R easons why farmers in Australia adopt the Internet

 
Electronic Commerce Research and Applications 2 (2003) 27–41
                                                                                                      www.elsevier.com / locate / ecra

               Reasons why farmers in Australia adopt the Internet
                               John Rolfe a , *, Shirley Gregor b , Don Menzies c
               a
               Faculty of Business and Law, Central Queensland University, P.O. Box 197, Emerald, QLD 4720, Australia
           b
            School of Business and Information Management, Australian National University, Canberra, ACT 0200, Australia
        c
          School of Business and Information Management, Australian National University, Rockhampton, QLD 4700, Australia
                      Received 29 June 2002; received in revised form 1 October 2002; accepted 1 February 2003

Abstract

   Landholders in rural Australia are increasing their use of computers and the Internet. In part, this is because of the
increased availability of hardware, software and communications infrastructure at reasonable cost. However, it is unclear
what all the benefits of adopting a new technology are. It may be that the primary benefits are simply cost reduction; for
example, the time saved in financial bookkeeping. Other reasons might include potential gains to production, keeping pace
with regulatory and other external changes, or improved marketing opportunities. These issues are explored in relation to the
grains and beef industries of the Central Queensland region.
 2003 Elsevier Science B.V. All rights reserved.

Keywords: Computing; Internet; Agriculture

1. Introduction                                                         ing e-commerce). There are many indicators that
                                                                        suggest that the level of penetration of information
   The growth in the US economy over the past                           technology is broadly similar between Australia and
decade can be partly explained through the contribu-                    the US [15].
tion of information technology [2,9,12,16]. Advances                       Agriculture is a forgotten sector in the debate
have occurred through improved productivity (par-                       about the contribution of information technology to
ticularly in the services sector), and changes in the                   economic growth. For example, most studies of
labour and capital markets. These advances occur in                     productivity changes in an economy focus on the
part because of the integration of computing hard-                      non-farm sector [3,16]. Because information technol-
ware and software into production processes (allow-                     ogy applications allow not just direct productivity
ing greater productivity and better use of labour and                   changes, but also organisational changes, marketing
capital), the development of new services and prod-                     and consumer relationship changes, and better con-
ucts (including the Internet), and the improved                         trol over supply chain management, the greatest
linkages between businesses and consumers (includ-                      benefits from adoption of information technology
                                                                        have tended to be at the manufacturing and service
  *Corresponding author. Tel.: 161-7-4980-7081; fax: 161-7-             industry levels [3]. Agriculture, firmly in the primary
4982-2031.                                                              industry sector, is generally assumed to have fewer
  E-mail address: j.rolfe@cqu.edu.au (J. Rolfe).                        gains to make from information technology.

1567-4223 / 03 / $ – see front matter  2003 Elsevier Science B.V. All rights reserved.
doi:10.1016 / S1567-4223(03)00004-8
28                     J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

   It could be expected that some innovators in                   electronic component. Second, many of the benefits
agriculture would experiment with information tech-               and costs relating to information technology are not
nology. However, the use of information technology                priced in markets. Non-priced benefits range from
by agriculture appears to be expanding beyond this                many free products available on the Internet to the
group [14]. In the US, the proportion of farmers who              social benefits in isolated areas of gaining e-mail
had access to the Internet had risen from 13% in                  access. Non-priced costs include the additional time
1997 to 29% in 1999 [10]. By June 2000, 58% of                    spent on solving problems, and the potential for
Australian farms had computer access and 34% had                  harmful events like virus infections or data loss.
Internet access [1]. Farmers are notoriously con-                    In this paper, we report an attempt to evaluate
servative and cautious with new technology. The                   some of these issues though a case study of farmers
high rates of takeup indicate that farmers are gaining            in a particular region of northern Australia. The case
real benefits from using information technology, and              study focused on broadscale cropping and beef cattle
that they judge the benefits to be greater than the               industries, which tend to be small business enter-
costs of time, money and frustration involved in                  prises supplying generic markets and not be highly
getting to grips with a new technology. However,                  specialised in production. As a consequence, these
there has been little work to identify and quantify               industries could be expected to be at the low end of
these benefits and costs.                                         demands and uptake for information technology
   Identifying why farmers in Australia take up                   services. If producers in these industries report that
information technology is important for two reasons.              there are net benefits in the use of information
The first is that if productivity can be improved from            technology, the results should be broadly transferable
using information technology, this might be an                    across other agricultural industries and regions of
important way of achieving further growth in ag-                  Australia.
riculture. Determining where opportunities lie for
productivity gains, how they might be achieved, and
what are the barriers and triggers for takeup of                  2. The takeup of information technology in
information technology are important questions re-                rural areas
lated to this issue.
   The second issue is about the net benefits that                   Australia is one of the leading nations in the world
might be expected from adopting information tech-                 in terms of Internet infrastructure, penetration and
nology. There is a large political debate in Australia            use [15]. By September 2001, 67% of Australian
about the provision of appropriate information tech-              households owned or leased a computer, and 52%
nology services to rural and regional areas, and the              were online [15]. The proportion of farms in Aus-
appropriate level of public funding (Government                   tralia with computers rose from 40 to 58% between
expenditure), quasi-public funding (community ser-                March 1998 and June 2000 (see Table 1). Internet
vice obligations by telecommunications providers)                 access rose from 11 to 34% over the same time
and private funding. Estimates of the level of bene-              period, with a 91% increase in access between
fits and costs will be important to help provide                  March 1999 and June 2000 (see Table 2). Queens-
information about the likely demand for information               land was third lowest in terms of proportion of farms
technology services, and the efficient use of public              with a computer, and second lowest in terms of
funding.                                                          proportion of farms with access to the Internet. While
   These goals are not easily achievable. First, mea-             these rates of takeup are very high, rates of computer
surement of e-commerce and e-business activities                  ownership and Internet access still lag behind the
and information technology contributions are very                 small business sector [15,18].
difficult [5]. Most national statistics are collected on             The grains, sheep and beef sector reported both
an industry basis, and do not identify the contribu-              the lowest proportion of computer use (55%), and
tion of particular components. It is difficult to                 the lowest proportion of farms using the Internet
identify transactions that occurred electronically, or            (31%) [10]. There was a strong positive relationship
to apportion actions and transactions that have an                between farm size (as measured by value of turnoff),
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                         29

Table 1
Farms using a computer, by state / territory
                                     March 1998                           March 1999                           June 2000
                                     Farms using a computer               Farms using a computer               Farms using a computer
                                     No.                  %               No.                 %                No.                  %
New South Wales                      16 934               40              21 545              49               23 028               53
Victoria                             13 538               37              18 075              49               21 549               58
Queensland                           11 311               37              13 870              45               17 841               58
South Australia                        6795               43                8361              53               10 180               64
Western Australia                      6850               49                8270              59                 9466               68
Tasmania                               1608               36                2186              49                 2507               57
Northern Territory                      196               52                 241              65                  260               71
Australian Capital T.                    58               55                  66              64                   67               70
Australia                            57 290               40              72 615              49               84 898               58
  Source: Ref. [1].

and the use of the computer and Internet [10]. There                    value of farm production. Larger farms in the US
are claims that farm users of the Internet actually use                 with gross sales of more than US$100 000 had
it for longer periods than do the general population                    approximately double the computer use and Internet
[7], implying that reported usage rates are under-                      access of farms with incomes between US$10 000
stated. One explanation is that farmers tend to access                  and US$100 000 [10].
the Internet for both business and recreation pur-                         Many users of the Internet appear to be accessing
poses, while metropolitan users tend to be recreation                   it to gain information, and only a small proportion
only.                                                                   are using it to purchase goods and services [7]. Other
   There has also been rapid adoption of the Internet                   important activities include education and training
in agriculture in the US. While only 13% of farmers                     activities, access to services (such as electronic
had access in 1997, the proportion had risen to 29%                     banking), and social and recreational activities.
in 1999 [7]. Computer access rose from 38 to 47%                        Using the Internet for selling or teleworking appears
over the same time period, indicating that Australian                   less important at this stage for rural industries.
farmers may have been slightly ahead in takeup in                          The rate of computer and Internet takeup indicate
this area. Like Australia, computer ownership and                       that farmers perceive real benefits in adopting in-
Internet access in the US is closely related to the                     formation technology. Yet as a primary industry,

Table 2
Farms using the Internet, by state / territory
                                   March 1998                           March 1999                            June 2000
                                   Farms using the Internet             Farms using the Internet              Farms using the Internet
                                   No.                   %              No.                   %               No.                   %
New South Wales                      5006                12               8231                19              13 596                31
Victoria                             3621                10               6174                17              12 270                33
Queensland                           3075                10               4830                16                9811                32
South Australia                      1896                12               3030                19                6442                40
Western Australia                    1428                10               2548                18                5621                40
Tasmania                              552                12                973                22                1539                35
Northern Territory                     81                22                114                31                 180                49
Australian Capital T.                  21                20                 27                26                  40                42
Australia                          15 680                11             25 927                18              49 499                34
  Source: Ref. [1].
30                     J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

agriculture appears to have limited possibilities to              weather forecasts and commodity prices are easily
use information technology to increase economic                   accessible on the Internet, but this simply represents
outputs. This raises questions about whether the                  another way of getting information that is already
benefits of information technology adoption will be               widely available. While these improvements in in-
small in this sector, with corresponding implications             formation technology may be welcomed by the
for the rate and extent of the takeup. To explore                 agricultural sector because of convenience and time
these issues, the potential benefits and costs of                 saving, they will do little to generate production
adopting information technology are explored next.                increases by themselves.
                                                                     Improved communication technology is reducing
                                                                  transaction costs in areas such banking, stockbrok-
3. The benefits and costs of adopting                             ing, and supply chain management. There are many
information technology                                            examples, such as electronic banking, where primary
                                                                  producers now have better and cheaper communica-
   There are a number of benefits that farmers and                tion services, with improved efficiencies as a result.
graziers can expect to gain from access to infor-                 There have also been suggestions that improved
mation technology. For convenience, these can be                  communication would improve the marketing of
separated into two main areas. The first reflects a               products by cutting out middle marketers and reduc-
focus on cost reduction, where computers and Inter-               ing costs [14]. Here, the benefits of e-commerce are
net access are used to automate tasks and reduce                  that more direct links can be established between
operating costs. In this case, the key benefits of                producers and consumers, and the producers can pick
adopting information technology flow from cost                    up the gains from the reduced marketing costs.
savings. The second area relates to benefits that                 However, these potential gains from direct marketing
farmers and graziers might gain from encouraging                  remain largely unfulfilled, mostly because inter-
innovation. Under this scenario, information technol-             mediate links in the marketing chain provide very
ogy allows and encourages new ways of doing                       real services that are difficult to replicate [14,20].
things, stimulating additional productivity. In this
case, the benefits of adoption come from increased                3.2. Information technology and direct productivity
productivity, rather than from cost reduction. Here,              gains in agriculture
the case for each of these possibilities is examined in
more detail.                                                         Adoption of information technology impacts may
                                                                  lead to direct production gains, as opposed to
3.1. Information technology and cost reduction in                 reductions in operating costs. There are several areas
agriculture                                                       where this might happen, including:

   The initial focus of using computer hardware and                  • better retrieval and evaluation of available data
software in agricultural enterprises is usually in the                 for management purposes,
field of accountancy and budgeting. This was the                     • development of management decision support
dominant application for computers in the beef                         systems,
industry in the late 1990s [13]. Some benefits here                  • development of processes for quality assurance
come in the form of reduced inputs, as computing                       and external regulatory compliance require-
resources are used to replace labour and accountancy                   ments,
fees. Computers are also replacing manual processes                  • better links to remote sensing and geographic
for data entry and storage [6], as the retrieval process               information systems (GIS) data,
is much more efficient when mechanised. Word                         • better links to technical and other information,
processing is also an important use, and fax ma-                     • better links to agricultural suppliers,
chines are now commonplace.                                          • more direct feedback from customers and con-
   These uses represent slightly more efficient ways                   sumers,
of carrying out previous functions. In the same way,                 • improved supply chain management,
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                31

  • opportunities for marketing and other networks                larger farms. It is only the larger scale enterprises
    to emerge.                                                    that can afford the investment in capital and person-
                                                                  nel. As decision support software becomes more
   Some commentators on agricultural trends suggest               available and successful in micro management, it
that the next decade will see the growing use of GIS              may offer even greater economies of scale to larger
data, increasingly detailed farm-level record keeping,            farms, and allow further amalgamation of farms and
and increased reporting requirements for items like               development of corporate farming.
chemical use [6]. Satellite and GIS applications are                 Better links to agricultural suppliers is likely to
already emerging in Australia. In one pilot study in              occur through reverse flows of information [10]. This
Western Australia, satellite images are used by                   is when suppliers are able to track farmers who
woolgrowers to predict pasture biomass and pasture                explore their sites, and by building up profiles of
growth rates [17]. This information can assist man-               their customers, target products and advertising
agement decisions such as grazing rotations, feed                 directly. There are economies of scale in profiling
budgeting, fertiliser applications and other ‘precision           customers this way, suggesting that it is the larger
farming’ techniques.                                              suppliers that will be dominant.
   There are already examples where improved data                    The Internet may also help farmers to market their
sets are being used to improve management in areas                produce more effectively. Better information will
such as fertiliser application and water use ef-                  allow some producers to diversify and market niche
ficiency. In many cases, such as the development of               products directly to customers. Information will help
Breed Plan, the availability of data is coupled with              producers of bulk commodities like grains to match
decision support systems to improve cattle selection              supply with demand better, and to insure against
on specific traits. Other decision support systems that           fluctuations in commodity prices. Information tech-
have been developed involve climate predictions and               nology allows growers to form alliances more easily
rainfall probabilities.                                           for marketing their product. It also allows for closer
   A key benefit of access to the Internet is the                 integration of supply chains through the improved
increased supply of information to farmers. Infor-                flow of information, establishment of quality assur-
mation takes many forms, including those relating to              ance programs, better information and traceback, and
production, farm inputs and machinery, and identifi-              closer links between market players [4,11,19].
cation of buyers, sellers and favourable contracts
[10]. It is likely that the Internet will transform the           3.3. Information technology and indirect
farm input supply sector in particular, and the output            productivity gains
marketing sector as well. Farmers will have the
possibility to use the Internet to learn about and buy               While computers are useful in replacing labour for
about a wide range of inputs, to search for lower                 mechanical calculations, these are not the primary
costs, and to order directly from manufacturers. In               purpose of computers in most business applications
these cases, use of the Internet will reduce spending             in the non-farm sector. Computers, when aligned
through local and regional suppliers, but should                  with other elements of information technology, can
make rural producers more profitable.                             be broadly applied to reduce the costs of coordina-
   Information by itself quickly results in overload. It          tion, communication, and information processing [3].
is the decision support systems that enable us to                 Because these are such integral parts of business
make use of the information that are important. In                production systems in a modern economy, improve-
some cases these are achieved through people de-                  ments here stimulate wider economic restructuring.
velopment, e.g., training staff to make the best use of           Here the arguments about information technology
available data. The real gains are to be made in the              driving gains in innovation in the non-farm sector are
development of improved decision support software.                analysed. These are then related to potential gains in
It is possible that the extent of investment in such              agriculture.
software and the learning process explains why                       From an innovation perspective, the real gains
computer and Internet usage is so much higher on                  with information technology come from business
32                    J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

managers finding new processes and organisational                ing and / or allows specialisation through better links
structures that employ the new technology in differ-             to consumers.
ent ways. These encompass changes in the way that                   Second, there are often considerable lags between
firms communicate within the organisation (hence                 investment in information technology and real prod-
the opportunities to change structure), between other            uctivity gains. The size of the investment in in-
businesses (changes in the way that supplies are                 formation technology, the extent to which it is
sourced), and between customers. Just as the steam               integrated into operations, and the ability of mana-
engine, the electric motor and the telegraph each                gers to create new production and management
transformed economies by changing the form, loca-                opportunities are all indications of potential prod-
tion, and pattern of production, so does information             uctivity gains.
technology allow innovation to be the key to prod-                  It is not always apparent how applicable these
uctivity gains [3]. Business investments in infor-               lessons are for agriculture. Most operations are run
mation technology do not simply generate normal                  as family farms, so communication needs are simple.
rates of return by replacing labour, but allow much              The complexities come from variabilities in weather
greater productivity gains to be made.                           and natural processes, rather than from trying to
   These arguments led to a search for a relationship            coordinate complex inputs and outputs. Much of the
between the takeup of information technology and                 information that is used in farming is an amalgam of
productivity in an economy. Up to the 1990s, it was              personal observation, inherited knowledge, advice
difficult to identify that takeup of information tech-           from peers and technical advice, rather than in-
nology had any influences on productivity within an              formation that has been collected scientifically. In
economy. After that point though, much more con-                 addition, coordination, communication and informa-
crete evidence has been found that information                   tion needs are probably a much smaller proportion of
technology is generating real gains [16]. One expla-             effort in agricultural enterprises than for businesses
nation for this long lead time is that investment in             involved in the secondary and tertiary sectors. It is
information technology entails corresponding invest-             with these ambiguities in mind that we turn to
ment in some intangible items such as staff training,            identifying the costs and benefits of using infor-
building up a database, software development, or-                mation technology in agriculture in a particular case
ganisational restructure and designing new processes             study.
[3]. It is only when these have been completed that
the net productivity gains and profits will emerge.              3.4. The design and application of the survey
   Another explanation of the delays in productivity             instrument
gains is that it takes business managers some time to
find innovative ways of using the new technology                    The purpose of the research was to identify what
within their business and market setting. A further              the key benefits and costs of adopting information
explanation is that there is some threshold level of             technology were for beef and grain growers in the
investment in information technology before enough               Central Queensland region of Australia. These are
capital stock and expertise develops within a firm to            the dominant land uses in that region. Other primary
generate productivity gains.                                     industries such as irrigation, mining and forestry, and
   Some lessons for agriculture can be drawn from                other land uses such as national parks, occupy only a
this brief overview. First, the real gains from in-              small proportion of the land mass. In line with the
formation technology may not be in automating                    national data [10,15], the beef and grain producers of
existing mundane tasks, but in encouraging innova-               the region would be expected to have low takeup
tion to occur. Where agricultural businesses involve             rates of information technology relative to other
coordination, communication, and information pro-                agricultural sectors.
cessing tasks, the opportunities for using information              The key research question to address was whether
technology will be high. This means that information             adoption of computers and Internet use was pro-
technology is likely to provide most benefit to                  viding more benefits in the form of reduced oper-
agriculture when it improves complex decision mak-               ating costs (including non-financial ones), or in the
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                 33

form of increasing productivity. The latter might                 directory using the region of Central Queensland and
occur in several ways, through items such as better               could include any producer with greater than 11
management, improved application of technology, or                head. The DPI grains producers were supplied by a
new opportunities for marketing. If the key purpose               DPI grain Extension Officer and were sourced from a
of information technology was to replace labour,                  list of producers subscribing to a DPI grains newslet-
then its penetration and use in agriculture is likely to          ter. Participants were selected at random from the
be limited. If the key purpose is to improve manage-              compiled lists (Table 3).
ment and productivity, then the net benefits of                      The survey was collected through a mail-out /
adoption are likely to be much higher.                            telephone response format. All surveys were mailed
   Survey data was collected to address the research              out in batches of 20 per week from October to
question. Producers were asked to rank, in turn, how              December 2001. Respondents were contacted by
important computers and Internet usage were to their              telephone in the following week and asked if they
business. These rankings could then be tested against             would like to participate. Respondents could either
other variables collected in order to determine                   complete the forms in their own time and return
whether it was the cost reduction or the productivity             them by post, or could give the answers to the
enhancing activities that were significant in explain-            interviewer over the telephone. One of the research-
ing the rankings. The self-assessment approach im-                ers and a research assistant performed the mailout
plicit in the survey was used for two main reasons.               and the telephone interviews.
The first was that specific case study information on                By January 2002, 75 responses had been received
applications and adoption on information technology               from 197 surveys issued. There were another 8% of
in the region of interest was not available. The                  respondents who indicated that they did not own a
second was that a large proportion of costs and                   computer and that the survey was not relevant to
benefits involved are non-financial ones (i.e., im-               them, giving an overall response rate of 46%.
proved social communication), and personal assess-
ment allows these factors to be considered.
   In the survey, respondents were asked a series of              4. Results and analysis
questions about their use of computers and the
Internet, as well for information about their en-                    The responses to the survey indicated generally
terprise, and some demographic and attitudinal in-                that computer usage and Internet access was im-
formation. The key questions were about how they                  portant for business purposes. The involvement of
rated the value of computer use and Internet use in               respondents in the different sectors is summarised in
their business according to a number of factors such              Table 4 below. The off-farm income relates to the
as use of accountancy records and use of online                   use of property assets for other purposes (e.g., farm
banking. In order to encourage participation and                  tourism), while other income usually refers to people
minimise the cognitive burden on respondents, most                working part-time or full-time off the farm or
questions were framed with Likert scale intervals,                property. Of the 75 respondents, 70 indicated they
where respondents could tick the category that best               used a computer in their business, and 63 used the
suited their operation. A list of the key variables for           Internet. Fifteen respondents indicated that their time
which responses were collected is summarised in                   spent on a computer had increased slightly over the
Table 1.                                                          past 5 years, while 47 respondents (64%) indicated
   The list of potential respondents in central                   that their time commitment had increased signifi-
Queensland was compiled from several sources.                     cantly. Only five respondents indicated that their
These comprised lists of members of a grains                      time commitment had stayed the same or declined.
cooperative (Capgrains Co-operative) and a beef                      Respondents were asked to rate some of the
marketing cooperative (Bluegum Beef), and lists of                software that they might be using for certain func-
grains and beef producers supplied by the Depart-                 tions. The results, summarised in Fig. 1, show that
ment of Primary Industries (DPI). The DPI beef                    accountancy packages receive very high ratings. It is
producers were taken from the Queensland Tail Tag                 clear that almost all computer users are using their
34                        J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

Table 3
Key variables collected in survey
Variable                                          Description                                                          Coded
Electronic equipment                              Links to computer for production                                     0,1
Use per week                                      No of days used each week                                            1,2,4,7
Time spent on computer                            Increase in use over past 5 years                                    1–4
Accountancy records                               Value of computer use                                                1–5
Production / property records                     Value of computer use                                                1–5
Budgeting                                         Value of computer use                                                1–5
Forward planning                                  Value of computer use                                                1–5
Word processing                                   Value of computer use                                                1–5
Overall value of computer use (DV)                Overall value to organization                                        1–5
Use of the Internet                                                                                                    0, 1
E-mail                                            Value of Internet use                                                1–5
Weather                                           Value of Internet use                                                1–5
Technical notes                                   Value of Internet use                                                1–5
Market information                                Value of Internet use                                                1–5
Education and training                            Value of Internet use                                                1–5
On-line banking                                   Value of Internet use                                                1–5
Social and recreation                             Value of Internet use                                                1–5
Buying goods                                      Value of Internet use                                                1–5
Selling goods                                     Value of Internet use                                                1–5
Own website                                       Value of Internet use                                                1–5
Teleworking                                       Value of Internet use                                                1–5
Feedback on product                               Value of Internet use                                                1–5
Shares and investments                            Value of Internet use                                                1–5
Overall value of Internet (DV)                    Overall value to organization                                        1–5
Better information                                Advantage in using the Internet                                      1–5
Reduced paperwork                                 Advantage in using the Internet                                      1–5
Improved customer service                         Advantage in using the Internet                                      1–5
Faster for goods in                               Advantage in using the Internet                                      1–5
Better inventory control                          Advantage in using the Internet                                      1–5
Reduced costs of operation                        Advantage in using the Internet                                      1–5
Differentiation of services                       Advantage in using the Internet                                      1–5
Improved competitive advantage                    Advantage in using the Internet                                      1–5
Help from software suppliers                      Support for computer and Internet use                                1–5
Help from Internet service provider               Support for computer and Internet use                                1–5
Govt funding for training                         Support for computer and Internet use                                1–5
Significance of financial costs                   Cost of computer, Internet access and other resources for business   1–5

                                                                       computer for some form of record keeping. There is
                                                                       also widespread involvement with budgeting and
                                                                       word processing, and much more limited in-
Table 4                                                                volvement with production records and scenario
Responses by enterprise type                                           planning.
Involvement                         Respondents                           Respondents to the survey were asked to rate the
with enterprise                                                        value of both computer use and Internet use to their
                                    No.                     %
                                                                       organisation. The number of responses given to each
Cattle                              58                      78.4
Grains                              35                      47.3       rating category is summarised below in Table 5. It is
Sheep                                0                       0         clear that the majority of respondents rate the value
Cotton                               7                       9.5       of computer use highly in their business. This
Off-farm                             5                       6.8       suggests that computer usage generates real value,
Other income                        18                      24.3
                                                                       either in the cost savings or productivity gains area.
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                    35

                                 Fig. 1. Ratings given for value of different categories of computer use.

Table 5
Ratings given for value of computer and Internet usage
Value of:                    Very low                  Low                   Medium                     High        Very high
Computer use                 1                         5                      9                         24          30
Internet use                 9                         5                     16                         23           9

Value for Internet usage also rated highly, but not to                  value for them. Reasons for use that achieved the
the same extent of computer usage. This suggests                        highest values were more timely and better infor-
that Internet usage does not generate nearly as much                    mation for decision making, and greater clerical
value as computer usage.1                                               efficiency (less paperwork). There was little support
   Respondents were also asked to rate the value of                     for the Internet helping to improve service, control
Internet usage for different purposes. The responses                    inventories, reduce costs, or differentiate services,
are summarised in Table 6. The use of e-mail and                        and only modest support for the Internet helping to
electronic banking rated highly in value, followed by                   improve response time for goods ordered, or to
weather information, technical information, market                      improve competitive advantage.
information and social and recreational uses.                              In another section of the survey, respondents were
   Respondents were also asked to rate their percep-                    asked about the time and dollar savings that might
tions about the advantages of using the Internet. The                   have been gained from access to the Internet. Two
results (see Table 7) show that the majority of                         respondents indicated that they had saved money
respondents viewed the Internet as achieving low                        making purchases over the Internet, while one re-
                                                                        spondent indicated that Internet use had improved
                                                                        sales results (selling lucerne hay). Eight respondents
1
 Respondents to the value of computer usage question may have           indicated that they had saved time through Internet
also incorporated their values for Internet usage within their          use, and 14 respondents indicated that they had
response.                                                               improved management decisions. By contrast, 35
36                          J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

Table 6
Ratings given for value of different categories of Internet use
                             Number            Very           Low          Medium           High             Very   Median
                             using             low            (2)          (3)              (4)              high   score (range
                             (n575)            (1)                                                           (5)    1–5)
E-mail                       55                 7              8           17               12               11     3
Weather                      45                 8             10           11               13                3     3
Technical                    46                 8             13           14               10                1     3
Market info                  45                 9              9           15                9                3     3
Education / training         33                 6              9           13                2                3     3
Online banking               56                 3              3            4               13               12     4
Social and recreation        51                19              9           15                8                0     2
buying goods                 29                 7             10           10                2                0     2
selling goods                17                11              5            0                1                0     1
Own web site                  6                 3              1            1                1                0     1.5
Teleworking                   4                 3              1            0                0                0     1
Feedback on product           9                 2              1            5                1                0     3
Shares / investments         28                 6              4            7                5                6     3

respondents (47%) indicated that the Internet al-                       4.1. Do the benefits of computer usage relate more
lowed them better information access, especially in                     to cost savings or increased productivity?
relation to weather and market information.
   The results allow some general conclusions about                        Some information about whether the benefits of
computer and Internet usage to be drawn. The                            computer usage relate more to cost savings than to
respondents have generally viewed computers as                          increases in productivity can be gained from the
creating real benefits for their businesses, especially                 survey results. It is clear that the time spent on
in the areas of financial management, budgeting and                     computer use has increased for almost all respon-
word processing. The value of Internet usage is not                     dents, with 67% of respondents indicating that their
ranked nearly so highly, perhaps because it has                         time spent had increased significantly. In comments,
simply tended to replace other forms of gaining                         many respondents indicated that there were signifi-
information about items such as weather forecasts                       cant time investments in learning to use the com-
and market prices. The use of the Internet and                          puter, and that there were low benefits to be gained.
electronic communication for personal and social                        However, it appears likely that in some areas, such
reasons does not appear to rank very highly, sug-                       as financial accounting, that there is a net savings in
gesting that the reasons for investing in information                   time.
technology generally relate to business purposes.                          There appears to be a significant group of respon-

Table 7
Ratings given for perceived advantage in Internet use
                                        Very low                  Low           Medium                 High           Very high
Better information                      16                         9            22                     14             7
Less paperwork                          19                         8            20                     11             8
Improved customer service               36                         9            13                      4             1
Faster supply of goods in               27                         8             8                      8             0
Better inventory control                33                        10             9                      4             1
Reduced costs                           27                        12            16                      5             0
Service differentiation                 34                        12             8                      3             0
Competitive advantage                   36                         3            10                      8             1
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                     37

Table 8
Probit model modelling ‘high value’ and ‘low value’ computer use
                                                            Coefficient                     Standard error                P value
Farmer is a grain producer                                    1.350                         0.4673                        0.0039
Uses computer linked equipment                                0.6040                        0.2049                        0.0032
Uses computer for accountancy records                         0.1463                        0.0045                        0.0730
Using computer for farm budgeting                             0.0013                        0.0004                        0.0032
Restricted Log-likelihood                                   235.88
x 2 (df53)                                                   20.95

dents who are using computers to achieve productivi-                      ‘medium’, ‘low’ and ‘very low’ responses were
ty gains, with 21 respondents indicating that they                        combined into the other response (‘low value’).
utilised electronic equipment (such as liveweight                         Under the second option, only the ‘very high’
scales and water scheduling equipment) in conjunc-                        responses formed the first value (‘very high’), while
tion with their computer. A number of respondents                         the other responses formed the second value
indicated that they were using software (e.g., Cattle                     (‘other’).
Plus) to track property production, and software (e.g.,                      Under the probit model, choices between one of
Phoenix) to engage in budgeting and forward plan-                         the two options available are described in terms of
ning. This information suggests that for these respon-                    significant independent variables. Results of a probit
dents, the value of computer use may come through                         analysis generate a variate of coefficients similar to a
improved production opportunities.                                        multiple regression exercise. A least-squares regres-
   The survey data generated mostly nominal and                           sion exercise is used to generate starting values, and
ordinal data. For the purpose of testing the research                     then a bootstrapping procedure used to generate the
question and statistical analysis, the variables of                       probit model. Log-likelihood and x 2 statistics (for
interest, including the dependent variables, were                         testing model significance) are also generated.
ordinal. This restricts the pool of statistical tech-                        Two probit models for predicting values for
niques that may be used to construct relationships                        computer use are reported below. In the first model
between the variables. The key options for determin-                      (Table 8), the ‘high value’ of computer use was
ing relationships (apart from non-parametric correla-                     significantly related to four variables. Grain produc-
tion techniques) are canonical correlation analysis,                      ers and those using computer linked equipment,
probit models, and logit models.2 Canonical correla-                      accountancy packages and farm budgeting were
tion analysis is generally seen as a weaker (or last                      more likely to rank computers as being of high
resort) statistical technique than probit or logit                        value.
models [8]. The number of categorical variables in                           In the second model (Table 9), respondents who
the data set made it difficult to fit logit models. This                  rated computers as having a ‘very high value’ for
left probit models as the preferred technique for                         their business were more likely to be cattle produc-
testing the research question.                                            ers, using computer linked equipment, have older
   The probit model was established by creating                           computers, value farm budgeting and word process-
binary dependent variables for respondent percep-                         ing uses highly, and value Internet usage highly.
tions about the values of computer usage and Internet                     They were also less likely to be using computers for
usage to their businesses. Two options were created                       production / Quality Assurance records. There was
for each dependent variable. Under the first option,                      also a negative constant value in the model, indicat-
all the ‘high’ and ‘very high’ responses were com-                        ing that there were other unspecified variables im-
bined into one response (‘high value’), and the                           pacting on the choices made.
                                                                             It is notable that use of computers for accountancy
2
 The latter can be used by identifying the independent variables as       purposes only emerges as significant for high value
categorical.                                                              usage, and not for very high value usage. In contrast,
38                        J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

Table 9
Probit model modelling ‘very high value’ and ‘other value’ computer use
                                                      Coefficient                       Standard error            P value
Intercept                                              22.9820                          1.1802                    0.0115
Farmer is a cattle producer                             1.8809                          0.6465                    0.0036
Uses computer linked equipment                          0.8102                          0.4886                    0.0973
Age of computer                                         0.4682                          0.1640                    0.0043
Uses production / QA records                           20.0012                          0.0005                    0.0099
Using computer for farm budgeting                       0.0020                          0.0005                    0.001
Uses computer for word processing                       0.0013                          0.0006                    0.0209
Value of Internet usage to farm                         0.0021                          0.0005                    0.0210
Restricted log-likelihood                             246.39
x 2 (df57)                                             35.2

Table 10
Probit model modelling ‘high value’ and ‘low value’ Internet usage
                                                    Coefficient                        Standard error             P value
Intercept                                            27.999                            3.016                      0.008
Cattle producer                                      22.972                            1.479                      0.044
Job off-farm                                         23.452                            1.387                      0.013
Days / week access Internet                           0.725                            0.291                      0.013
Value of e-mail usage                                 2.414                            0.875                      0.006
Value of weather information                         21.521                            0.566                      0.007
Value of market information                          20.754                            0.329                      0.022
Advantage of better information                       1.656                            0.612                      0.007
from Internet
Advantage of less paperwork                            1.060                           0.465                      0.023
Advantage of faster response                           1.953                           0.699                      0.005
time for goods in
Restricted log-likelihood                           242.94
x 2 (df512)                                          61.85

using computers for budgeting is significant for both                4.2. Do the benefits of internet usage relate more
models. Budgeting may be a traditional activity that                 to cost savings or increased productivity?
primary producers have automated with computer
use. It may also be a newer management tool that                        Information about whether the benefits of Internet
has been more recently adopted with the aid of                       usage relate more to cost savings or increased
information technology. Both explanations have                       productivity can also be drawn from the survey
some validity, making it difficult to test the research              results. It is clear from the responses to the survey
question. However, to the extent that budgeting                      that very few respondents had achieved either re-
activities can be associated with new and improved                   duced costs from purchases in, or increased revenue
management, it would appear that the benefits of                     from sales out as a result of Internet use. As well,
computer use are moving from the cost minimisation                   only a small proportion of respondents indicated that
phase towards improved management and production                     they were achieving time savings through Internet
phases.                                                              use. However, there did appear to be some benefits
J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41                 39

Table 11
Probit model modelling ‘very high value’ and ‘other value’ Internet access
                                                        Coefficient                       Standard error              P value
Intercept                                               215.1794                          5.11708                     0.003013
Days / week access Internet                               1.33608                         0.499439                    0.007469
Value of weather information                             22.90725                         1.06043                     0.006114
Value of technical information                            2.81311                         1.00087                     0.004944
Value of electronic banking                               1.63008                         0.64171                     0.011079
Value of social and recreational use                      0.649792                        0.373337                    0.081772
Restricted log-likelihood                               225.68
x 2 (df55)                                               36.35

in terms of improved access to information (which                       about the weather or markets. Actions that save time
may be related to better management decisions), and                     and effort, such as electronic banking or ordering
access to electronic banking services (which relate to                  goods to speed up delivery time, appear to be key
both management and financial accountancy needs).                       components in providing value. The significance of
The latter would also be important in terms of time                     technical information (Table 11) may suggest the
saving and convenience, as the trips would reduce                       importance of Internet access in increasing prod-
the number of trips to town and other centers.                          uctivity in some businesses, while the importance of
   The results of the ‘high value / low value’ model                    social and recreational uses (Table 11) highlight that
(Table 10) indicate that the groups most likely to put                  these values are also important.
a low value on Internet use are cattle producers,
those with jobs off-farm,3 and those who want
weather and market information. The groups that are                     5. Conclusions
most likely to put a high value on Internet use are
those who access the Internet more frequently each                         Information technology (including computers and
week, those who rate e-mail highly, see that it                         Internet access) have helped to transform the non-
provides more timely and better information for                         agricultural sectors of western economies and drive
decision making, want less paperwork, and want a                        real productivity gains. In recent years, agricultural
faster response time for ordering goods in.                             enterprises have adopted information technology at a
   The results of the ‘very high / other value’ model                   high rate, suggesting that agricultural producers are
(Table 11) indicate that respondents with a high                        gaining real benefits from employing information
value for weather information are less likely to put a                  technology in their businesses. However, these bene-
high value on Internet use. The groups most likely to                   fits have been difficult to identify and quantify.
put a high value on Internet use are those with higher                     In this paper, survey information from primary
rates of access, and those who put a high value on                      producers in central Queensland has been analysed
technical information, electronic banking, and social                   with probit models to identify factors that are
and recreational uses.                                                  associated with perceptions of value for computer
   It appears from these results that the respondents                   use and Internet access. The key goal was to identify
who value Internet use highly are those who can be                      whether benefits could be associated mainly with the
classified as wishing to improve their efficiency. It is                reduction of costs or increases in productivity in
unlikely that high value simply comes from acces-                       agricultural enterprises.
sing information more easily, such as information                          While most enterprises surveyed use computers
                                                                        for financial accounting purposes, there were mixed
                                                                        results for this variable as an explanator for percep-
3
    This group may have access from their other work location.          tions of value about computer usage. The variable
40                     J. Rolfe et al. / Electronic Commerce Research and Applications 2 (2003) 27–41

emerged as significant when explaining ‘high value’               Acknowledgements
categorisations, but not significant for the ‘very high’
category. This suggests that primary producers who                  The research reported in this paper has been
perceive most value in computer usage are moving                  supported by the Australian Research Council, the
beyond the cost-minimisation applications such as                 Capgrains Cooperative, the Queensland Department
financial packages. Other factors that were signifi-              of Primary Industries, and the Queensland Depart-
cant in explaining ‘very high’ value responses were               ment of Innovation and Information Economy.
the use of budgeting programs, computer-linked
equipment and the Internet. To the extent that these
variables can be associated with new and improved                 References
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