E-Commerce and Agricultural Markets

OFOR Working Paper No. 00-03

42 Pages Posted: 21 Jun 2000

See all articles by Sarahelen Thompson

Sarahelen Thompson

Purdue University - Department of Agricultural Economics

Eugene Kunda

Chicago Board of Trade

Date Written: April 2000

Abstract

E-commerce will have a profound effect on agricultural markets. Due to lower transactions costs, more firms throughout the agricultural value chain will be able to engage in business-to-business e-commerce. Products and services will be increasingly unbundled throughout the marketing channel. Firms will be able to specialize in narrow niches and will face competition from other similarly specialized firms. Many more products and services will be traded as "commodities," and price discovery throughout the value chain will become more transparent and observable. Differentiated or value-added agricultural products, such as high oil corn, or "Roundup Ready" soybeans could be traded on organized, perhaps virtual, exchanges. To increase the probability of success of new contracts, exchanges should use information technologies, demutualize, design contracts to meet industry needs, encourage inter- and intra-market spreading, and develop new means to certify product quality. Producers will benefit from e-commerce if they can gain competitive access to the virtual value chain.

JEL Classification: Q12

Suggested Citation

Thompson, Sarahelen and Kunda, Eugene, E-Commerce and Agricultural Markets (April 2000). OFOR Working Paper No. 00-03, Available at SSRN: https://ssrn.com/abstract=229797 or http://dx.doi.org/10.2139/ssrn.229797

Sarahelen Thompson (Contact Author)

Purdue University - Department of Agricultural Economics ( email )

West Lafayette, IN 47907-1145
United States

Eugene Kunda

Chicago Board of Trade

141 West Jackson Blvd.
Chicago, IL 60604-2994
United States

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