• Demand for and Supply of Internet Content for Australian Farm Businesses;
• Buying and Selling Online: the Opportunities for Electronic Commerce for Australian Farm Businesses;
• Online Education and Training for Australian Farmers; and
• The Economic and Social Impacts of Farm Internet Use.

The authors are Jim Groves (ph 07-5526-9698, email grovesc@winshop.com.au) and Jenny Da Rin (ph 02-6231-5445, email jdarin@u030.aone.net.au).

The Internet makes a seemingly unlimited amount of information available "at the click of a button". It can facilitate market access, create new business opportunities, improve service provision, and improve access to education and training.

For rural Australia, however, few of these opportunities are being realised. The availability of information is not as extensive or accessible as it could be—electronic commerce opportunities are still limited and online education and training are almost non-existent. The problem is not just poor communications infrastructure, which most discussion concerning access has been about.

The problem is also that most of the organisations serving Australian agriculture have not been able to keep up with the new opportunities.

These RIRDC-supported studies analyse the current and potential effect of the Internet. They aim to help organisations serving Australian agriculture, and farmers themselves, make better use of the Internet.

A major source of data on user needs was the results of a survey of participants in the Farmwide Online Services Pilot project provided by Farmwide Pty Ltd. This was complemented by original surveys of farm Internet users and of organisations providing Internet content for Australian farmers. Other sources of information included cooperation with other RIRDC research projects, literature reviews, and extensive searches of the Internet for both direct content and for other information.

Farm User Needs

Media reports give newcomers to the Internet an inflated view of the extent and accessibility of information, but little understanding of its potential as a communication medium. It is these communication uses—particularly email—that farm users value most.

Information needs listed by farm Internet users (in descending order of importance) are:

commodity market reports;

 

pricing information;

 

technical production information;

 

weather information;

 

information on supplies; and

 

financial information.

Policies to enhance rural Internet access can be implemented in the knowledge that they will be of genuine value to farm management. It is likely that broader non-economic benefits will be less substantial.

There have been significant improvements in the range and quality of content available on the Internet and most farm Internet users express a high degree of satisfaction with it.

However, there is still a significant proportion of farmers who consider that there are unacceptably wide gaps, particularly in market and price information, technical information and local/regional information.

Finding information that does exist on the Internet can also be difficult.

There is a continuing need and demand for farmer training in Internet use. Greater attention needs to be paid to ongoing support, training in search techniques and training in farm business applications.

These conclusions hold across commodity, regional and demographic sub-groupings of Australian farmers. Research has also found there may be slightly greater Internet use among dairy farmers than among other commodity sectors. The one outstanding feature of farm Internet users compared with the rest of the farm population is their substantially higher average levels of formal education—the proportion of farm Internet users with formal tertiary qualifications is more than double that of the farm population as a whole.

Content Provision

More organisations, large and small, are providing information via a web site. In late 1996, the authors located 206 such sites. By the time The Australian Farmer’s Guide to the Internet was published in late 1997 the number had grown to 238; as at October 1998, the web version of the guide contained 350 such sites.

Growth in the number of Australian agricultural sites overall reflects the increasing number of web sites among small businesses, including farmers. The growth in the number of sites is also indicative of the increased depth of content provided within many sites.

By any measure the quality of these sites ranges widely. A few sites offer a great deal of information, but many more are quite limited in the scope of their content. A similar pattern is apparent on any other measure of quality (eg. presentation, accessibility).

Four broad stages of organisational Internet effort can be identified:
 

few organizations truly use the Internet as an interactive medium;

few have conducted research into users’ needs—some do not monitor the usage of their site at all;

the main feedback effect has been in respect of the presentation of the information on the web site with few more substantial impacts;

few organizations expect the Internet to have a fundamental, or even significant, impact on their operations.

some make no effort to promote their web site;

many organizations devote few, if any, additional resources to their web site;

most have not integrated their web site into their communications strategies;

a majority of sites are only updated occasionally;

a significant proportion of web sites were developed without the benefit of any expertise in communications in Australian agriculture;

far too many sites are not designed to take account of the needs of users with poor phone lines.

Such professionalism is expected to become more prominent as experience in web publishing, communication and marketing is gained, as Internet penetration among client groups increases and as users become more discerning and demanding.

Agricultural organizations should think of the Internet as more than just a "cheap" form of publishing or communications. Organizations that effectively and creatively integrate the Internet into their activities will get the biggest benefit from the medium. This will especially be the case if they maximize the use of its interactive capability.

Electronic Commerce

Internet based electronic commerce can be provided inexpensively, and so can lower costs both directly and through competitive effects. It can also lower firms’ support costs. Commerce increases the number of sellers that purchasers have to choose from and vice version a global basis. Hence it could improve the terms of trade of commodity producers like Australian farmers. It can provide greater convenience to purchasers, and opportunities to provide more effective customer service.

As a result, electronic commerce is growing strongly, and is expected to grow to around 0.5% of all transactions in a few years, and possibly as much as 20% of all transactions in the next 10 years.

This is likely to be accompanied by continued developments in making electronic commerce work, such as the development of new payment mechanisms and in overcoming security, privacy, fraud and consumer protection concerns.

There are substantial barriers to the development of electronic commerce. At a basic level, there are limits on the goods and services that can be bought and sold over the Internet. The low cost of entry means that the Internet is a highly competitive marketplace, with many operators having profitability below expectations. Many people are concerned about security on the Internet. Some costs, such as transport costs, may be more expensive through a loss of economies of scale.

Hence, some goods and services are more amenable than others to electronic commerce. These include products that can be digitized (e.g.. software, images), information services (e.g.. financial services), goods with a ratio of value to volume, and time sensitive services (e.g.. travel reservations).

About one third of Australian farm Internet users express interest in electronic commerce: as at early 1997 about half of that group had actually made a purchase on the Internet. This proportion is likely to have increased substantially since that time. Almost 40% express interest in online banking and over half in conducting transactions with government. The remainder are not interested or are unsure—mostly on security grounds. A larger proportion is more interested in buying on the Internet than in selling—presumably reflecting commodity marketing arrangements.

A number of commercial organizations serving Australian agriculture have commerce enabled web sites. This includes financial organizations, and suppliers of a diverse range of goods and services. However, the total proportion of farm inputs provided in this way is trivial. A larger number of organizations have web sites containing passive advertising with interactivity provided through email contact.

The main use of the Internet in purchasing decisions for Australian farmers—as for many other Internet users—has been in "comparison shopping" and the gathering of information, before concluding a purchase via more traditional means.

Internet options for selling farm produce include email contact with brokers, agents etc.; "venues" where buyers and sellers can come together; and farmers’ own web sites. The first of these, along with the provision of market information, is the main means by which farmers currently use the Internet for marketing.

There are few "venues" bringing together buyers and sellers. Some exist in embryonic form for the meat and livestock and wool industries, some subscription based services are available for horticulture, and there are some non industry specific services. There are also several "classified advertising" sites. None of the statutory marketing authorities has a commerce enabled web site.

Some farmers have endorsed the Internet by developing their own web sites (for farm business purposes—others have personal home pages). Most of these are for livestock genetic material; the other major category is for industry promotion among producers of niche products.

Education and Training

Potential benefits of Internet delivery include:
 

• abolition of distance (both social and geographic) as a barrier to access;

• after an initial outlay on course development, delivery via such means could be remarkably inexpensive—implying a potential cost advantage;

• quality benefits from more interactive, self paced learning. The evidence to date is that on average there is no significant difference in quality between computer mediated and online education and that delivered by more traditional means;

• more efficient uses of student and educator time—possibly reducing the time taken to complete courses, implying additional cost and access benefits.

Australia has a strong record in distance education delivery at all levels of education—the Internet represents one more method of distance delivery, and one with potential advantages of immediacy and interactivity.

Obstacles to widespread Internet delivery include the relatively low level of household penetration of the Internet, bandwidth limitations, resistance among many educators, less than fully integrated software packages available at present, and the unsuitability of online delivery for some purposes.

Many, though not all, of these obstacles can be expected to diminish as Internet use increases and experienced is gained. Like other aspects of the Internet, online courses can be made available globally—implying potential import competition to, as well as export opportunities for, Australian education providers.

The education applications of the Internet have so far been limited largely to supplementing the delivery of existing courses, particularly through email communication and information provision on the web.

Some "virtual institutions" are coming into existence, especially in North America. These are primarily consortia of existing institutions. They are still in embryonic form, and do not offer prestigious highly recognized awards.

There are a few wholly online courses available, usually on an experimental basis. But these options are extremely limited—with few being of direct relevance to agriculture.

When it comes to formal courses in agriculture over the Internet, there is very little available to Australian farmers. The only examples noted are those by a small private provider based in Queensland and by one of the US consortia. Further offerings are in prospect, but experience to date has been that new opportunities are much slower in coming than generally promised.

Education and training are becoming an increasingly important instruments of rural policy, but Internet access is highly skewed towards those with the highest levels of education in any case.

Measures to stimulate Internet access in rural Australia, as well as to improve the provision of agricultural (and other) education and training services on the Internet will help reduce the bias.

Economic and Social Implications

But, taking users as a whole, there is little evidence of a substantial impact to date, particularly with Internet penetration at only around 20% of farm households (less among other non metropolitan Australians) and electronic commerce accounting for only a trivial proportion of commercial transactions.

Predictions are for substantial growth in both Internet penetration and electronic commerce. Realistic estimates are that 20% of all consumer expenditures might be directed over the Internet in 10 years time. At these levels, the potential social and economic implications become quite substantial.

Starting with a "worst case" scenario, the re-direction of 20% of household expenditures away from local businesses could be devastating to many local businesses and even some entire country towns. Obvious examples are if Internet banking accelerates local bank branch closures, or if the provision of government services online leads to a withdrawal of physical services.

However:

this business is being re-directed somewhere—much of it to other country towns;

the Internet brings substantially increased opportunities, on a global basis, to existing businesses;

purchasers will buy over the Internet only if it is to their benefit, implying higher real incomes and hence higher expenditure levels generally;

the Internet provides opportunities for businesses to diversify—such as offer income opportunities for farmers;

the Internet is creating new types of businesses, many of which are located in non metropolitan areas;

the Internet creates opportunities for teleworking;

improved education and training access via the Internet could reduce the need for young people to leave home to receive their education; and

the Internet can be used to improve service provision.

There would, however, be both winning and losing regions from such a process. Winning regions would be those with strong communications infrastructures, lifestyle attractions, and communities active in addressing any problems and taking advantage of opportunities as they arise.

At the social level, some concern has been expressed that the Internet could see "virtual community" replacing geographic community, with a net loss of "social capital". Experience to date has not justified these fears:
 

• most Internet use is at the expense of watching television;
• "virtual communities" are defined by common interests of some sort, one of which is geographic proximity;
• there are examples of "virtual communities" being created in support of geographic communities.

Another fear is that the Internet will create "a new bifurcation of society into the information rich and the information poor". Fortunately, it is not difficult for public policy to address this issue through policies aimed at ensuring equitable access to the Internet.