FARMERS TEST SWIFT E-COMMERCE WATERS.

The tidal wave of new electronic technology is taking farmers for quite a ride, and success for agrimarketers hinges on their attitude and acceptance. Observers generally anticipate that farmers will embrace e-commerce opportunities. But it appears likely that larger farmers may initially use the new technology to streamline input purchases while small and niche market farmers are more likely to first seek open sales doors.

The Kellogg Foundation's Foster, in "The Impact of E-Commerce on Agriculture, Issues for 21st Century Food Systems," notes that people disagree on the impact e-commerce will have on farmers and farm structure. "Some believe these developments may spell trouble for smaller family farms. Others see this as an enormous opportunity for midsized producers to reassert control in the marketplace and for large farmers to increase efficiencies. Any outcome promises to greatly affect the future of food systems."

Foster also quotes Gary Carlson, president and chief executive officer, Rooster.com, Bloomington, Minn. "`In a recent study, Internet access was highest among young, more-educated growers with large acreage. Currently 65 percent of farmers with gross sales over $500,000 have Internet access compared to 50 percent with gross sales under $250,000. But that trend is evolving,' he says. `More growers are turning to computers for not only record keeping but also Internet access'."

That fits with survey findings compiled by Lynxx Solutions, Inc., Newtown, Pa. President Barbara Hook says Lynxx conducted surveys with soybean growers and cattle producers to gauge their Internet use and interest in purchasing farm-related products on the Internet. Cattle producers in Missouri, Nebraska, Oklahoma and Texas were surveyed in January and February 2000. Responses were obtained from 195 operations, ranging from less than 100 head to 500 or more head. Illinois and Iowa soybean growers were surveyed from December 1999 to February 2000. Responses came from 200 growers with operations ranging in size from less than 100 to 500 or more soybean acres.

While the surveys were sent to two very different markets in different geographies, Hook reports that:

* Computer use for business rose as operation size increased in both cattle and soybean operations. Internet use was about one-third less than computer use in all markets and sizes.

* While it seemed that soybean growers showed more current involvement in the Internet, the survey indicates use will accelerate in the cattle market and the gap will narrow quickly. Within the next year, both groups will have approximately 40 percent of producers on the Internet.

* Products of interest to buy over the Internet varied greatly. Farm equipment and parts are appealing to both markets. Cattle producers appear to have a stronger interest in buying farm-related products over the Internet than soybean growers.

Based on responses, Hook offers agrimarketers these suggestions:

* When looking at the marketplace and how to use the Internet and e-commerce, look at your customer base and consider how many of your current customers will access the Internet and how often they will log on.

* This survey indicates that Internet use will continue to increase. While companies need to develop methods to service the e-commerce segment of their business, the majority of sales are still going through conventional channels. Hook says to be careful not to alienate such customers.

Commodity sales also still largely go through conventional channels, but industry watchers again see tremendous potential for marketing such ag products through the Internet.

The Kellogg Foundation's Foster notes:

      "As with any new technology, `innovative' farmers are first to
   experiment with using the Internet for marketing commodities and food
   products. Some of the largest, initial users of the infrastructure are the
   groups of farmers interested in selling conventional or identity-preserved
   commodities.

      `E-commerce can positively impact small farmers since it provides an
   outlet for small market opportunities,' adds Frank Beurskens, E-Markets.com
   director of product strategy, Ames, Iowa. `Niche production will be a
   growth market as consumers access food alternatives available from
   non-mainstream outlets. The historical challenge is how to market that, but
   the Internet provides smaller participants with the same access as giants.'

The Internet also provides a more level playing field for producers gathering information. Foster quotes Rooster.com's Carlson, who "adds that e-commerce will allow small farms to be as efficient as possible and to better compete with large operations to stay in business. `The Internet allows producers to access timely information, agricultural trends around the world, new production methods, and crop and input alternatives. The Internet also provides real-time commodity prices and instant local news and weather, plus easier communication with ag companies and other farmers. With this information growers will be better-educated and prepared and have more options.'"