Assessing the Impact of Digital Procurement via Mobile Phone on the Agribusiness of Rural Bangladesh: A Decision-analytic Approach

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Assessing the Impact of Digital Procurement via Mobile Phone
on the Agribusiness of Rural Bangladesh:
A Decision-analytic Approach
Md. Mahbubul Alam
Christian Wagner
Abstract The research assesses the impact of a digital pro-
curement (e-purjee) system for sugarcane growers in Ban-
gladesh. The system itself is simple, transmitting purchase
orders to local farmers via SMS text notifi cation. It replaces
a traditional paper-based system fraught with low reliabil-
ity and delivery delays. Applying expected value theory,
and using decision tree representations to depict growers’
decision-making complexity in an information-asymmetric
environment, we compute outcomes for the strategies and
sub-strategies of ICT vs. traditional paper-based order
management from the sugarcane growers’ perspective.
The study results show that the digital procurement system
outperforms the paper-based system by tangibly reducing
growers’ economic losses. The digital system also appears
to benefit growers non-monetarily, because of reduced
uncertainty and a higher level of perceived fairness. Sug-
arcane growers appear to value the non-monetary benefi ts
even higher than the economic advantages of the e-purjee
system.
Keywords Information and communication technology
(ICT), decision analysis, decision tree, digital procurement
system, mobile phone
1 Introduction
Information and Communication Technologies (ICTs) are
now widely used as a tool for national and regional devel-
opment (Cook, 2005; Dada, 2006). The availability of low
cost computing, in the form of mobile phones and similar
devices providing web access, creates opportunities even
for less developed regions. However, the success rate of
ICT-led development projects has been less than satisfac-
tory (Heeks, 2003) in both developing and developed
countries. Frequently the provision of technology without
well identified project objectives, and without change
management leads to slow adoption, reduced benefi ts, and
ultimately project failure. The fact that most ICT-based
projects are donor-funded and jointly operated with the
concerned department of local government may not help,
if projects are development-focused rather than business-
oriented. As a result, many projects run on a pilot basis but
may not be fully functionalized and sustained due to sub-
sequent unavailability of funds (beyond project duration),
lack of commitment, or waning political support (Avgerou,
2008, p.137). The success of such projects may be further
compromised when a donor-aid based project adapts too
little to the contextual factors of the recipient region’s envi-
ronment, such as local technological capabilities (Odedra-
Straub, 1993), human resources capacity (Avgerou, 2008),
or local practices (Bada, 2002; Avgerou, 2002). Frequently
also, there is a challenge in measuring the success or evalu-
ate the contribution of ICTs to the development process,
especially if project objectives are not well defi ned and the
details of existing and new processes are not fully mapped
out.
Consequently, the purpose of this article is to explain
and apply a method by which to determine the economic
value of an ICT-led development project for its users (the
sugarcane growers), using expected value theory combined
with decision tree analysis. The underlying assumption is
that sustained success can only be achieved, if the new sys-
tem creates signifi cant (typically monetary) benefi ts, which
Md. Mahbubul Alam
Affi liation : Department of Information Systems
University: City University of Hong Kong
Email: mmalam2-c@my.cityu.edu.hk( )
Christian Wagner
Affi liation: School of Creative Media and Department of
Information Systems
University : City University of Hong Kong
Email: c.wagner@cityu.edu.hk( )
Agribusiness and Information Management Vol.5, No.1 2013

32
convince users to change past habits and adopt the pro-
cesses associated with the new system. To do so, we depict
the strategies of decision makers under the old, paper-based
and the new ICT-based system, identify best strategies,
and determine the economic value of system adoption for
individual decision makers. The project we analyzed is a
mobile-based e-Government initiative in Bangladesh’s agri-
business, namely the Digital Procurement System for Sug-
arcane popularly known as the ‘e-purjee’ (purjee = purchase
order ticket) system. In performing the analysis, we sought
to illustrate the measurability of project success, while also
shedding light on the need to understand the impact on user
processes, which effect user decision making strategies, and
ultimately project outcomes.
1.1 Agribusiness and ICT in Bangladesh
Governments in developing countries have been keen to
implement an IT-based service delivery model, with the
expectation of significant economic and societal benefits
(Dada, 2006). In the process of building a ‘Digital Ban-
gladesh’ by 2021, the Office of the Prime Minister of
Bangladesh Government together with the United Nations
Development Programme (UNDP) initiated an ‘Access to
Information (A2I)’ program. Both institutions have been
working together to implement ICT-based services in dif-
ferent sectors prioritizing agribusiness, local government,
and education. Initially most of the projects were web-
based. However, the lack of success of web-based services
such as the Agricultural Market Information Systems
(AIMS) together with low IT literacy and IT infrastructure,
brought a shift in focus. In consideration of the high mobile
phone subscription rate, the Government launched mobile-
based services to introduce ICT-based services to potential
users in rural Bangladesh. Among the services, a digital
procurement system for sugarcane became one of the prime
initiatives, jointly operated by Bangladesh Food and Sugar
Industries Corporation (BSFIC) and the ‘Access to Infor-
mation (A2I)’ program. The digital procurement system
(e-purjee system) sends SMS-based purchase orders from
sugar mills to sugarcane growers during crushing season.
It replaces a paper-based system, where the same purchase
orders are delivered by a courier to rural communities and
distributed there manually to local growers. The new sys-
tem was intended to reduce uncertainty in the fl ow of raw
materials to sugar mills, allow faster, less costly, and more
reliable purchase order delivery, and ensure transparency. It
was thus expected to minimize economic losses and physi-
cal hazards in the selling and crushing of sugarcane. The
system was fi rst launched in 2009 in two sugar mills on a
pilot basis. After successful accomplishment of the pilot
phase the project was extended to all of Bangladesh’s sugar
mills in 2010.
1.2 Digital versus Paper-based Procurement of Sugarcane
by Bangladesh Sugar Mills
In the digital procurement system, purchase orders are sent
to sugarcane growers via SMS. These purchase orders rep-
resent permits to supply a specifi c amount of raw sugarcane
to a mill at a predefi ned date. To ensure stable raw materials
fl ows, the sugar mill authority maintains a roster of grow-
ers. The sugar mill authority collects and uploads the con-
tact and farming information of growers in its system, and
issues digital purjees to growers in a system that maintains
a stable fl ow of quality raw materials while also taking into
account the delivery capacity of individual growers (smaller
growers receive fewer purjees). The SMS (e-purjee) retains
detailed purchase information such as quantity (weight
in Kilograms) of raw sugarcane, name of the sale center,
delivery date and time. Generally, one purjee is issued for
each 1200 kg cane to be supplied. Growers either need to
have a cell phone or may register a relative’s or neighbor’s
phone. E-purjees are sent with relatively little lead time,
about three to four days prior to delivery, typically just 1-2
days longer than the time required to harvest the canes, load
them, and deliver them to the mill.
In the traditional system, a paper purjee was sent to
growers, by “hand-to-hand” delivery or via traveling couri-
ers, called Cane Development Assistants (CDAs). Growers
often had to visit the nearest sales center to collecting their
purjees due to a shortage of CDAs. Moreover, the system
had several levels of uncertainty. Purjees took longer time
to reach to the growers and frequently arrived only a day
or two before delivery was due. Sometimes the permit was
lost, while at other times a permit would reach a non-eligi-
ble grower instead, since purjees did not contain growers’
names. These uncertainties affected growers economically,
requiring them to rush the harvesting and delivery to the
mills, or to harvest prior to receiving a ticket and face pos-
sible loss or shrinkage of their crop. The uncertainties also
affected mills due to quality deterioration of harvested sug-
arcane, or operation below scheduled capacity.
1.3 Research Questions
According to stakeholder testimony, the digital procurement
system (e-purjee) has brought benefi ts both for the supply-
side (growers) and the demand-side (sugar mills). The
sugar mill authorities also obtained benefi ts by ensuring a
steady fl ow of quality raw materials during the crushing pe-
riod, improving inventory management and enabling direct
communication with the growers. Most importantly, the e-
purjee system enabled sugar mills to crush the sugarcane
frequently within 24 hours of harvesting. This, according
to news reports resulted in a 7.5 percent increased in sugar
recovery rate for the mills (The NewsToday, 2011). To
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33
explain the adoption of the e-purjee system, however, we
must look at the supply side, namely the economic and pos-
sibly non-economic benefi ts (e.g., transparency) that would
convince local growers to switch from the traditional sys-
tem to e-purjees. After all, if benefi ts only accrued to sugar
mills, but not to cane growers, why should they switch to
the new system? To understand these benefits, the study
formulates two research questions concerning the impact of
digital procurement on Bangladesh sugarcane growers.
1. Does the e-purjee system provide economic benefi ts
to growers, and at what level?
2. Does the e-purjee system provide other, non-econom-
ic benefits to growers, which also would support the
decision to adopt?
In the next section, the paper presents prior research on
ICT-based agricultural market information systems. In Sec-
tion 3, our method of investigating the research questions is
described in detail, while the key fi ndings are reported and
discussed in Section 4, followed by a summary and conclu-
sions in Section 5.
2 PRIOR RESEARCH
The exploration of prior research is divided into two sub-
sections. The first sub-section discusses the roles of ICT
in agribusiness development. The second sub-section ad-
dresses methodological approaches used in prior research
to assess the economic impact of ICT-based initiatives in
developing economies.
2.1 ICT and Agricultural Market Information
With the improvement of telecommunication technology
and particularly the increase in mobile phone subscriptions
of developing countries, new potentialities emerged in the
sector of rural development. ICT-based services, including
those delivered via mobile phone, can aid greatly in eco-
nomic growth and good governance and thus, in develop-
ment process by improving effi ciency, effectiveness, equity
and reach (Hudson, 2006, p.12). Ubiquity and convergence
are the key attributes of mobile technology that not only
lead to better communication but also create opportuni-
ties in exchanging farming information among different
stakeholders in a timely manner. With the existence of a
digital divide, farmers without connectivity are more likely
deprived of access to pricing information across markets,
or deprived from the receipt of time sensitive farming in-
formation (e.g. weather conditions, or pest or farm manage-
ment advisories), resulting in reduced crop yields, lower
selling prices and reduced income (Lwoga, 2010, p. 3). A
summary of research concerning agriculture market infor-
mation via ICT and its impact in developing countries is
presented in Table 1.
The impact of users’ access to information on economic
growth and development, and thus on poverty reduction has
already been well documented in past studies (Salia et al.,
2011). ICT-based solutions, and particularly mobile phone
applications can bring about positive social changes. Adop-
tion of mobile phones by the fi shermen in Kerala, India and
the exchange of pricing information with traders increased
market effi ciency by reducing wastage 6%, reducing cross-
market price dispersion, and increased fi shermen’s profi ts
by 8%, while decreasing customer prices by 4% (Jensen,
2007). A study conducted in Niger found cell phones to
reduce grain price dispersion across markets by a minimum
of 6.4% and to decrease intra-annual price variation by 12%
(Aker, 2008). Elsewhere, Muto & Yamano (2009) docu-
mented that expansion of mobile phone coverage increased
small-scale farmers’ participation in local markets. While
many of these solutions only show single-digit efficiency
gains for any stakeholder group, such an economic benefi t,
combined with intangibles, such as the removal of market
inequalities, appears to provide suffi cient incentive for the
adoption of ICT and its sustained use.
Effi cient communication on pricing in alternative market
outlets and on market demand enables farmers to respond
to market opportunities (Muto & Yamano, 2009; Labonne
& Chase, 2009) and to choose marketing channels from
various alternatives, thereby positively infl uencing selling
intensity (Chowdhury, 2002). Small-scale farmers tradition-
ally depend more on intermediaries than on direct sales
to buyers. In intermediary-based supply chains, farmers
share the transaction surplus with intermediaries and are
often deprived of fair pricing. While intermediaries in the
supply chain of developed economics serve to overcome
transaction costs (i.e. negotiation cost), they tend to be
economically counter-productive to small-scale farmers of
developing countries (Chowdhury, 2002, p.2). ICT-led pric-
ing information can replace the intermediaries and build a
better linkage between sellers and buyers. In addition to re-
ducing negotiation costs and ensuring fair price distribution
across markets, ICT can assist in signifi cantly lowering in-
formation search costs, which typically account for a major
portion of transaction costs. Research shows that informa-
tion search costs represent 11 percent of farmers’ total costs
and up to 70 percent of their transaction costs (Silva & Rat-
nadiwakara, 2008). Information asymmetry can also lead to
higher transaction cost, namely by increasing farmers’ in-
formation search costs and by forcing farmers sell more to
intermediaries (Chowdhury, 2002). Hence, the reduction of
information asymmetry provides considerable opportunity
to improve fairness and economic benefit in developing
economies (Muto & Yamano, 2009). Consequently, many
ICT-based projects have been launched to reduce informa-
tion costs, overcome information asymmetry, and to ensure
Agribusiness and Information Management Vol.5, No.1 2013

34
more transparency in the supply chain. Examples include
Xam Marse (“Know Your Market”) of Senegal, CAMIS
of Cambodia, Farmprice of Zambia, KACE-MILS of Ke-
nya, TradeNet of Ghana, FoodNet of Uganda, RESIMAO/
WAMISNet of Wet Africa and AMIS in Bangladesh (Islam
& Alawadhi, 2008). Still, many of these projects face sus-
tainability problems because they have neither generated
broader economic and societal changes (Pade, et.al., 2006)
nor suffi ciently lowered the access barriers of their intended
users (Kaaya, 2006; Chipchase, 2007; Islam & Alawadhi,
2008). One such project is the web-based Agricultural Mar-
ket Information Service (AMIS) in Bangladesh, which nei-
ther satisfi ed farmers’ informational needs nor suffi ciently
lowered users’ access barriers (Islam & Grönlund, 2007).
2.2 Methodological Approach of ICT-based Projects Evalu-
ation
The major concern of ICT-led projects in developing
countries long term viability, or correspondingly, high
failure rate. Prior research has paid considerable attention
to success and failure evaluation, however the ICT-for-
development (ICT4D) literature still lacks holistic evalua-
tion frameworks for project development and management
(Alshaawi & Alalwany, 2009). ICT4D and mainstream IS
research are similar in some points, yet the issues and ques-
tions in ICT4D research are often quite different (Avgerou,
Aside from lack of economic benefi ts and missed participa-
tion targets, non-persistence or delayed funding (Islam &
Grönlund, 2010b), as well as waning political support and
funding discontinuation (Avgerou, 2008) are the root causes
of IS-projects failure in developing countries. Even after
the successful initial launch, many projects face scalability
problems, either while waiting for a new funding source
or while continuing as part of regular function of the con-
cerned ministry (e.g., AMIS of Bangladesh, Myanmar, Mo-
zambique) (Islam & Grönlund, 2010b). Since achievement
of project goals is a major driver for funding, and funding
is a major factor for project continuation, assessment or
project success is essential to achieving long-term viability.
2008). ICT4D projects are more development focused (non-
business). Their success evaluation thus requires consid-
eration of multiple dimensions, including social, culture,
economic and technical issues (Symons & Walsham, 1988),
plus multiple stakeholder views (Davison et al., 2000).
Hence, prior studies which often discussed success or fail-
ure from an IS design and implementation perspective—
focusing on professional knowledge and practice—often
overlooked the actual conditions of organizational practice
in developing countries (Heeks, 2002, Avgerou, 2008).
Table 2 summaries some of the prior studies on evaluation
approaches of ICT4D projects in developing countries.
Authors Context Method Findings
Islam and
Grönlund,
2007
Web based Agricultural
Market Information
Service (AMIS), Bangladesh
Stakeholder
analysis, design-
reality gap analysis
A gap in technology use and access, plus failure to
address stakeholder needs and preferences resulted
in a lack of project success and sustainability.
Islam and
Grönlund,
2010a
Mobile based Agricultural
Market Information
Service (AMIS), Bangladesh
Users-
Technology-
Process-Facility
Effectiveness of an e-service depends on the design
and delivery of the service in accordance with
individual information needs.
Jensen,
2007
Mobile phone impact on
market performance of
fi shermen, India
Econometric
analysis
Adoption of mobile phones by the
fi shermen reduces price dispersion.
Aker,
2008
Cell phone impact on grain
market, Niger
Econometric
analysis
Cell phone minimizes the price dispersion between
different markets by reducing the search cost,
thus improving fi shermen, consumer, and trader welfare.
Muto and
Yamano, 2009
Mobile phone coverage and
market participation, Uganda
Econometric
analysis
Expansion of mobile phone coverage increases
market participation.
Silva and
Ratnadiwakara,
2008
ICTs and transaction cost
of vegetables growers,
Sri Lanka
Measuring
information cost
ICTs reduce transaction cost through reducing
the information search cost.
Table 1 ICTs impact on agricultural market information dissemination in developing countries
Agribusiness and Information Management Vol.5, No.1 2013

35
Authors Key aspects Measuring dimensions
Heeks, 2003 Design-reality gap Information-Technology-Process-Objectives
& values-Staffi ng & Skills-Management-
Resource (ITPOSMO model)
Alshawi& Alalwany, 2009 System and technology Technical-Economic-Social
Horan et al.,2006 Usage Utility-Reliability-Effi ciency-Customization-Flexibility
Papadomichelaki, et.al., 2006 Usage and management Service-contents-system-organization
Young, et.al, 1997 System and technology Development-Management
Madon, 2004 Users’ capabilities
(interpretive approach)
ICT application-functionality-opportunity-
accessibility
Table 2 Summary of evaluation approaches in ICT4D research (adapted from Islam & Grönlund, 2010a)
Among the proposed frameworks, Heeks’ (2002, 2003)
‘Design-Reality’ framework is achieving wider acceptance
among the ICT4D research community. It states that the
reason of ICT4D failures in developing countries is the
mismatch (gap) between the current reality and the system
design and that the chance of failure increases as the gap
grows (Dada, 2006, p.4). However, Heeks as well as other
authors (Table 2) adopt a subjective ontological approach
and lack the users-centralism needed to explore the impact
of ICT4D projects on users’ lives. By ignoring the user
perspective, analysis frameworks are in danger to overlook
a key driver of project success, namely adoption by users.
3 DECISION MAKING UNDER UNCERTAINTY AND
DECISION TREES
When making decisions under uncertainty an individual is
required to choose an action from multiple alternatives, not
knowing what events might occur and what the correspond-
ing outcome will be. Decision analysis is a quantitative ap-
proach to decision making. It enables people to make better
choices under uncertainty, by helping them determine the
probabilistic outcomes of different alternatives to enable
choices leading to the best possible outcome. Outcomes
can be measured for instance according to their expected
value (Fishbein, 1968), assuming a highly rational stance,
or according to their expected utility, which considers risk
propensities and diminishing marginal benefi ts. Expectancy
Value Theory calculates outcome values by weighing the
outcome value under certainty, with the probability of the
outcome’s occurrence.
Decision trees are an analytical tool that can support and
leverage expected value calculations by logically and sys-
User adoption however will be largely driven by economic
and non-economic benefi ts, weighed against the effort re-
quired to make a change to the new system. Therefore, for
our assessment of the e-purjee system versus the traditional
paper-based purjee system, we adopted an alternative ap-
proach that would consider the sugarcane growers’ decision
situation, strategies, and economic as well as non-economic
benefi ts. We analyzed e-purjee adoption using expected val-
ue theory together with a decision tree formulation, thereby
examining whether the growers’ decision to adopt the new
system would bring positive changes in their individual
situation.
tematically presenting a decision problem with multiple
sequential decisions and multiple events affecting deci-
sion outcomes. A decision problem is depicted via deci-
sion nodes (rectangular boxes), event nodes (circles), and
branches (lines) within the tree (Fig. 1). In Fig. 1 for in-
stance, Decision 1 has two options, leading to either Event
A or B. Event A has two possible outcomes, Outcome 1, or
Event C, which then results in either Outcome 2 or 3. Deci-
sions are exclusive so that only one option can be selected
at each decision node. Nonetheless, sometimes branches
emanating from decision nodes can lead to other decision
nodes. An event node should represent all possible out-
comes at that junction. Each of the possible outcomes of
the event is represented as a line emanating from the event
node. Each outcome is assigned a probability and a value,
or a present value if the calculation takes into account dis-
counting of value over time (as is the case in harvesting,
where product quality and thus value can quickly deterio-
rate).
Agribusiness and Information Management Vol.5, No.1 2013

36
To calculate the Expected Monetary Value (EMV) of
each decision, a numeric value is assigned to each outcome
branch of the decision tree. Finally, the EMV of an event is
weighted average of all possible numeric outcomes, with
the probabilities of each of the possible outcomes used as
the weights. The formula for EMV (Schuyler, 1996) is:
EMV(x)
=
∑
[PV(x) x P(x)]
Where,
• x – possible outcome
• PV(x) – present value of outcome x
• p(x) – likelihood of outcome x
To evaluate a decision tree (manually), the tree is ‘folded
back’. All branches emanating from the same node are
combined and their values aggregated (via the EMV formu-
la), working backwards from nodes closest to the outcomes.
The process continues until it reaches the original deci-
sion node. In case of a decision node, the expected value is
computed for each branch and the highest (EMV) value is
chosen for further consideration.
4 APPLICATION TO THE E-PURJEE PROBLEM
AND DISCUSSION
To capture the e-purjee decision problem in a decision tree
model, we first need to identify the uncertainties and pos-
sible outcomes in both paper purjee and e-purjee systems,
and examine the expected value of each alternative.
During the sugarcane crushing period (November-January),
growers are invited to deliver raw sugarcane stalks to the
sales center twice a week with an interval of 2 to 3 days.
The number of purjees in each delivery depends on the
estimated production of a farm. Growers can supply 1200
kg of sugarcane with each purjee. A purjee is issued about
3 days in advance of the delivery date, allowing growers
to prepare for harvest, transportation, and delivery. In the
past, growers had to go to the sales center to collect their
purjee, or had to wait for a Cane Development Assistant
(CDA) to bring it, or hope to receive it via hand-to-hand
delivery. Hand-to-hand delivery of purjees and shortage of
CDAs resulted in delays and losses, with losses (or wrong
allocation) occurring also due to the lack of name identifi-
cation on purjees. In the purjee distribution system, three
outcomes are thus identified: on-time receipt, delay (2 to 3
days), or loss of purjee (“loss”). To determine the likelihood
of probabilities of each outcome we interviewed a member
of management of a sugar mill in Bangladesh, responsible
for purjee distribution. The manager had several years work
experience in that position. Based on his experience, he
provided best estimates for the probabilities of each out-
come (see Table 3). A cross-check against available records
suggest his estimates to be valid and reliable.
4.1 E-purjee versus Paper-purjee: Loss in Cane Weight
Growers are paid by the weight of delivered sugarcane. The
estimated price of 1200 kg (1 purjee) of sugarcane is about
3000 Bangladeshi Taka (BDT)1 . Given the delays in the
system, growers sometimes harvest their sugarcane prior to
purjee receipt, anticipating receipt of purjees on a certain
date. When a purjees is delayed, the delay extends the time
between harvesting and crushing, causing the sugarcane to
lose weight by drying out. The rate of weight loss varies
depending on the temperature, humidity, sugarcane variety
and other agronomical factors. Solomon (2002, p.7) esti-
mates weight reduction rates per day as shown in Table 4.
Solomon’s estimates refer to India, whose climatic condi-
tions are quite similar to those in Bangladesh. Thus we con-
sider the estimates reliable for this study. Table 4 indicates
that for a delay of 2-3 days (60 hours) in delivery, and ap-
Fig. 1 A simple decision tree showing nodes and branches
Event E-purjee Paper purjee
On-time receipt 85% 45%
Delay (2 to 3 days) 10% 40%
Loss of purjee (“Loss”) 5% 15%
Table 3 Purjee receipt events and their likelihoods
1 USD 1 ≈ BDT 78
Agribusiness and Information Management Vol.5, No.1 2013

37
proximate weight loss and thus monetary loss of 6% should
be expected.
In the decision tree, we added additional events and de-
cisions that occur when purjees are delayed or lost (see Fig.
2). These additions were made based on interviews with
four experienced sugarcane growers from two sugar mill
zones, located 200km apart from each other. According to
the interviewees, the practice to harvest in anticipation of
receipt of a purjee was not uncommon under the volatile
paper system. In case of a delayed purjee, this behavior
could lead to partial (e.g., 6%) economic loss for the har-
vested canes, or to complete loss when the purjee was never
received. To mitigate such losses, growers had the option to
request a replacement purjee from the responsible Cane De-
velopment Assistant (CDA) or they could sell the harvested
cane into the local market albeit at an approximate 50%
discount. Table 5 summarizes payoff values.
The interviews with growers also revealed that under the
e-purjee system, the reliability of purjee receipt had risen so
much that growers stopped the practice of harvesting prior
to receiving a purjee. At 85% on-time receipt of purjees,
and only 5% lost purjees growers considered waiting for
e-purjee to be the better strategy than early harvesting. A
replacement rate of 90% for lost purjees further motivated
this decision. The replacement rate grew from 60% for the
paper based system to 90% for the e-purjee system, because
the sugar mill authority tracked the success or failure of
purjee distribution and thus could easily re-issue lost pur-
jees. This change in events and resulting decision making
behaviors is depicted in the decision tree in Fig. 2.
Folding back the decision tree, we observe that the highest
expected value for growers is BDT 2,991 per purjee result-
ing from use of the e-purjee system, compared to BDT 2,886
under the paper based system.
4.2 E-purjee versus Paper-purjee: Information Seeking and
Opportunity Cost
Research shows that information seeking costs represent
a significant portion of total cost (Silva & Ratnadiwakara,
2008). One of the additional benefits of the e-purjee system
to growers was the time saved by not having to physically
visit the sales center to receive a paper purjee. Previously
growers needed to visit the center at least once per week,
which took time away from farming and incurred travel
costs. In general, the distance between growers’ farms and
sales centers is approximately 5-7 kilometers. According
to the interviews with growers, travel costs amount to BDT
20, while the time spent for each visit is approximately one
hour. One hour of labor cost was quantified as an opportu-
nity cost of BDT 30, resulting in total information seeking
and opportunity costs of BDT 50. A loss or delay of purjees
would potentially multiply these information seeking and
opportunity costs, which are depicted in a second decision
tree in Fig. 3.
Fig. 3 indicates that the e-purjee system significantly
reduces growers information seeking and opportunity costs,
with a difference of BDT 15 in favor of e-purjees. The
combined benefits of reduced harvesting losses and reduced
information seeking and opportunity costs suggest an ag-
gregate economic benefit of BDT 120 per purjee for the e-
purjee system, or approximately 4%. While this amount
does not instantly change growers’ economic conditions, it
is in line with single-digit reported benefits elsewhere (e.g.,
Jensen, 2007) which led to adoption of ICT.
Interestingly, when interviewed, growers also expressed
high appreciation in terms of the transparency in purjee
distribution, the reduced graft and lessened uncertainty
in farming operations (harvest and transportation), de-
emphasizing the monetary benefits received from e-purjee
adoption. In other words, the improved procedural fairness
Duration (hrs.) Weight loss (%)
24 2.72
48 4.54
72 7.27
96 12.72
Table 4 Sugarcane weight loss due to time lag between
harvesting and milling
Outcomes Payoff value (BDT)
On-time 3,000
Delay (2 to 3 days), resulting in 6% weight loss 3,000 × (1 – 0.06) = 2,820
Loss of purjee, harvest sold into local market (“Loss with local sale”),
leading to a 50% loss in revenue 3,000 x (1 – 0.50) = 1,500
Loss of purjee (“Loss”), leading to a complete loss of the harvested canes 0
Table 5 Payoff value of purjee receipt events
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38
On-time (85%)
3000 BDT
3000 BDT
1500 BDT
1500 BDT
3000 BDT
3000 BDT
3000 BDT
3000 BDT
2820 BDT
0 BDT
0 BDT
2820 BDT
3000 BDT
On-time (45%)
Not early haevested (100%)
Replacement (90%)
Loss with local sale (75%)
Sales without any loss (75%)
Loss with local sale (75%)
Not early haevested (90%)
Replacement (60%)
Early haevested (0%)
Loss (25%)
Sales with loss(delay) (25%)
Loss (25%)
CANE Procurement
System
2991 BDT
Digital Procurement
System
2886 BDT
Paper-based
Procurement System
3000 BDT
2996 BDT
2550 BDT
2812 BDT
Delay(2 to 3 days) (10%)
Delay(2 to 3 days) (40%)
Loss (5%)
Loss (15%)
1125 BDT
2955 BDT
1125 BDT
No replacement (10%)
Early haevested (10%)
No replacement (40%)
Fig. 2 Estimated economic value (based on sold cane weight) for e-purjee and paper-purjee
and reduction of uncertainty were perceived as potentially
more significant than the approximate 4% monetary ben-
efit. These results are consistent with prior research which
has demonstrated the importance of procedural fairness (Er-
dogan, 2002) and the interest of people to reduce economic
(and other) uncertainties (Lind & Tyler, 1988) for instance
through the purchase of insurance. In fact, the e-purjee
system may be viewed by growers as an insurance against
unfair practices and against the uncertainties of the purjee
ordering system.
5 SUMMARY AND CONCLUSION
Our research sought to assess the impact of a mobile phone
based procurement system for sugarcane growers in rural
Bangladesh. Modeling growers’ decision situations un-
der uncertainty, via an expected value and decision tree
approach, we explored possible choices and calculated
the expected monetary value of paper delivery versus e-
delivery. The e-purjee system was found to outperform the
traditional paper-based system by reducing financial losses
of the growers, and by reducing information search and
opportunity costs. Interviews also revealed important non-
monetary benefits with respect to uncertainty reduction and
increased procedural fairness.
The identified benefits of the decision situation also high-
light the methodological value of a decision theoretic anal-
ysis. By exploring the entire scope of the decision problem,
including for instance the need to request a replacement
purjee in case of loss, and understanding the frequency of
such events, planners can better assess the overall benefits
derived from ICT systems for development and thus much
better judge potential adoption. As we saw in the e-purjee
system, whereas economic benefits were meaningful indi-
vidually, additional benefits became a strong motivator for
rural sugarcane growers. It should be noted that none of the
benefits were highly technology dependent. The technol-
ogy, at least on the user side was very simple (SMS), yet
allowed to significantly change practices such as harvesting
in anticipation of a not yet received purjee. This reinforces
our earlier observation, that the success of development
Agribusiness and Information Management Vol.5, No.1 2013

39
50 BDT
50 BDT
50 BDT
50 BDT
0 BDT
0 BDT
0 BDT
0 BDT
Visit to centre (10%)
Visit to centre (20%)
Visit to centre (50%)
Visit to centre (80%)
No Visit (90%)
No Visit (80%)
No Visit (50%)
No Visit (20%)
CANE Procurement
System
1 BDT
16 BDT
Paper-based
Procurement System
Digital Procurement
System
On-time (85%)
0 BDT
5 BDT
0 BDT
25 BDT
40 BDT
10 BDT
On-time (45%)
Delay(2 to 3 days) (10%)
Delay(2 to 3 days) (40%)
Loss (5%)
Loss (15%)
Fig. 3 Estimated economic value of information seeking and opportunity costs for e-purjee and paper purjee
oriented ICT systems may hinge on criteria quite different
from those of regular IS.
Overall, we believe the findings will be useful in their
policy implication for respective demand-side stakeholders
such as the Bangladesh Food and Sugar Industries Cor-
poration (BSFIC) and ‘Access to Information (A2I)’ pro-
gramme, as well as the donor agency, UNDP, especially in
light of the lack of success of an earlier web-based Agricul-
tural Market Information System in Bangladesh. Therefore,
the findings of this study may interest donor agencies and
the government to promote more mobile-based initiatives in
rural community development, but also to carefully analyze
the impact on user decision making behaviors as demon-
strated here.
ACKNOWLEDGMENT
The work described in this paper was partially supported
by a grant from the City University of Hong Kong (Project
No. 7002924).
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