TALKING POINT
TALKING POINT
E-commerce is
spreading in the
farming industry but
potential new
customers need to
tread with care, warns
John Jenkin
ALMOST every week it seems we are invited by yet another new dot.com to trade over the world wide web.But how can you decide which provider can be relied on to deliver what is expected from a contract, be it livestock, grains, inputs or cash?
The technology of e-commerce is relatively new and developing at an exponential pace, so few operators can demonstrate a track record of competence. Some will fall at the first fence, but as competition is the spur to innovation, the survivors will be all the more competent.
Who to choose? Who you know, rather than what you know, may still be a safe policy, but farm-household names are, as Lady Bracknell once put it, "no guarantee of respectability" in the brave new world of the net. If supermarket retailers have done nothing else, at least they have exposed how costly loyalty to branded products has been. A new name may be the best in the field, but it has to be taken on trust, however convincing the sales pitch.
Find out who is backing them, for starters. Their success will depend not only on their reputation, which will soon be spread via the grapevine, but on whether the architecture of their software is right. Few software programmers have knowledge and experience of agricultural and horticultural markets.
Three main classes of e-commerce operations are emerging for farmers and growers – those owned by buyers, by sellers and by independent, neutral trading platforms. Buyers include the multinational processors and commodity traders. Sellers include input manufacturers, e-retailers and service providers. Farmer and grower-owned platforms can be a combination of both. Neutral platforms may offer to handle the whole gamut of farm produce and requisites, by enabling bids and offers by parties, perhaps unknown to each other, to be matched.
But theres danger with a stranger. The neutral platform provider must guarantee quality, quantity, delivery and payment, to sustain its credibility. It follows that not all products will be traded through e-commerce yet. Those used to visual and manual inspections of samples may take some persuasion to convert.
Commodity traders have generally been reluctant to innovate, although some are now taking the plunge. Scientifically reliable means of product sampling and cataloguing electronically are continually being developed. Wool, for example, need no longer be handled by buyers present at auction. They can bid remotely through an extranet on the basis of specifications in the electronic catalogue.
So can individual producers, however computer-iterate and enthusiastic, really reap the bountiful harvest potentially available? Up to a point, but as multinational companies are making most of the running, it becomes ever more obvious that producers must co-operate in trading to maintain any semblance of market power. It therefore behoves co-operatives and others to get on and embrace the new technologies, if their members are not to end up with as much bargaining power as smallholders in a banana republic. They will be better able than individual members to keep abreast of the continuous and time-consuming business of upgrading software to remain competitive.
So no one should be deterred from venturing into electronic trading, whether collectively or individually. It has enormous capability to bring greater efficiencies and transparency and to add value through cost savings. The environmental benefits to be derived from logistical economies – goods moving directly from producer to processor or retailer, or from manufacturer directly to farm – ought to be a strong motivation for the government to intervene with some inducements for more farmers to get on-line.
So can individual producers, however computer-literate and enthusiastic, really reap the bountiful harvest…?