Published June 28, 2000
“Farmers and Ranchers have been forced to buy retail and sell wholesale,” says Warren Clark, Farms.com spokesman. Very few businesses in similar market environments have endured as has the agriculture professional. Due in part to their intelligence and perseverance, it’s the farmer and rancher’s sanguine nature to adapt to rapidly changing market conditions that characterizes them so uniquely.
The Internet, as a tool, has well served the busy rancher/farmer needing latest information, news and favorable markets for their products. Knowing and reacting to present opportunities dispenses accumulative advantages of sustainability.
Farms.com has been on the Web from Memphis, TN since 1995. This year this privately held company purchased Canada’s eHarvest.com. Their auctions of cattle, hogs, poultry, chemicals, feed, grain, real estate and up-to-date pricing and jobs information have been their most popular feature.
Traditionally, farmers have purchased equipment and supplies from local dealers, traveling salespersons and catalogs. Now the formerly lone-individual farmer combines his purchases with hundreds of others to strengthen the collective purchasing power through these Internet-centric organizations.
Farmers and ranchers are wired, sophisticated Internet users. Their reputation may not be as high-tech business planners, yet they do benefit by being plugged-in which has the potential of making more money for them. A full third are connected, and of all farms sales over quarter million dollars, 52% have Internet access.
Nearly a dozen Web-based marketplaces offer wholesale prices for fertilizer, seed, tractors and other equipment. Some of these are DirectAg, NetSeeds, Farms.com, SellMeat and XSAg, It means more choices, better prices, and competitive delivery.
“These online farm exchanges represent an efficiency being brought to what has been a very inefficient marketplace,” says Kevin Murphy, research director at GartnerGroup. “Online exchanges could potentially represent almost the entire agriculture market.”
In addition to the independent sites, major agricultural firms such as Cargill, Cenex Harvest States Cooperative and E.I. du Pont de Nemours are getting into the online exchange market. The big three manufacturers recently launched Rooster.com, an electronic mall for farmers to sell crops and buy goods.
Agriculture is expected to be the third-largest business-to-business (B2B) Internet activity by 2004, a whopping 8% of the entire Internet commerce, according to Goldman Sachs Group. The largest single item is chemicals.
New York dairy farmer Ted Farnsworth, perplexed by the inequitable imbalance of high overhead and lower net returns, formed Farmbid. Farmbid sells wholesale to the farming industry on the Internet. They boast of 1300 listed items for sale from a dozen suppliers: includes crops and forage, livestock, tools, parts, machinery, and country store supplies. One hundred thousand users are registered to participate in biding and catalog purchases. Everyone wins.
Farmbid started as an auction site for farm equipment and now is a portal for a variety of ag-info, news, weather, and catalog sales. It operates very similarly to the popular consumer auction site, eBay. Sellers set a minimum bid and duration of the auction, usually a week to 30 days. The buyer and seller arrange for the transfer of funds and shipment of product; the seller pays the auction house a small transaction fee.
Farnsworth intends to expand the price advantages for a virtual co-op, demanding deep discounts of consumables for combined participants’ bulk purchases. Next to come will be farmers discount rates on insurance, banking and travel.
These Web hub sites are financed from banner advertising and a transaction fee or percentage of each sale over the site. As these entities become more used, their eventual profitability will be realized for their investors. It’s to everyone’s advantage to investigate these channels and participate when timing and circumstance deem reasonable.
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Web Links
http://www.directag.com
http://www.eharvest.com
http://www.farmbid.com
http://www.farms.com
http://www.netseeds
http://www.powerfarm.com
http://www.rooster.com
http://www.sellmeat.com
http://www.xsag.com