definition of natural capital variables and theratios that reflect market orientation. As natural capital variables, the study considers the number of species of animals, whichis an indicator of diversification and risk reduction, but which is also an obstacle to obtaining the benefits of specialization;the number of heads of the most valuable kind of animals, as an indicator of productive specialization; and average pasturesize. The variables used to analyze market insertion reflect the relative importance of certain types of production: livestockvalue compared to total added value, as an indicator of the importance of primary activities; the value of the main speciescompared to the total for all livestock, as an indicator of specialization; the importance of fodder crops; and the value of themain by-product as a percentage of all by-products.Table 3.1: Variables included in the econometric analysis Type -Variable Indicator Definition / Hypothesis Measurement unit Agricultural profit is he difference between revenue and total agricultural expenditure. Agricultural income is the sum of the Continuous total value of agricultural production, Agricultural profit (Current Soles) the value of agricultural by-products and the total value of forest production. Agricultural expenditure isEndogenous the sum of wages, animal and machinevariable hiring and other inputs. Livestock profit is the difference between revenue and total livestock expenditure. Continuous Livestock profit Livestock income is the sum of the (Current Soles) value of revenue from livestock activity (sale of animals) and the total value of livestock by-products. The value of this variable is the total Discrete number of members in each Number of household household. A higher value is related membersHuman capital to higher profits, because it minimizes the need to hire labor. Proportion of adults en in Continuous This ratio is the quotient of adults per household (Real number between 0 and household (between ages 15 and 65)Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 184
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru 1) divided by the total number of household members. A higher ratio means higher profit, reflecting a more productive labor force. Highest level of education Discrete A household member with more achieved by a household education can have a positive impact member Whole number on productivity. The value is the number of plots of the household. A higher number may be related to Discrete land fragmentation, which results in Number of plots difficulties in achieving economies of Whole number scale. It could therefore be associated with low productivity, which negatively affects the level ofNatural capital - agricultural profit.Agriculture A smaller average plot size may Continuous Average plot size adversely affect productivity and thus (Hectares) the level of agricultural profit A larger number of crops in the portfolio is expected to be associated Discrete with lower levels of agricultural Number of crops (Whole number) income and difficulties in specialization, which makes it more difficult to achieve economies of scale. The number of species of animals raised by the household. Discrete A higher number of species shows Number of species Whole number greater diversification and thus a reduced risk, which can have aNatural Capital – positive impact on livestock profitLivestock level.production The main animal is the one that contributes the greatest added value Number of head of the main Discrete associated with livestock. animal Whole number A larger number of animals is expected to be associated with greater livestock profit. Value of production of Continuous Higher value implies greater fodder crops per hectare productivity, and greater agricultural tilled (including own and (Current Soles) profit is therefore expected. rented)Productive results For greater integration of crops and Ratio: Value of fodder crops Continuous livestock, the importance of fodderand marketorientation - / Total value of agricultural (Real number between 0 and crops may reflect vertical integrationAgriculture production 1) and be associated with higher profit levels. Ratio: Value of production This ratio reflects the importance of devoted to making Continuous vertical integration and may reflect agricultural by-products / (between 0 and 1) higher profit levels. Total value of agriculturalProceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 185
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru production Ratio: Value of main crop / Continuous Indicates greater specialization and is Total value of agricultural related to higher productivity and production (between 0 and 1) profit. If a crop-farming household also raises livestock, the result could be risk Dichotomous reduction through diversification, but Livestock raising household = 1 if agricultural household also higher diversification and difficulties in achieving economies of scale. Value of fodder production Continuous Higher value implies greater per hectare tilled (including productivity, so higher livestock profit own and rented) (Current Soles) is expected. This ratio shows the relative weight ofProduction Importance of by-product Continuous livestock by-products in the totaloutcomes and sales compared to total added value. This may be related tomarket orientation added value of livestock (Real number between 0 and greater productivity and thus be– livestock production 1) associated with higher levels ofproduction livestock profit. Importance of main by- Continuous Indicates greater specialization and is product sales compared to related to greater livestock total livestock by-product (From 0 to 1) productivity and profit. sales Multiplicative variable that establishes Dummy – used mobile to interaction between the variable ―use Dichotomous get information about … of information from third parties for = 1 if mobile was used for agricultural production‖ and the --either agricultural crops or that purpose. variable ―use of mobile phone for livestock production obtaining information‖. Continuous (months) Having used a mobile phone for a Length of time mobile Categorical longer time reflects greater familiarity phone has been used Under 1 year. with it and knowledge of its use. This From 12 to 24 months may help in obtaining information. Over 24 monthsMobile phone asproduction input The variable considers the informant who uses the mobile phone to communicate with clients and/or suppliers and/or members of producers Used mobile phone to associations or cooperatives. communicate with clients, Dichotomous Decreased transaction costs can have a suppliers or members of = 1 if mobile was used for positive effect on the levels of profits. producers‘ associations that purpose. In the OLS models, only (dummy) communication with clients or suppliers is considered. The IV models add communication with members of producers‘ associations or public agencies. Dummy if perceived Dichotomous =1 if If the informant perceives improvement in communication is perceived improvement in communication, thisProceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 186
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru communication to have improved a little or may signal full integration of the greatly mobile phone into everyday activities. DichotomousLocation Market A location variable. = 1 if the market is in Asillo.4. EMPIRICAL ANALYSISThe empirical strategy is to explain the level of earnings in the respective activity (crop or livestock). The level of profits canbe explained or per capita household level. Unlike Barrantes (2010), where the emphasis was placed on comparing usersversus non-mobile users, this paper emphasizes the different potential uses of mobile phones both in the field of marketingdecisions and of the production sphere as well. Hence the analysis is restricted to agricultural households where the informantis a user and also is the head of household or spouse.The emphasis is thus placed in elucidating the role of using the mobile phone in decisions related to agricultural production inthe dimensions affecting the production function. It is postulated that the mobile phone plays a role as a productive input,when it allows to access information more cheaply and timely than other ICT. The effect of using this information is differentwhen it pertains to aspects related to the production function, ie the combination of inputs to produce, as compared to thoseaspects related to marketing, ie, decisions of the time and place of sale. Consequently, the effect of mobile phone use will bedifferent if it involves decisions on production or on marketing decisions.To account for the varied possible productive uses of the mobile phone, several indicators were used as regressors: whetherthe informant used the mobile phone to get information for the production process (agricultural or livestock), whetherinformation obtained from family members was used in production combined with whether the mobile phone was used tocommunicate with family; and if the informant used the mobile phone to communicate with customers, suppliers, similarbusinesses, association, cooperative, or any support institution. The first two correspond to uses that would affect theproduction function and the last indicator reflects mobile use to affect marketing decisions.Obviously, agricultural production or livestock production or the respective by-products, depend on other inputs as well asother controls - such as, for example, the location of the fair. The variables and indicators used can be found in Table 3.1, andwere explained in the previous section.It is important to stop and explain a key element of the empirical strategy, which is the use of instrumental variables. It seeksto unravel the problem of causality involved when the mobile phone is used as an explanatory variable of the level of profits,as it reflects the access to information as a productive input, when it could well be that the level of earnings accounts for thehighest probability of using the mobile as productive input, as communication is key to successfully penetrate markets. Then,using the 2SLS procedure, the productive use of mobile phones is instrumented with three variables: being a subscriber, to bea user for a longer period of time, and to perceive a higher quality of service.The database contained information from households that stated that their permanent activity was crop farming (699) andthose that said they were dedicated to raising livestock (690). There could be some overlap, because the two activities tend tobe complementary for rural families (667 households). However, since the goal was to identify the impact of mobile use as aproductive input, the regression analysis only included households where the informant was a mobile phone user. Therefore,the total number of households for each kind of activity shrank: from 699 to 427 for agriculture, and from 690 to 393, in forraising livestock.Similarly, households are grouped by main crop, or by the most important type of herd, or main byproduct. The hypothesis tojustify this strategy rests on the different productive cycles and marketing of various products, which can be more clearlyappreciated when isolated regressions are run. The descriptive statistics for all variables used can be found in Appendix 1.4.1. Profit from raising livestockThe set of regressions explaining the level of profits attained from raising livestock –be it total level or per capita— can befound in Table 4.1. Models 1 and 2 consider all households, while regressions 3, 4, and 5 consider households which raisevacuno criollo, and regression 6 is run on milk producers –what is considered a by product of livestock raising.Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 187
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, PeruThe results of the regressions, run on the natural logarithm of the dependent variable, are shown in Table 4.1., and reflect anappropriate overall goodness of fit for all models. Further tests were run on both coefficient bias, and instrument strength,yielding acceptable results.6The use of mobile phones to communicate with clients, suppliers and members of producers‘ associations shows the expectedpositive sign and is statistically significant in all models. On the other hand, the use of mobile phones to gather information todecide on productive aspects of raising livestock show a negative sign and is statistically significant only when all raisinglivestock households are considered. The effect of mobile use runs in opposite directions in the sample: positive forcommunications for marketing and negative for directly productive use –those affecting the production function.Insertion in fodder markets and specialization, reflected in the relative importance of the main by-product in total valueadded, are statistically significant and show the expected positive sign. Livestock size also positively influences the level ofprofits. Livestock profits are not affected by market location, as shown by the coefficient on Fair.In Model 2, variables of scale of production (number of most important animal heads) and the variables that indicate verticalintegration (fodder crops and the importance of by-products in total livestock production), are also significant. In the lattercase, it is interesting that the greater the importance of byproducts, the smaller the profits from raising livestock, indicating aninternal subsidy. Human capital variables are not significant in any of the models.6 Shown in Table 4.1 by the Cragg-Donald statistic and the F-Test for excluded instruments.Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 188
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, PeruTable 4.1. Regression Results Livestock HH Vacuno criollo HH Milk producers Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Per capita profits Profits when Per capita profits when Profits when when respondent is respondent is user respondent is user and Profits when respondent is user and head of respondent is user user and head of and head of head of household or household or spouse and head of Dependent variable (ln) household or spouse household or spouse spouse household or spouseExplanatory variablesMobile phone used to communicatewith clients and suppliers, similarbusinesses, producers’ associations orsupport agencies 0,4406106 * 0,457231 ** 0,6686473 * 0,571353 ** 0,5798816 ** 0,7134942 ** (0,2458339) (0,2592699) (0,271398) (0,2567895) (0,2684291) (0,2871292)Mobile phone used to obtaininformation about livestockproduction -0,1226931 ** -0,111385 ** -0,1182095 -0,105943 -0,1055344 -0,1080199 (0,0279835) (0,0656013) (0,078197) (0,0724004) (0,073036) (0,0830563)Highest level of education reached bya member of household -0,0001607 0,0122159 0,012208 -0,0028791 (0,0085812) (0,0099088) (0,0095558) (0,0092092)Share of adults in household -0,0441548 0,0128619 -0,0679248 (0,1033706) (0,1153263) (0,1082217)Ratio: Total value of livestock by-products/Total added value oflivestock production -0,2516858 *** -0,2075331 *** -0,4251128 *** -0,3508229 ** -0,3599909 *** -0,6868591 *** (0,0789144) (0,0757046) (0,1120549) (0,0978637) (0,1032908) (0,0972016)Ratio: Sales value of main by-product/total value of livestock by-products 0,3066641 *** 0,2949658 *** 0,3650294 *** 0,3333376 ** 0,3317105 *** 0,2131643 *** (0,0637117) (0,0608551) (0,0770273) (0,07137) (0,0714842) (0,0625804)Value fodder production per hectaretilled (includes own and rented) 0,0000742 ** 0,0000681 ** 0,0000488 0,0000432 * 0,0000469 * 0,0000495 * (0,0000296) (0,0000277) (0,0000299) (0,0000243) (0,0000275) (0,0000267)Number of species 0,1244187 *** 0,1549703 *** 0,0389867 0,0743231 * 0,0750054 * 0,0348474 (0,0279835) (0,0273239) (0,0415321) (0,0401105) (0,0402174) (0,0321752)Number of heads of main animal 0,0001586 *** 0,0001264 ** 0,0001214 ** Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 189
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru (0,0000487) (0,0000498) (0,0000532)Fair (Asillo = 1) 0,1231607 * 0,096161 0,0425908 0,0229301 0,135 * (0,0676947) (0,0620557) (0,0748523) (0,069978) (0,0711188)Constant 6,726398 *** 7,892213 *** 7,023034 *** 8,032066 *** 8,01232 *** 8,555354 *** (0,0800741) (0,1173034) (0,1291656) (0,1280472) (0,1438166) (0,1455535)Goodness of Fit Statistics Number of observations 393 393 253 253 253 294 Degrees of freedom 7 10 7 8 10 9 Cragg-Donald Statistic 11,463 9,377 8,699 7,438 7,041 6.480 F-test for overall instruments 2,21 * 2,80 ** 2,35 * 3,07 ** 2,97 ** 2.76 ** Centered R2 0,1113 0,1569 0,0814 0,1587 0,1554 0.1008 Uncentered R2 0,9957 0,9972 0,9956 0,9973 0,9973 0.9975Instruments: Length of use of mobile, perception of improved quality, terminal ownerStock-Yoho Critical Values: 5% maximal IV relative bias 13,91 10% maximal IV size 22,30 10% maximal IV relative bias 9,08 15% maximal IV size 12,83 20% maximal IV relative bias 6,46 20% maximal IV size 9,54 30% maximal IV size 5,39 25% maximal IV size 7,80Standard errors in parenthesis*** Significance level = 0,01 ** Significance level = 0,05 * Significance level = 0,10 Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 190
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru4.2. Crop farming profitThe hypothesis is that the level of profit from crop farming, either total or per plot, depends on the levels of human capitaland natural capital stock, the degree of specialization and market orientation, and the use of mobile telephones to facilitateaccess to information and reduce overall transaction costs.None of the models showed statistically significant results for any of our variables indicating mobile phone use.FINAL COMMENTSUsing quantitative evidence gathered in the area of influence of two rural markets in Puno, in southern Peru, this paper showsthe positive effect of mobile phone use on profits from livestock production in rural households. Higher profits are explainedby the use of mobile phones by heads of households or spouses who make calls to clients, suppliers, similar businesses,producers‘ associations or support agencies.In contrast to our initial expectation, the econometric results did not extend to agricultural profits. None of the postulatedvariables indicating mobile phone use, either for production or marketing decision making, were significant in explainingagricultural profits.The underlying hypothesis in the econometric modeling is that the cost of looking for new markets for a particular product islower than the cost of adopting new techniques, which may be associated with modification of the product. Informationleading to product modification may take longer to permeate entrenched agricultural practices that have proven to reduce riskover the years. The possible positive effects of the use of mobile phones on profit of raising livestock, occur first in marketingand are not yet manifested or perceived in defining parameters for production, that is obtaining information about raisingparticular animals or producing by-products.This possible differentiated effect could mainly be a response to the fact that these decision-makers have used mobile phonesfor only a short time, an average of barely over a year -16 months. During that time, they have made many more marketingdecisions about the farm household‘s products or by-products than about production (decisions associated with the crop cycleor animal reproduction cycle). Given this length of use, it may be too early to assess the directly productive impact of mobilephone use for these rural producers.Nevertheless, it is important to note the statistically differentiated effects observed when explaining agricultural profitscompared to livestock profits. The latter appear more conclusive than the former. This could be because the production timeframe is more flexible for livestock production than crop farming. The qualitative evidence gathered for the study (Aronés,León y Barrantes, 2009), showed that timely contact with a veterinarian was key to increasing livestock productivity; this wasachieved by using the mobile phone. No similar key use of the mobile phone was documented for crop production.On the other hand, emphasizing calls to clients and suppliers as an indicator of the productive use of the mobile telephoneoverlooks the fact that these households‘ information networks are crisscrossed by solid kinship relations in contexts in whichmarket transactions have not yet permeated a wide array of activities, as they would in more modern or urban areas of thecountry. It is difficult to determine when a call to a relative stops being ‗unproductive‘ and becomes a productive call (i.e.,related to a decision about where to sell, price, inputs, etc.). Clearly this is an area for further investigation.ACKNOWLEDGMENTSI would like to thank several IEP young researchers: Ramón Díaz for initial discussions, which helped me define theapproach; Ramiro Burga, who pursued the econometrics; Aileen Agüero, who contributed to the literature review, and OscarMadalengoitia, who drafted the map. Comments by Jonathan Donner, Mireia Fernandez-Ardevol and participants at theConference on Development and Information Technologies: Mobile Phones and Internet in Latin America and Africa: WhatBenefits from the most disadvantaged? held in Barcelona in October 2009, are greatly appreciated. The usual disclaimerapplies.REFERENCES1. Aker, J. (2008) Does digital divide or provide? The impact of cell phones on grain markets in Niger. Berkeley: University of California. http://are.berkeley.edu/~aker/cell.pdf (20/04/09).Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 191
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru2. Aronés, M., León, L. y Barrantes, R. (2009) La telefonía móvil en el ámbito rural. Estudio cualitativo de las áreas de influencia de las ferias de Asillo y Taraco, en Puno – Perú. Mobile Communications and Socioeconomic Development in Latin America Project. Final report. Unpublished manuscript.3. Barrantes, R. (2007) Oportunidades móviles: pobreza y acceso a la telefonía en América Latina y el Caribe. El caso de Perú. Lima, DIRSI. http://dirsi.net/sites/default/files/dirsi_07_MO_per_es.pdf. (09/04/10).4. Barrantes, R., (2008) Comunicaciones Móviles y Desarrollo Socioeconómico en América Latina. Módulo II: Proceso social de Desarrollo. Estudio de caso 2: La telefonía móvil en el ámbito rural. Partial report.5. Barrantes, R., (2010) Mobile phones as a tool in the household production process Evidence from Puno, Peru. Communication Technologies in Latin America and Africa: A multidisciplinary perspective. UOC y Agencia Catalana de Cooperació al Desenvolupament. Barcelona. Pp. 87-116.6. Barrantes, R., Agüero, A. and Fernández-Ardevol, M. (2009) La telefonía móvil en el ámbito rural. Estudio de caso de los hogares de Puno-Perú. Mobile Communications and Socioeconomic Development in Latin America Project. Final report. Unpublished manuscript.7. De Angoitia, R. y Ramírez, F. (2008) Estrategias utilizadas para minimizar costos por los usuarios de telefonía celular de sectores de bajos ingresos de México. Lima, IDRC, Serie Investigaciones breves, 2. http://dirsi.net/sites/default/files/dirsi_08_RB2_es.pdf. (09/04/10).8. De Silva, H. and Zainudeen, A. (2007) Teleuse on a Shoestring: Poverty reduction through telecom access at the ‗Bottom of the Pyramid. Paper prepared for Centre for Poverty Analysis Annual Symposium on Poverty Research in Sri Lanka. http://www.lirneasia.net/wp-content/uploads/2007/04/lirneasia_teleuse_cepa_-mar07_v30.pdf (13/01/09)9. Donner, J. (2006) The Use of Mobile Phones By Microentrepreneurs in Kigali, Rwanda. Information Technologies and International Development, 3, 2 – Winter.10. _____, (2008) Research Approaches to Mobile Use in the Developing World: A Review of the Literature. The Information Society, 24, 140–159.11. Esselaarc S., Stork, C., Ndiwalana, A. and Deen-Swarray, M. (2007) ICT Usage and its impact on profitability of SMEs in 13 African Countries. Information Technologies and International Development, 4, 1, 87–100.12. Feres, J., Mancero, X. (2001) El método de las necesidades básicas insatisfechas (NBI) y sus aplicaciones en América Latina. Estudios y perspectivas. ECLAC – United Nations. http://eclac.cl/deype/mecovi/docs/TALLER5/8.pdf. (15/10/08).13. Figueroa, A. (1983) La economía campesina de la sierra del Perú. Lima: Pontificia Universidad Católica del Perú.14. Galperin, H. y Mariscal, J. (2007) Oportunidades Móviles: Pobreza y Telefonía Móvil en América Latina y el Caribe. DIRSI. http://dirsi.net/sites/default/files/dirsi_07_MO_reg_es_0.pdf. (09/04/10).15. Gutierrez, L. y Gamboa, L. (2007) Oportunidades móviles: pobreza y acceso a la telefonía en América Latina y el Caribe. El caso de Colombia. Lima, DIRSI. http://dirsi.net/sites/default/files/dirsi_07_MO_col_es.zip. (09/04/10).16. Jagun A., Heeks, R., Whalley, J. (2007) Mobile Telephony and Developing Country Micro-Enterprise: A Nigerian Case Study. Working Paper Series No. 29. Institute for Development Policy and Management. http://www.sed.manchester.ac.uk/idpm/research/publications/wp/di/documents/di_wp29.pdf (27/04/09).17. Jensen, R. (2007) The Digital Provide: Information (technology), market performance and welfare in the South Indian fisheries sector. The Quarterly Journal of Economics, 122, 3, 879-924.18. Parodi, A. (1995) El lago Titicaca: sus características físicas y sus riquezas naturales, arqueológicas y arquitectónicas. Arequipa, Regentus.19. Souter D., Scott, N., Garforth C., Jain R., Mascarenhas O. and McKemey K. (2005) The economic impact of telecommunications on rural livelihoods and poverty reduction: a study of rural communities in India (Gujarat), Mozambique and Tanzania. Commonwealth Telecommunications Organisation for UK Department for International Development. http://iimahd.ernet.in/ctps/pdf/The%20Economic%20Impact%20of%20Telecommunication%20on%20Rural%20Livelih oods-Teleafrica%20Report.pdf. (08/05/08).Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 192
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, PeruMap 1. Puno and the areas of influence of the Asillo and Taraco marketsProceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 193
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru Appendix 1 – Descriptive StatisticsAll monetary figures are expressed in Soles. Current exchange rate: 2.8 soles per American dollar. Subset: Respondent is user and head of family or spouse, and raising livestock; N=393 Variable Mean Median SD Min. Max. %Yes %Noln Profit per cáp 7.14 7.04 0.50 6.35 9.31ln Profit 8.36 8.30 0.48 7.57 10.42Relative importance of by- 0.43 0.38 0.34 0.00 1.00productsMax edu HH 10.75 12.00 3.26 1.00 16.00Ratio adults HH 0.62 0.60 0.25 0.00 1.00Relative importance of main by- 0.43 0.43 0.43 0.00 1.00productAgri-livestock VI per ha. 751.34 180.00 1229.61 0.00 7045.46Number of species 2.37 2.00 0.94 1.00 6.00Size of main species 16.36 2.00 252.20 0.00 5000.00Market 0.55 1.00 0.50 0.00 1.00 55% 45%Mobile-intra-fam-info 0.80 1.00 0.40 0.00 1.00 80% 20%Quality perception 0.70 1.00 0.46 0.00 1.00 70% 30%Terminal owner 0.64 1.00 0.48 0.00 1.00 64% 36%Length of use 16.40 12.00 15.38 1.00 120.00Mobile-extra-familiar 0.15 0.00 0.36 0.00 1.00 15% 85%Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 194
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru Subset: Respondent is mobile phone user and head of household or spouse, raising vacuno criollo; N=253 Variable Mean Median SD Min. Max. %Yes %Noln Profit per cáp 7.17 7.11 0.50 6.35 9.31ln Profit 8.39 8.32 0.48 7.57 10.42Relative importance of by- 0.40 0.35 0.34 0.00 1.00productsMax edu HH 10.60 12.00 3.31 1.00 16.00Ratio adults HH 0.63 0.60 0.24 0.00 1.00Relative importance of main by- 0.36 0.00 0.42 0.00 1.00productAgri-livestock VI per ha. 1049.21 350.00 1425.89 0.00 7045.46Number of species 2.50 2.00 0.92 1.00 6.00Size of main species 23.38 2.00 314.27 0.00 5000.00Market 0.39 0.00 0.49 0.00 1.00 39% 61%Mobile-intra-fam-info 0.73 1.00 0.45 0.00 1.00 73% 27%Quality perception 0.78 1.00 0.41 0.00 1.00 78% 22%Terminal owner 0.61 1.00 0.49 0.00 1.00 61% 39%Length of use 16.91 12.00 16.64 1.00 120.00Mobile-extra-familiar 0.16 0.00 0.37 0.00 1.00 16% 84%Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 195
    • Barrantes Impact of mobile phone on agricultural profits from livestock activities Evidence from Puno, Peru Subset: Respondent is Mobile phone user and head of household or spouse, and milk producers; N=294 Variable Mean Median SD Min. Max. %Yes %Noln Profit per cáp 7.23 7.15 0.48 6.35 9.05ln Profit 8.45 8.38 0.45 7.61 10.16Relative importance of by- 0.54 0.48 0.30 0.00 1.00productsMax edu HH 10.69 12.00 3.26 1.00 16.00Ratio adults HH 0.62 0.60 0.25 0.00 1.00Relative importance of main by- 0.52 0.74 0.42 0.00 1.00productAgri-livestock VI per ha. 749.85 200.00 1229.92 0.00 7045.46Number of species 2.52 2.00 0.90 1.00 6.00Size of main species 20.31 2.00 291.54 0.00 5000.00Market 0.62 1.00 0.49 0.00 1.00 63% 37%Mobile-intra-fam-info 0.84 1.00 0.37 0.00 1.00 84% 16%Quality perception 0.69 1.00 0.46 0.00 1.00 70% 30%Terminal owner 0.60 1.00 0.49 0.00 1.00 60% 40%Length of use 16.22 12.00 15.60 1.00 120.00Mobile-extra-familiar 0.16 0.00 0.36 0.00 1.00 16% 84%Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 196