The document proposes a virtual market system to reduce transaction costs and bridge the economic divide in South Africa's dualistic agricultural sector. It notes the large gap between commercial farmers and small-scale or household farmers in terms of access to markets, financing, and information. A virtual market system could integrate mobile communications technologies, geospatial positioning, trade platforms, and microfinancing to help small farmers access markets, financing, and extension services. This would require collaboration between farmers, researchers, extension officers, government, businesses, and information and communications technology developers. The goal is to improve livelihoods and food security in South Africa by leveraging existing technologies and solutions to create an integrated virtual market system.

1. VIRTUAL mMARKET SYSTEM
REDUCING TRANSACTIONS COSTS TO
BRIDGE THE ECONOMIC DIVIDE
Armour RJ,
Bloemfontein
jack.vslandbou@gmail.com

2. The Problem:
• Dualistic Agricultural sector in South Africa
• Factors affecting Markets Access:
– Transactions costs
– Economies of scale
– Gap between the formal and the informal markets
30 000 Commercial farmers
National food security &
International Trade (forex)
300 000
Small Scale farmers
mostly former homelands
Local food security?
3 000 000
Household and backyard
gardeners
Household Food Security?
/ Food Sovereignty?
-Access to Markets
-Access to Finances
-Access to Information

3. Literature Review:
• Groenewald (2003) Conditions for successful Land Reform:
“Complementary services and infrastructure are needed in the form
of improved access to financial services, markets and inputs and also
improved transport, health, communications and other
infrastructure.”
• Dr E. Gabre-Madhin (2006) AEASA Simon Brand Memorial Address,
then Program Leader for Ethiopia’s Development Strategy and Governance,
now CEO of Ethiopian Commodity Exchange, stated :
“the 2nd revolution will be in markets:
– “New exchanges” (self regulated)
– “086 Ag-trade network”,
– low cost V-SAT technology making rural entrepreneurs into
knowledge brokers.
– A warehouse / silo = a potential bank!”

4. WEF
research
2009-11
Boston
Consulting
Group

7. “Mobile communications can help to meet the challenge of feeding an estimated 9.2 billion people by 2050.
The 12 specific opportunities explored in this study could increase agricultural income by around US$138
billion across 26 of Vodafone’s Markets in 2020.” - Sept 2011

8. ICT / services Gap
• Grameen Foundation AppLab MTM Uganda case:
– Google Earth has the GIS positioning Technology
– Google Trader has the virtual trade platform
– Google sms provides the extension platform
– Grameen Bank - micro-finance (MPESA in Kenya)
• OPPORTUNITY:
– Integrated solution with central database,
– Incentivizing NARYSEC & extension officers
– Corporate social responsibility,
– Targeted GeoTag Advertising

9. The proposed
VIRTUAL mMARKET SYSTEM

10. CONCLUSION
This paper is a plea to bridge the industry and
digital divide:
•Between farmers, agricultural & social development
researchers, extension officers, Government officials
and agri-business practitioners and the often very
distant ICT applications programmers and developers.
NAMC, the Meraka institute mLab and Mobile operators are
key stakeholders in SA.
Working together as an integrated team and with the
correct structures and systems in place, we could do far
more toward achieving Improved Livelihoods and Food
Security in South Africa and beyond.

11. Key ROLE-PLAYERS:
Research Corporate Finance
Supplier
development fund

12. Thank You!
Armour RJ,
Bloemfontein
jack.vslandbou@gmail.com