Reasons why farmers in Australia adopt the Internet

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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.

Introduction

The growth in the US economy over the past decade can be partly explained through the contribution of information technology [2], [9], [12], [16]. Advances have occurred through improved productivity (particularly in the services sector), and changes in the labour and capital markets. These advances occur in part because of the integration of computing hardware and software into production processes (allowing greater productivity and better use of labour and capital), the development of new services and products (including the Internet), and the improved linkages between businesses and consumers (including e-commerce). There are many indicators that suggest that the level of penetration of information technology is broadly similar between Australia and the US [15].

Agriculture is a forgotten sector in the debate about the contribution of information technology to economic growth. For example, most studies of productivity changes in an economy focus on the non-farm sector [3], [16]. Because information technology applications allow not just direct productivity changes, but also organisational changes, marketing and consumer relationship changes, and better control over supply chain management, the greatest benefits from adoption of information technology have tended to be at the manufacturing and service industry levels [3]. Agriculture, firmly in the primary industry sector, is generally assumed to have fewer gains to make from information technology.

It could be expected that some innovators in agriculture would experiment with information technology. However, the use of information technology by agriculture appears to be expanding beyond this group [14]. In the US, the proportion of farmers who had access to the Internet had risen from 13% in 1997 to 29% in 1999 [10]. By June 2000, 58% of Australian farms had computer access and 34% had Internet access [1]. Farmers are notoriously conservative and cautious with new technology. The high rates of takeup indicate that farmers are gaining real benefits from using information technology, and that they judge the benefits to be greater than the costs of time, money and frustration involved in getting to grips with a new technology. However, there has been little work to identify and quantify these benefits and costs.

Identifying why farmers in Australia take up information technology is important for two reasons. The first is that if productivity can be improved from using information technology, this might be an important way of achieving further growth in agriculture. Determining where opportunities lie for productivity gains, how they might be achieved, and what are the barriers and triggers for takeup of information technology are important questions related to this issue.

The second issue is about the net benefits that might be expected from adopting information technology. There is a large political debate in Australia about the provision of appropriate information technology services to rural and regional areas, and the appropriate level of public funding (Government expenditure), quasi-public funding (community service obligations by telecommunications providers) and private funding. Estimates of the level of benefits and costs will be important to help provide information about the likely demand for information technology services, and the efficient use of public funding.

These goals are not easily achievable. First, measurement of e-commerce and e-business activities and information technology contributions are very difficult [5]. Most national statistics are collected on an industry basis, and do not identify the contribution of particular components. It is difficult to identify transactions that occurred electronically, or to apportion actions and transactions that have an electronic component. Second, many of the benefits and costs relating to information technology are not priced in markets. Non-priced benefits range from many free products available on the Internet to the social benefits in isolated areas of gaining e-mail access. Non-priced costs include the additional time spent on solving problems, and the potential for harmful events like virus infections or data loss.

In this paper, we report an attempt to evaluate some of these issues though a case study of farmers in a particular region of northern Australia. The case study focused on broadscale cropping and beef cattle industries, which tend to be small business enterprises supplying generic markets and not be highly specialised in production. As a consequence, these industries could be expected to be at the low end of demands and uptake for information technology services. If producers in these industries report that there are net benefits in the use of information technology, the results should be broadly transferable across other agricultural industries and regions of Australia.

Section snippets

The takeup of information technology in rural areas

Australia is one of the leading nations in the world in terms of Internet infrastructure, penetration and use [15]. By September 2001, 67% of Australian households owned or leased a computer, and 52% were online [15]. The proportion of farms in Australia with computers rose from 40 to 58% between March 1998 and June 2000 (see Table 1). Internet access rose from 11 to 34% over the same time period, with a 91% increase in access between March 1999 and June 2000 (see Table 2). Queensland was third

The benefits and costs of adopting information technology

There are a number of benefits that farmers and graziers can expect to gain from access to information technology. For convenience, these can be separated into two main areas. The first reflects a focus on cost reduction, where computers and Internet access are used to automate tasks and reduce operating costs. In this case, the key benefits of adopting information technology flow from cost savings. The second area relates to benefits that farmers and graziers might gain from encouraging

Results and analysis

The responses to the survey indicated generally that computer usage and Internet access was important for business purposes. The involvement of respondents in the different sectors is summarised in Table 4 below. The off-farm income relates to the use of property assets for other purposes (e.g., farm tourism), while other income usually refers to people working part-time or full-time off the farm or property. Of the 75 respondents, 70 indicated they used a computer in their business, and 63

Conclusions

Information technology (including computers and Internet access) have helped to transform the non-agricultural sectors of western economies and drive real productivity gains. In recent years, agricultural enterprises have adopted information technology at a high rate, suggesting that agricultural producers are gaining real benefits from employing information technology in their businesses. However, these benefits have been difficult to identify and quantify.

In this paper, survey information

Acknowledgements

The research reported in this paper has been supported by the Australian Research Council, the Capgrains Cooperative, the Queensland Department of Primary Industries, and the Queensland Department of Innovation and Information Economy.

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