Western Canadian grain is the springboard for a Net market-making company that has its eye on even broader horizons than the Prairies.
AgriPlace, headquartered in Calgary, announced recently that $2.3 million US worth of grain traded in August on its online exchange. It has seen a monthly average of $1.5 million US and total trade of $18 million since the site debuted March 30. That money changed hands for 10 million bushels of grain.
Doug Cornell, vice-president of e-business solutions for AgriPlace says the company is in discussions with other sites in the United States “that might take us there quicker than doing it ourselves.”
The secrets behind the company’s growth seems to be maintaining middlemen and clickable, real-time trading.
“When we wrote our business plan a year or so ago, we tried to be inclusive,” says Cornell. Many people look at eliminating middlemen as a natural savings generator on the Net. “We tried to keep people in.”
Cornell, who has a background in commodity trading for producers, says many farmers have close relationships with their advisers. AgriPlace allows the farmers’ own advisers — whether cash grain brokers, elevator managers or others — to trade for the farmers. The AgriPlace transaction fee to the farmer is the same; any broker gets part of it, says Cornell.
The trades are executed on an exchange. Many agricultural sites offer bulletin boards that only list offers to buy or sell. On the grain-trading site, GrainPlace, you can click on a lot and execute the transaction. “If someone beats you by a millisecond, they’ve bought it, not you,” says Cornell.
GrainPlace is the first online bid-offering exchange in North America. As an exchange, it backstops the transactions and makes sure everyone gets paid. AgriPlace also has a farm supply site, InputPlace. It’s modelled on a catalogue, not an exchange.
“It’s a case of using . . . the right model for the marketplace . . . .” says Cornell. “That’s why we used two different Net market models.” The third site — like the company, it is called AgriPlace — offers agronomic advice, including custom crop planning.
AgriPlace hired name advisers on matters from insect pests to seed varieties. The person advising a farmer on what fertilizer to use won’t be the person trying to sell him fertilizer.
“We believe our marketplace must be neutral so all players can come and find value,” says Cornell.
The three sites were all designed by Verida Internet Corp., AgriPlace’s Californian parent company. Verida’s vice-president for marketing and public relations, Alan Gold, says it’s a net market-making company that also includes a strategic marketing and communications branch, which does branding on and off-line. Verida is exploring other agricultural markets such as coffee, and energy trades including oil and emissions credits.
Web Watch:
www.agriplace.com
www.grainplace.com
www.inputplace.com
