Study: farmer profits increase with better communication; Child labor decreases

A recent study by a University of Maryland doctoral student shows that the installation of telecommunications technologies in isolated villages in rural Peru has a strong increase on farmers income while decreasing child labor, daily El Comercio reported.

Diether Beuermann, a doctoral candidate in economics at the University of Maryland, led the study with Miguel Paredes, a researcher at the Institute of Peru at San Martín de Porres University. (Click here to open full presentation of the study)

Between 1999 and 2004, the Ministry of Transportation and Communication’s Fund for Investment in Telecommuncations, or Fitel, provided one satellite payphone to 6,509 rural villages that did not have any kind of communications service before. On average these villages were located 37.3 miles from the nearest phone before the installations. The population of the targeted villages ranged from 200 to 3,000 people.

The results of Beuermann’s research shows the value received per kilogram of agricultural production increased by 14.8 percent while agricultural costs decreased by 22.6 percent.

“Before having (phones), these rural farmers where heavily constrained in terms of being able to search for better prices in nearby markets,” Beuermann says in an initial report sent to the Peruvian Times. “However, after being able to reduce these information asymmetries through the utilization of phones, they might be capable of searching for the best prices.”

Furthermore, farmers are able to use the phones to receive weather information in order to decide the best time to plant, thus reducing the amount of fertilizer needed for their crops. They are also able to call markets in neighbouring villages to order and have delivered agricultural inputs, such as fertilizer and seeds.

The study also found the number of working children between six and 13-years-old in rural communities decreased due to the rise in the net income of farmers. The likelihood of child market work dropped by 31.6 percent and child agricultural work fell by 25.54 percent.

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