Agribusinesses could be making a killing on the web but nobody’s out there doing it, says one retail expert.
“It just isn’t happening and I’m not sure why,” said the vice-president of the Canadian Association of Agriculture Retailers.
Bob Evans suspects part of the reason has to do with the big guys not wanting to compete with themselves.
“How do we do it without cannibalizing the business that we’re already doing?”
But there are all sorts of opportunities for smaller outfits to expand their markets on the web without additional capital and labor expenses.
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Evans said one thing keeping input providers from offering discount services on the web is the logistics involved in delivering products like agriculture chemicals.
“It’s just not quite as simple as selling stationery.”
But he expects the current round of low commodity prices will spur innovation in the way retailers can get cheaper inputs to farmers over the web.
“It would absolutely amaze me if somebody didn’t figure out how to make it happen, but it hasn’t been done yet.”
Evans said Allan Johnston might be the exception to the rule. The Welwyn, Sask., farmer and his partners market everything from grain to fuel and fertilizer over the web (http://www.canadagrain.com). And business is booming.
Johnston has brokered $99 million in grain sales over the web in the past two years. Peas, lentils and canaryseed make up the bulk of his sales. In April alone he sold 12,500 tonnes of peas to India.
He also sells a variety of inputs over the web, from fertilizer to grain bins, and uses his fleet of trucks to deliver the supplies that he buys at wholesale prices from established dealers.
Johnston said there are few Canadian outfits his size operating on the web, but expects that to change in the near future.
“The spark hasn’t even lit the match yet as far as I’m concerned. This thing is just going to get huge.”
That seems to be the consensus in the industry. A year ago Verna Mitura conducted a survey of 100 producer marketing clubs in Saskatchewan. About 83 percent of the respondents said they were somewhat likely or very likely to purchase farm inputs over the web, with chemicals, fertilizer and equipment topping the list of needs.
An equal number said they would be interested in selling products like grain and used equipment over the web.
But one year after her survey, Mitura said little is happening in terms of buying or selling agriculture products on the internet. She blames the big players who have already got the agribusiness market tied up.
“There’s a reluctance to do something like e-commerce that would allow for increased competition,” said Mitura.
United Farmers of Alberta is a large supplier of inputs, with 34 farm supply stores, 120 petroleum outlets and six elevator sites in conjunction with AgPro Grain. But the company is in no rush to sell inputs over the web.
“We haven’t really noticed a demand by our customers to enable them to purchase electronically,” said Don McKellar, vice-president of marketing for UFA.
“Although it’s recognized almost universally as something you have to get into, get prepared for, I haven’t seen any burning evidence to indicate that if you’re not in it right now that it’s going to hurt you.”
He said the logistics of delivering agriculture inputs sold over the web is the tricky part.
“Purolator Courier won’t stop by and pick up 600 gallons of dyed diesel and deliver it for you.”
Despite his skepticism, McKellar said UFA is preparing itself for what it considers the inevitable explosion of web-based sales of agriculture inputs. It doesn’t want to be left behind when customers start placing orders for fuel and fertilizer from their computers.
“My personal feeling is that when it does start, it will escalate very quickly. You’d better be prepared to move quickly.”
Evans said web-based marketing of agricultural products is already taking hold south of the border (http://www.directag.com and http://farms.com) and he doesn’t expect it to be too long before there is more activity in Canada.
