Mobile phones promise new markets for flour foods

by Morton Sosland
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Regardless of the part of the world where the question may be posed, a common issue facing grain-based foods executives is how best to gain understanding of the forces that are likely to maintain and even expand demand.

In the developed nations, the focus is usually on new product development and marketing combined with factors in the overall economy that influence consumer spending and attitudes. In the developing world, where the largest part of the global population resides, emphasis is often placed on measuring personal income trends. After all, many billions living in developing countries are too poor to participate in a functioning economy that offers growth to grain-based foods. Thus, the prospect for this situation changing any time soon has huge relevance to the future of an industry like grain-based foods.

As tempting as it may be to dismiss any hope for improving the lot of the global poor, in the wake of all the development disappointments of the past, one avenue suddenly promises success. This is mobile telephone service which allows the poorest countries to bypass an essential stage of development that had seemed beyond the reach of most of these nations. Due to the reach of modern wireless communications services, it is no longer necessary for these nations to come up with national mail services and land-based communications networks. For investments far less costly than previously required to achieve that goal, developing countries have the chance to put in place the path to industrialization. The result should be expanding employment and the cultivation of a market-based economy stemming from this new knowledge and communications capacity.

"In less than a generation," the International Monetary Fund (IMF) recently declared, "mobile telephony has transformed agriculture, marketing, fisheries, freight logistics, irrigation, banking and small business in the developing world." Each of these elements has an important role in the development of grain-based foods demand. Without assigning more weight to one than another, it is especially striking to understand what it means for these "backward" nations to have freight logistics systems in place that change primitive unreliability into a rational, efficient system.

According to IMF, it is likely that mobile telephony will have its greatest positive multiplier effect through mobile banking. This means incorporating the telephone into a formal financial system, using technology currently available in developed countries to make the phone a point-of-sale device and a source of cash. This convergence of banking and telephone technology offers massive opportunities for building businesses and spurring economic growth that would certainly have equal repercussions on demand for grain-based foods as well as overall economic growth. More than 1 billion people have a mobile phone but no bank account, and it has been estimated that nearly half of these are eager to have a banking relationship. In countries like Kenya, where such a financial system has been in place, the speed, ease of access and safety of this approach combine to make it a good way of doing business, including for the purchase of food. Retail merchants, who frequently are marketers of food amid a variety of merchandise, are essential participants in mobile banking.

Agreeing - cations are growth promoters makes mobile telephony especially important to rural areas where half of the world’s population and 75% of the poor now reside. Important here is the declining cost of installing and operating such systems, which in turn make it possible to reach rural people with low incomes and low literacy.

"The next billion mobile subscribers will consist mainly of the rural poor," says the IMF. It also may be said that the next billion consumers of grain-based foods provided through a commercial market system will also be drawn from the rural poor, whose promise makes an exciting dynamic to the development of new markets and new demands where very little existed before.