E-commerce for farmers

Author : Edgardo Herbosa
Date added : 2003-09-26

Brief Project Background

It started as a dream. Edgardo Herbosa, in his thirties, wanted to do something significant, something beyond the lure of windfall profits and the glory of business accomplishments. Sure he wanted to be an entrepreneur but not the kind whose measures of success do not go beyond returns on investment. In a country whose GDP growth is largely dependent on whether it will rain or not, the agriculture sector accounts for a hefty 40 percent of the economy. This is widely attributed as the reason why a substantial portion of the population is living below poverty line. He knew that if he wanted to make an impact the best beneficiaries of his project would be the farmers.

By June 2000, Herbosa and co-founder Fiona J.M. Paua have hatched a vision, drawn up a strategy and were set to launch their project : B2Bpricenow.com, an electronic trading site for farmers. First to join the fold was Unisys, a US-based technology vendor engaged in e-business solution and infrastructure which had a Manila office. Also aiming to showcase an e-commerce project in their portfolio, Unisys agreed to design, maintain, and host the website for free. In other words, Unisys took care of all the technology cost which usually corners bulk of the capital expenditures of a typical dotcom.

Next step was to provide the content. Herbosa approached a television and radio program called Ating Alamin (Let’s Learn) to link its agricultural research materials for the past 25 years to the B2Bpricenow.com site. After clinching the deal, Mr. Herbosa approached Landbank of the Philippines which has the mandate to take care of the financing and developmental needs of the agriculture sector. Landbank was envisioned to become the settlement bank of the members participating in the B2Bpricenow.comn electronic marketplace.

The timing was perfect. Government agencies were being required to roll out their own ICT projects but were short of know-how and financial resources. Landbank was having a successful run of their marketing project where commodity prices were aired over a radio program, and were already in the process of mapping out a strategy to adopt the same concept over the internet. Enter B2Bpricenow.com. A partnership was the perfect result. B2Bpricenow.com was a project that was already existing, and best of all, it did not cost the government a single centavo.

Now came the gigantic task of educating the farmers on the basics of using the internet. But even before that, there was the challenge of overcoming their resistance to new technology. Obviously, there was a lot of hand-holding required to prepare them for electronic trading. But first was a strategy to reach out to the grassroot farmers themselves. For this purpose, Landbank’s network of 3,700 cooperatives each with an average membership of 285 farmers came in handy. Landbank organizes and provides financing packages to these cooperatives and the prospect of increasing their profits through a more efficient marketing system will eventually mean higher prospects of loan repayment. Part of the partnership was for Landbank to organize the training schedules, provide the venue, and engage trainors to conduct the training. Of the 21 scheduled trainings and roadshows nationwide, 19 have been conducted to date.

No less than the Worldbank and InfoDev recognized the project’s significance. In 2002, B2Bpricenow.com bagged a 118,039 US-dollar grant after besting 2,400 participants in an international competition on the use of IT for poverty alleviation. This amount enabled B2Bpricenow to reach out to more cooperatives in addition to those already being handled by Landbank. One of the country’s biggest NGOs, Philippine Rural Reconstruction Movement (PRRM), which has about 500 peoples organization, with a combined membership base of about 30,000 nationwide was the designated co-beneficiary of the grant.

It was an opportunity waiting to be tapped. There is really nothing earthshaking about the business model. It simply involves creating a bridge between the private sectors which are looking for ways to tap the farmers or other types of groups, and the government agencies which have the mandate to educate these same sectors about the benefits of e-commerce. Opportunity knocked when the available resources and core competencies of both were found to be complementary and can be consolidated to produce the desire outcome.

The secret of the sweet success of B2Bpricenow.com actually lies in the fact that the private sector and the government agencies shouldered two major expenses -technology and training. Thus, it was easier to move on and the rest just fell on the right places. For instance, because B2Bpricenow was not weighed down by technology costs, membership and access to information on the website is free. The target users need not concern themselves with the cost of access but only with exploring how the electronic marketplace can further benefit them.

Central to implementation of the project are the roadshows and regular training sessions. B2Bpricenow.com have mirror programs with partners Landbank (Strategic E-Commerce Program) and PRRM (E-Commerce for Farmers Hands-On Training Program). Typically, roadshows and training require two full days. The basics are discussed : benefits and uses of e-commerce, a hands-on training on how to use the computer, how to use the internet and create an e-mail address. In the last leg, they are trained to use the B2Bpricenow.com website as an additional tool to market their produce. They are also taught how to use their mobile phones as an alternative tool. Mobile phone users need to sign up on the website to become a member first and to have a personal page where he can indicate his preferred buyers and sellers. Once back at his farm, he can check the prices of his preferred buyers or sellers by sending SMS messages.

B2Bpricenow.com has become the tool to narrow the digital divide especially since it involves agriculture, the most marginalized and fragmented sector in the Philippines. The E-Commerce for Farmers Program between B2Bpricenow.com and the government agencies not only educates them about e-commerce, but most importantly, it provides an important reason for these farmers to use the internet. Indeed, the content that they get to view from the site is very relevant to them. From here, it is much easier to leap forward to the second aspect of the project - an opportunity for the members of the cooperatives to also earn from an IT business.

Soon, 1,500 B2Bcenters will be rolled out in various municipalities. Essentially, these are business centers where farmers can access the internet, photocopy documents, fax and buy cell phones handsets and prepaid phone cards. This next project will pave the way for the transformation of an ordinary agricultural cooperative dependent on traditional products to become an ICT cooperative where they can also earn from the use and sale of ICT products and services.

As it is though, the B2Bpricenow.com model has been proven to be sustainable because it is not bogged down by high operating expenses. There’s also a persistent effort to train the countryside players by making training accessible through state universities and colleges, partner government and non-government organizations, and of course Unisys. The B2Bcenters will also provide another income opportunity so that the hardware for connectivity to the website will also be productive.
Yet as a corporation, B2Bpricenow.com must also earn its keep and to save funds to plow them back to the business so that more cooperatives will be tapped in the future. At the moment, online banner advertisements still compose bulk of revenue streams. Private companies and government agencies post their ads on the website not because it’s cute but because B2Bpricenow.com is the “ Official e-marketplace of the Philippines for Agriculture and Fishereis” . Fact is, it is the only available marketplace for agriculture. Another revenue source is the 20 percent fee for every SMS inquiry or transaction, which costs 2.50 pesos (about five US-cents) per message. It also earns 2,800 pesos (about 51 US-dollars) a year for web page design and hosting services for cooperatives who want to own their own templates, and a share in partner banks’ settlement fees for on-line payments. Once the B2Bcenters are established, it will also have a share in the usage fee of machines and a commission form the sale of phone handsets and prepaid phone card sales at the B2Bcenter.

Results

More than three years since the birth of this project, the accomplishments has been encouraging. A total of 1,600 cooperatives have had postings while total value of postings have reached a hefty 3.3 billion pesos (about 60 million dollars). To date, 31 roadshows and training sessions have been conducted nationwide for the cooperatives both under Landbank and PRRM. The absorption capacity, which guages how much of the lessons during training programs were absorbed using pre and post training exams, is a laudable 90 percent. This means that the module used by the trainors engaged by the government agencies have been effective in disseminating the knowledge and skills to the participants.

Early on, the Worldbank-InfoDev award and grant has lent credibility and importance to the project. The 2,400 participants were whittled down to 200 finalist , then to 30 winners who flew to Washington D.C. in January 2002. B2Bpricenow.com was thrust into the limelight when it was declared one of there winners focused on the use of IT for poverty alleviaition. This award has since become the testimony of how significant these ICT-oriented projects are in alleviating poverty especially when it targets the agriculture sector. The grant money allowed B2Bpricenow.com to expand to more cooperatives, this time to those under PRRM. It was used to finance the purchase of computers and phones that were deployed to several cooperatives for their electronic trading needs. B2Bpricenow.com is seeking for more grant givers so it can also reach out to the remaining more than 13,000 cooperatives nationwide.

Meantime, the website’s content has since evolved. While it initially targeted only farmers, other government agencies have requested that more sectors be included. For example, the Department of Trade and Industry indicated that small and medium enterprises (SME) be also part of the project. It was pointed out that farmer’s commodities are used as the raw materials of food processors which are usually the SMEs. For example, a banana gets processed for an SME’s production of a banana chip. Indeed there’s a fit. As members of the site diversify and grow in number, the marketplace becomes more fertile.

On the policy front, things have been fortunate for B2Bpricenow.com too. They have been endorsed the Congressional Oversight Committee on Agriculture and Fisheries Modernization ( COCAFM) a joint bicameral committees of the Senate and the House of Representatives as the “ Official
e-marketplace of the Philippines for agriculture and fisheries sector.” It has also been included as deliverable in the State of the Nation Address ( SONA) 2003 of President Gloria Macapagal - Arroyo under Modernized Agriculture to Ensure Food Security.



The B2Bpricenow’s project was also showcased by Landbank in the Asia Pacific Rural and Agricultural Credit Association (APRACA) on one of its executive committee meetings in Bangkok, Thailand last November 2002. Already, seven participating financial institutions took interest in replicating the program in their own countries. Of these, three came over to the Philippines last February 2003 to witness for themselves how a roadshow / training is conducted. The three agriculture banks are Bank Rakyat of Indonesia , Agriculture Development Bank of Nepal and National Bank of Agriculture and Rural Development of India. The remaining four have scheduled visits later this year. Likewise, the Asia Pacific Economic Council (APEC) has made a study on the E-commerce for Farmers Program and will endorse Program in the next APEC meeting in Thailand this October 2003 for possible replication in other APEC economies.

The beauty of the project is that it is scalable and easily replicated. The business model can be adopted by other agriculture producing countries and the training module can be modified to the language of the beneficiaries.

Lessons

This is actually a story on how private sectors and government agencies can blend their objectives together to uplift the lives of those engaged in agriculture or any other sector.

But note that the initiative came from the private sectors, not the government. Partnerships with the government agencies were forged after the electronic marketplace was already operational. Had it been the other way around, the pace could have been slower because of the bureaucracy. But obviously, the project would have not succeeded without the support of the government because it is they who have the mandate and the resources to inform and educate the farmers on the benefit of
e-commerce. That allowed B2Bpricenow.com to reach out to as many farmers more efficiently.

Recognize too that the government agreed to financially support the project by shouldering the information and education campaign-related costs because B2Bpricenow.com marketplace was at no cost to them. Had subscriptions been charged, the government would have not spent to inform and educate farmers to use B2Bpricenow.com.

The biggest cost for this project that comes from the private sector is the technology and the marketing component. Crucial to the reduction of cost and the having the least burn rate was the negotiation with Unisys to own 5 percent of B2Bpricenow.com in exchange for being called their technology partner. That saved the company the financial burden of buying its own programming software for an
e-marketplace and payment gateway plus the administrative, mantainance and hosting charges.

The online payment gateway is important . The payment gateway completes the e-marketplace as a venue to post and canvass, negotiate, close a contract and transact online in the most secure environment. The payment gateway creates a full cycle of electronic trading. That way, the
e-marketplace does not become a mere bulletin board of products.

Only when these matters were settled were the agriculture department, Landbank and the state universities and colleges accepted a partnership with them. In turn, they employed their own personnel and resources in conducting the roadshows and training sessions.

Note however that no amount of advertising can prompt members of cooperatives to access a computer on their own. They have been used to age-old system of marketing their produce that they can always reason out as something that worked even for the generations before them. Indeed, there will be a lot of hand holding before they embrace a new technology.

Development Impacts

The picture of a farmer being tech-savvy may seem farfetched since many in the farming sector have low literacy, let alone have access to the internet. Add the fact that age-old practices in going through their regular routines is a comfort zone that has become a barrier they are now shy or even adamantly hesitant to conquer. The answer of course is to educate them. Below are their accounts.

1. Coconut farmers find new prospects in the internet

Coconut farming used to be one of the Philippines’ bright spots in agriculture. By supplying bulk of the world’s copra requirements, coconut has generated wealth among Filipinos farmers like no other crop had. But that was in the early part of the century. Many decades and politicians after, coconut farmers in the Philippines are one of the poorest in the world. Tell that to members of RINCONADA Coconut Farmers Cooperative down in the depressed region of Camarines Sur in the Island of Luzon and they surely would not agree more.

Cooperatives are a big relief because it is community-centered and becomes an avenue to pool ideas and share resources among the farmers - a living testimony to the old adage “In unity there is strength.” RINCODA has been on a lookout for product ideas that go beyond the basic copra output so they can have higher margins and find new markets. So far, they are processing and marketing cocofiber and cocopeat already. They have a new venture : twining and roping cocofiber from the decorticated coconut husks that are used to make doormats, hotpads and wattles for orchid growing. Capacity for the twining operations is at 100 units of wattles per month, equivalent to a mere 60,000 pesos (about 1,000 US-dollars), not enough to cover cost and salaries. Sales are coursed through a local trader. But still, they have to find new markets. Or else....

Imagine their relief when B2Bpricenow.com was introduced to them. It was a new avenue to find new buyers. Excitedly, they planned to network with as many potential buyers as possible. There were initial hurdles, of course, like learning how to use a computer. Many a farmer bashfully expressed disbelief that they can actually operate a computer, a gadget considered an obscure tool among them whose calloused hands have become proof to years of endless toiling at the coconut farms. Since their training session, one computer from a Worldbank grant has been allocated for their cooperative. Many wanted to access the website themselves so they troop to internet cafés which charge about P35 (about 60 US-cents) an hour. With meager funds, however, spending this much for access is already a burden. In response, a network of government agencies and NGOs committed to let the members of RINCODA free or cheaper use of their own computers whenever the farmers want to access B2Bpricenow.com.

But that’s not all. A community organizer, Maggie Monge, has long toyed with the potentials of producing virgin coconut oil. It was just an idea that cropped up in one of those days when they are wracking their brains for other higher-value coconut products. While going through the B2Bpricenow.com training and they were being guided on how to move from one page to another, suddenly her eyes popped! Staring right at her from one of the web pages are the words “Virgin Coconut Oil.” She knew it. There is actually a demand for the product. And the good news is, no one is producing it yet. Her heart is leaping. Finally, another coconut by-product which members of her cooperative can produce. And yes, this time, there is a market.

2. Fisherfolks break long-time practices

PRRM is implementing a community-based resource management strategy among the impoverished fishing communities that dot the coasts of Manila Bay. One of the cooperatives they are working with is El Gancho Multi-Purpose Cooperative, a village level organization named after their location in Cavite south of bustling Metro Manila. Yes, credit services are available to them in time of belt tightening, which is actually almost all the time. But there had to be more than giving them the “fish.” In time, they have put up a consumer store which turns over sixty sacks of rice every month. But life is hard in El Gancho. While the obvious main source of livelihood should be fishing -they are not called fisherfolks for nothing - not even days of big catch can make them afford more sacks of rice as they would have preferred. They know that in this industry, it is the traders who pocket the bigger earnings. There has been a long-time practice of pricing their fish catch called “bulungan” system (whispered or silent pricing) by the trader. The fisherfolks have no idea what the going rates are so they just succumb to the prices dictated to them.

Then there was talk of B2Bpricenow.com last February 2003. It was supposed to benefit them by making the going prices of their produce available to them. But, it involved learning how to use the computer. This was immediately turned down during one of the meetings of the cooperative. How can they, asked the fisherfolks, operate a computer when all their lives, the only gadgets they are familiar with are fishing gears? Unperturbed, Ka Rene, the cooperative’s chairperson, pressed on. There has to be a way to get these fishermen to see the benefits of B2Bpricenow.com and go beyond their trepidations. Then an idea was raised : What if they send their children, instead? These young ones have fresher minds and would be able to absorb the lessons easier and more effectively. Ka Rene heeded the request.

Nine fisherfolk children were sent to the two-day training sessions at the PUP in Manila last February 2003. Indeed, their young minds were like a sponge easily absorbing the lessons, tinkering at the keyboard almost like it’s second nature. They were excited to tell their parents what they missed. Anyway, they did relay to the older ones what went on at the training. And from the reactions of their parents, the older ones cannot quite get the technical aspects but were sure that real-time pricing of their catch will definitely benefit them. Say goodbye to “bulungan” system and hello to higher take home earnings after a long day on the waters of Manila Bay.

Project Information

Organisation : b2bpricenow.com
URL : http://www.b2bpricenow.com
Country of activity: Philippines [PH]

Contact Information

Edgardo Herbosa
eherbosa@b2bpricenow.com
3/F Multinational Bancorporation Building, 6805 Ayala Avenue, 1209, Makati, + 63 - 2 - 8965722

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