The Rural Voice, 1998-12, Page 34The Internet
and farming
Trading commodities on
the internet, even buying a
car without ever visiting a
dealer, such are the
possibilities of the wired
world, a recent
conference was told
By Janice Becker
t was a glimpse at the cutting
edge of agri-business on the
internet, technology creators and
users espousing its benefits.
Dozens of people, from
researchers and company
representatives to those making the
internet work for them, gathered in
Guelph recently to discuss the
exciting future for agri-business on
the web.
The most interesting and practical
presentation came from Sheldon
Fulton of Agralink, a Saskatchewan -
based on-line commodity exchange.
"What we've done is put our
business on the internet," said Fulton.
"It is a facility for people to trade
commodities."
Fulton emphasized that his
employees do not make trades, but
help others to make connections.
Plugged in to the Saskatchewan site,
Fulton showed a screen listing
"asked" and "offered" prices for
commodities including barley, wheat,
milling and feed oats and peas. Those
who have paid the fee for the service
can log on and make an offer on any
item or can list their product. If a
trade is made, Agralink receives a
commission
Fulton said his employees keep an
eye on the going prices. If a customer
is looking for a certain tonnage for a
30 THE RURAL VOICE
specific price, they will notify the
client when the product becomes
available, but will not get involved in
the trade.
Aside from the actual service of
facilitating trades, Fulton said
Agralink benefits producers by
providing price discovery, allowing
producers to get the best price for
their goods in new deregulated
markets. Traders are no longer in
control of pricing information.
Through the same system, freight
services can be purchased as each
commodity order states whether it
will be delivered or requires a pick
up. The removal of the Crow benefit
has allowed truck freight to compare
favourably with rail.
Access to the intemet is both time
and cost efficient as well, he said.
With such a service relatively new
to the industry, Fulton said one of
Agralink's main goals was to provide
transaction security and reliability.
With backing from the Toronto
Dominion Bank, Agralink is able to
ensure all customers get paid.
Clients of Agralink are checked
for reliability and credit rating.
Contracts and agreements are signed
prior to initial trading. The company
is evaluated, a trade limit set and
position risk monitored. Agralink
ensures that no customer extends
themselves beyond their credit limit.
One questionable trade can disqualify
the customer from further
interactions.
Each step of the process is logged
on the net, allowing the purchaser,
seller and Agralink to monitor the
transaction from loading and delivery
to payment. A sale or purchase can
be cleared through the system in a
week.
If a dispute arises due to an
unsatisfactory transaction, an on-line
resolution mechanism is offered to
customers. Fulton laughed when
telling of the few times the dispute
button was pushed. "Customers just
wanted to see what would happen."
Though Fulton said the company
still needs to increase the number of
commission -earning trades to attain
profitability, he predicts dramatic
growth by 2000.
The optimistic forecast comes
from the benefits he sees to
electronic exchanges. Aside from fair
price discovery, financial assurances
and risk management at low cost,
Fulton said it provides access to both
new markets and spot, forward and
basis markets.
He also sees the increase in on-
farm computers, those connected to
the internet and those already trading
on-line. Of approximately 54,000