Dot-coms are a dying breed. This is probably an exaggeration, but worldwide, businesses solely dependent on the Internet as their medium of trading have been closing shop one after the other. Only the strong are surviving.

In the Philippines, one dot-com company is not only surviving. It is actually thriving.

B2Bpricenow.com is an electronic marketplace that caters to—surprise, surprise—the farmers.

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. The answer, of course, is to educate them and expose them to the technology. Connecting the farmers, including those in far-flung areas, is a gigantic task. But efforts are being exerted to make it a reality.

The Department of Agriculture is initiating programs to give farmers a venue for marketing their products more efficiently. Stress has been given to increasing productivity, but often, farmers produce crops that they soon realize have no potential buyers. "The tendency is to end up with a lot of spoils," notes Edgardo Herbosa, a trader by profession.

Herbosa, 36, used to be with Indonesia’s Salim Group, where he traded agricultural commodities, construction materials, and chemicals. After obtaining his masters degree from the American Graduate School of International Management, and engaging in the technical field of countertrading, he decided to become a "social entrepreneur."

Farming weakness

"I saw that one of the weaknesses of the agricultural sector is marketing," he says.

B2Bpricenow.com, Herbosa’s brainchild, aims to address this weakness.

The Internet is the cheapest way to market the products since it can facilitate and create market encounters between producers and buyers without their incurring traditional expenses such as for rent and labor. In the Internet marketplace, producers can post their production and the buyers’ requirements on-line. For farmers, this will reduce dependency on middlemen, who profit from trading their products. If farmers have easy access to information on the going price for their commodity, they’ll be in a better position to price and market their goods. They’ll also produce crops needed by buyers.

Ricardo Buenaventura, a rice farmer from Talavera, Nueva Ecija, tells Newsbreak how having access to B2Bpricenow.com has helped him and his cooperative, Nagkakaisang Magsasaka. "This trading venue enables us to monitor prices. We no longer have to travel far, going to a marketplace or trading center, to do that."

Technology costs usually account for most of the dot-coms’ capital expenditures. B2Bpricenow.com was able to cut down on these. Herbosa and partners were able to persuade Unisys to become their technical partner. In exchange, Unisys got to own 5 percent of Herbosa’s company. Unisys is a US-based technology vendor engaged in e-business solution and infrastructure.

As a result of this partnership, B2B’s major expenditures like programming and purchase of e-marketplace software, including administration, maintenance, and hosting charges, were taken out of the cost structure. And B2Bpricenow.com can now provide the marketplace for free, Herbosa says.

"If we charged subscriptions for the use of our site, it would have been difficult to move on to the next step."

Teaching farmers

The next step was to approach government agencies with the mandate, network, and resources to reach and educate farmers about the benefits of electronic commerce. Land Bank, which works with cooperatives, became the pioneering partner.

Land Bank personnel teach farmers the basics of using the Internet—how to log in, surf, send or receive e-mail. They are also trained to use the B2Bpricenow site for trading. The training is free. Herbosa says: "Since I go around the country with the Land Bank team for the information campaign and training, the education component of my business model is taken care of."

The next challenge is to get the farmers connected once they become computer literate. Most of them cannot afford to buy their own computers. To enable them to do so, Land Bank gives them loans at no interest.

In many parts of the world, the use of IT in the agricultural sector is one of the keys to alleviate poverty. In the Philippines, where agriculture accounts for 70 percent of the gross domestic product, giving farmers the necessary skills and a channel for marketing their products can ease their burdens, especially those related to marketing their produce.

World Bank award

For helping alleviate poverty through information technology and forging strategic partnerships with the private sector, B2Bpricenow was able to get a 118,000-dollar grant in a World Bank-sponsored contest. It was chosen one of 30 winners in the World Bank’s Development Marketplace Competition held January 9-10, 2002, in Washington D. C. There were 2,400 entries from all over the globe.

The judges were reportedly impressed with a feature of the B2Bpricenow project that allows farmers to check prices through their cell phones. With mobile phones now very popular all over the country, farmers can use them to canvass prices or post and change commodity prices through the Internet trading site. B2Bpricenow has tie-ups with both Smart and Globe for this service.

A large number of Land Bank cooperatives are now covered by the electronic marketing service. Herbosa’s company will use its World Bank grant to assist co-ops under the Philippine Rural Reconstruction Movement (PRRM).

Land Bank sent out its own teams to the countryside to train co-op members. In PRRM’s case, co-op members will be taught at the training facility of Polytechnic University of the Philippines in Sta. Mesa, Manila, and in other state universities and colleges all over the country.

The grant will be used by Herbosa to donate computers to the 14 cooperatives under PRRM and finance their training. B2Bpricenow.com has set up partnerships with computer hardware companies to become their sole distributor. Similar partnerships are with cell phone companies and other service providers, like logistics firms, insurance companies, and banks. "In exchange for these partnerships, they have to advertise with us," says Herbosa.

Revenue source

Like other dot-coms, the B2Bpricenow.com website gets most of its earnings from advertisements. "They advertise with us not because we are cute. It’s because it makes good business sense," he quips. These companies obviously want to reach out to the farmers, too. Cell phone companies, for example, may claim to have a nationwide reach, but the upper-middle classes still compose most of their users. If they want to go deeper, farmers are good targets.

Another revenue source for Herbosa’s company is the 20 percent fee for every SMS (short messaging service) inquiry or transaction, which costs about 2 or 2.50 pesos per text message. It also earns 2,800 pesos a year for web development and hosting services, and a share in the partner banks’ settlement fees for on-line payments.

As the market matures, and as the user-base increases, revenues from transactions will account for the bulk of revenues.

Profitable

Herbosa says his company, incorporated in June 2000, or less than two years ago, is already profitable. Many companies take three years to just break even.

Most dot-coms used to depend on venture capitalists for funding. B2Bpricenow’s business model, attested to by the World Bank, is sustainable even without such financing. "For us to reach out to more cooperatives, we can approach other grant-givers," says Herbosa.

Grant-givers are supporting similar initiatives to bridge the digital divide. A grant from the Canadian International Development Agency, in coordination with Landbank and Thai Farmers Bank, is in the offing so that B2Bpricenow.com can be replicated in Thailand.

Other government agencies want to partner with B2Bpricenow. The Department of Trade and Industry wants small and medium enterprises to post and canvass commodity prices for their products.

No strings pulled

Herbosa proudly claims that his company did not need to "pull strings" to get these agencies to tie up with them.

Right now, it has expanded to cater to other industries. From an agricultural marketplace, it has taken in construction and chemical commodities.

There are still loose ends to tie up. For example, Gil Melendres of Acres Multi-purpose Cooperative in Valencia City, Bukidnon, is eager to jump in but says facilities for on-line payments are still not in place.

Despite this, B2Bpricenow.com is showing that Filipino entrepreneurs can and do make a difference.