Alan Guebert is an Illinois farm journalist.
Even as the high-flying electronic commerce companies, the “dot coms,” rediscover the effects of gravity on Wall Street, internet-based commerce is poised to soar in agriculture. The size of the potential market is reason enough to draw dot commerce to the hidebound industry.
According to United States Department of Agriculture data, 77 percent of U.S. farms with yearly sales greater than $250,000 use computers and 52 percent of these farms regularly cruise the internet. That pipeline, presume e-sellers, means farmers will pump some of the $80 billion spent annually on farm goods into net-based e-commerce.
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In fact, some farmers already have. XSAg.com, which describes itself as “an interactive auction process designed specifically for use in the agricultural chemical industry,” opened its e-door in January 1999. Today more than 10,000 farmers have logged on to buy farm goods. XSAg.com reckons it will book $100 million in sales in 2000.
That growth has attracted some deep pockets. In January, Morgan Stanley invested $20 million into XSAg, and Meredith Corp., publisher of Successful Farming magazine and one of ag’s biggest websites, @griculture Online, linked with XSAg, too.
Other big boys have scratched the e-bug. On March 1, DuPont, Cargill and Cenex Harvest States announced their intent to jointly build an e-mall of local farm retailers, co-operatives and manufacturers. Called Rooster.com, the site will resemble the Sears catalog of yore: It will offer “seed, fertilizer, crop protection products and equipment” for sale at posted prices “through the same businesses (farmers) work with now.” Also, Rooster, which plans to be open by May 1, will allow farmers to market their crops on-line.
On March 7, Farms.com one-upped the Cargill-DuPont-Cenex group by placing 42.5 percent of its equity with vTraction, the internet business incubator owned by Rabobank Group, a farmer co-operative-owned bank from The Netherlands with $290 billion in assets. Like XSAg, Farms.com essentially will be an auction where farmers can buy and sell goods and services.
Arguably the ultimate internet-based auction will be FutureCom. On March 14 it received permission from the Commodity Futures Trading Commission to trade cash-settled cattle futures and options on the internet. FutureCom, foggily identified as the property of the Texas Beef Group of Amarillo, claims it will be on-line in three to six months. Later it hopes to add cash-settled corn, stocker and feeder cattle and boxed beef contracts to its e-futures market.
The velocity of this planned e-selling and buying, however, should cause farmers to slow their modems a bit. While e-sellers all are after the same thing — your bucks — they are not all the same.
Farms.com and XSAg.com are auctions. Like their big brother model, e-Bay, they are neutral trading platforms where buyers and sellers do business in virtual anonymity. These sites make their profit by charging commissions, generally around two percent of the sales price.
But even then differences between XSAg.com and Farms.com are wide. XSAg is mostly a buying site where farmers are hooked up with input sellers.
Farms.com is a buying and selling site for farmers where, for example, a farmer who grows food grade soybeans can both buy his inputs and sell his crop.
One potential drawback to all this e-business is its effects on bricks-and-mortar businesses in farm country.
Farmers should examine all the internet ag markets. They will be an empowering tool for buying and selling ag inputs and production. But keep in mind an old adage: caveat emptor.com.
