Digital Divide and Pakistan Agriculture sector

A different digital divide in agricultural e-commerce?

Whether individual agricultural producers will have full access to e-commerce technology is a question of technology development and control, not one of access to computers and the Internet.

"This is the real digital divide question," says W. Parker Wheatley, one of the authors of a research paper from the University of Minnesota's Department of Applied Economics. "You can buy a computer for $500 and get Internet access; that's not the problem. However, a digital divide in the development of strategic applications is still possible."

"First, the 'big players' will develop marketing and information software to fit their needs. Second, they will consider the needs of individual producers to attract them as users as well," Wheatley says. "Who develops commercial applications as well as who owns them will have important strategic implications for how individual producers engage in and benefit from electronic commerce."

E-commerce can bring concerns of collusion and price-fixing. For example, owners of one e-commerce "platform" control about 70 to 80 percent of the total meat processing capacity in the U.S. "Electronic information can be shared very efficiently," Wheatley says. "It would be quite easy for processors to simply link buying protocols and begin to manipulate markets."

"But this doesn't mean there is or will be collusion and price-fixing," Wheatley says. "It's an issue for us to be aware of, not upset about. Legislators and regulators are starting to ask questions, and the digitization of market exchange leaves an electronic trail that could provide an excellent vehicle for monitoring transactions and verifying trading practices."

Also, ownership of Internet markets by "large" players could simply be driven by the fact that they have easier access to capital to set up the e-commerce ventures. Wheatley says. "And by their sheer size, they can attract users to the market."

E-commerce can help small niche producers if they work together with others in a cooperative venture to form a critical mass. "But unless they've already established markets, it's usually not cost effective for an individual small producer to develop his or her own website," Wheatley says. "With millions of websites out there, it's very difficult to gain the attention of potential customers."

"Although individual producers may find it difficult to generate their own electronic agents or applications, they probably won't be at a large disadvantage," Wheatley says. "And they probably won't be worse off using Internet market places than conventional ones."

"Overall, e-commerce is only one factor in market development," he says. "It's not a panacea for market problems, and won't bring a short run revolution in agriculture. Its effects on markets will evolve over the longer term."