Abstract

Farmers use different information to predict future returns upon which they base current decisions. In designing information systems, knowledge about the information set used by farmers is relevant to have insight into the necessary information that should be made available for farmers. Using quasi-rational forecasting regression analysis to represent producer price expectation formation, the usefulness of disseminating real time information about the central wholesale prices discovered by the Ethiopian commodity exchange was tested. The results showed that the information about central wholesale prices can help farmers to make unbiased price forecasts. Effective dissemination of real time price information discovered through the Ethiopian commodity exchange was fully supported by the empirical insights from this study.

Key words: Market information, prices, quasi-rational expectation, smallholders, Ethiopia.