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E-COMMERCE WILL ACCOUNT FOR OVER HALF OF GLOBAL AGROCHEMICAL TRADE BY 2005

Richmond, Surrey, UK - The e-commerce revolution has hit the $30 billion global agrochemical industry. Agrochemical manufacturers are purchasing raw materials through Internet based Electronic Trading Exchanges (ETEs). Farmers are buying inputs on-line and are benefiting from Internet-based information providers. Distributors and dealers are also using Internet based ETEs to revolutionize the agrochemical distribution network.

"E-commerce has started to have an impact at every level of the agrochemical industry, from the purchasing of raw materials to the retail sale of the branded product" says Philip Jarvis, author of a new Agrow report, E-commerce: Opportunities for the Global Agrochemical Industry. "Moreover, we estimate that within five years e-commerce will account for more than half of global agrochemical trade - equivalent to $15 billion of goods traded via electronic channels".

The US is leading the way in Internet based e-commerce, and US farmers have now had the opportunity to purchase agrochemicals on-line for one full growing season. The report estimates that 10-15% of the crop protection products used during the 1999-2000 season moved through e-commerce channels at some point on their route down the distribution chain, and that this figure is expected to reach 50% by 2005. XSAg.com is the leading US based e-business catering to the agrochemical distribution network. XSAg.com operates as an Electronic Trading Exchange, allowing buyers and sellers of agrochemical products to trade anonymously. Anonymous on-line trading has enabled horizontal movement of products between distributors and between dealers, a channel not economically viable through traditional business practices. The UK and the rest of Europe are about two years behind the US in the development of both B2C and B2B e-commerce opportunities. The first UK based e-business facilitating trade in agrochemical products, globalfarmers.com, expects to launch its trading platform during 2000.

The report explains how the development of Internet trading of chemical raw materials and intermediates has been led by the diversified chemical industry. CheMatch.com and ChemConnect.com, the two leading chemical industry ETEs, have provided chemical companies and agrochemical manufacturers with the opportunity to undertake spot purchases and chemical contract auctions on-line. AgroConnect.com hosts the first ETE specifically facilitating trade in agrochemical intermediates and active ingredients. Based in Singapore, AgroConnect.com provides Chinese and Indian agrochemical manufacturers with an ideal opportunity to enter the global agrochemical market. AgroConnect.com also facilitates trade in branded crop protection products presenting agrochemical distributors around the world with the opportunity to move excess branded stock.

Farmers are also benefiting from the e-commerce revolution as e-businesses supplying crop protection products to the agricultural industry offer both 'content and commerce'. Loss leader information services are used to attract potential customers to the profit generating 'commerce' aspects of the site. Loss leaders usually include news reports, weather forecasts and market information. The e-commerce facilities offered to farmers include interactive business models such as on-line auctions and Electronic Trading Exchanges, and more traditional on-line brochure type business models. These e-commerce facilities provide farmers with the opportunity to purchase inputs, including agrochemicals, and to sell produce and livestock through Internet based farmer markets.

The report concludes that, through every level of the agrochemical industry, from the manufacturer to the distributor to the end-user, e-commerce is already being used to reduce transaction costs and increase competitive advantage. Within five years e-commerce will grow from being seen as an alternative to traditional business practices, to become the accepted method of business within the agrochemical industry.

The information contained in this press release is taken from the Agrow report, E-commerce: Opportunities for the global agrochemical Industry, published December 2000, priced £795/$1,670/¥191,000.

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