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AGRIBAZAAR: A VIRTUAL TRADING PLACE FOR FARMERS

Conference Paper · September 2004

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 AGRIBAZAAR: A VIRTUAL TRADING PLACE FOR FARMERS

Mohd Norzaliman Mohd Zain

Nur Razia Mohd Suradi
Atifah Khalid
Norlidza Mohd Yassin

MIMOS Berhad
Technology Park Malaysia
57000 Bukit Jalil
Kuala Lumpur

Tel : 603-8996 5000

Fax : 603-8657 9449

[email protected]
[email protected]
[email protected]
[email protected]

Abstract

The challenges for the agriculture community nowadays are to uplift the overall livelihood
for better quality of life. A cost effective e-commerce Supply Chain Management (SCM) application
and also a portal named AgriBazaar have been developed as a step to address the challenges. The
main focus is to bridging the digital divide among farmers, enhancing productivity and
competitiveness in the agriculture sector. AgriBazaar will be the gateway and exchange hub for
agriculture communities and all players in the industry to do trading the e-way. The portal will serve
as a platform for technology providers, industry players and government agencies to create an “e-
economy” revolution in the agriculture industry. This paper will gives overview of the main features
and usage of AgriBazaar and how it will benefit users in promoting and trading their products
online. The paper will also discuss the challenges facing during the pilot implementation of
AgriBazaar in Batu Pahat, Johor.
Keyword : Information and Communication Technology (ICT), Portal, Community center, Open
Source, knowledge society, B2B

1.0 AN OVERVIEW

Accessing ICT-carried information requires a lot of overt resources including a telecommuni-

cations infrastructure to provide network access, an electrical infrastructure to make the ICT work,
skills infrastructure to keep all the technology working, money to buy or access the ICT, usage skills
to use the ICT, and literacy skills to read the content .[2] In accordance to Dasar Pertanian Negara 3
(DPN3), the initiative will improve productivity hence generating more income for the farmers,
strengthening the industry supply chain links and create value add and efficiencies throughout the
chain. Its also provides the price transparency throughout the supply chain and in the longer run will
improve planning and strategy on the agriculture process.
The food production is increasing in a large scale in order to fulfill local demand and export
potential, aside from reducing the import bill. Increase in food production can be achieved through
opening new areas for agriculture, utilizing land intensively, improving capability, increasing produc-
tivity and applying new technology. Enhancement of current process and facilities are needed to cater
to the agriculture industry. Thus, services and appropriate training by using and applying Information
and Communication Technology (ICT) in agricultural practices and industry are necessary towards
achieving a knowledge based economy.
The nature of farming is such that the farmer manages at all levels[4]. In traditional way, the
sellers have to find their own buyers, the producer have to sell their own product themselves while the
buyers have to find the supplier or the sellers. The best place is a physical market but both seller and
buyer have to meet there at a certain time and location. The quantity and the quality of the products
are limited to the product availability at that time. In the addition, the market of the product is not
huge and then there are constraints of insufficient information to plan to improve the products.
In agriculture industry, computer is used for operational management such as for supporting
simple financial planning and very few use computers for tactical or strategic purposes. Introduction
to the internet at the later stage would bring to another dimension, a virtual connectivity in which
actors of agriculture industry are not physically connected to the outside world. ICT applications can
be created to automate or assist to support electronically the interaction between the agriculture
players and the process related to supply chain management between buyer and seller or vice versa.
AgriBazaar is such an effort to create applications or tools to automate the SCM process in
agriculture industry. Adopted from TIGeR (Technology, Industry and Government for E-economic
Revolution) model which focused on micro-electronic industry, MIMOS have signed a Memorandum
of Understanding (MOU) with Department of Agriculture (DOA) on 30th April 2003 to initiate a joint
project called AgriTIGeR. The idea is to create a virtual meeting place as a platform for the
agriculture communities to meet, interact and do trading on-line. The SCM application provide the
tool or enabler for the communities to do trading, manage daily buying activity and planing future
expansion.
AgriBazaar is the platform or the gateway or the trading hub for the agriculture community to
interact online. It is equipped with the SCM application and it is 100% locally made and thus far
there are no other similar initiative locally in Malaysia.

2.0 FEATURES OF THE PORTAL

This paper gives an overview and highlight AgriBazaar features that act as enabler for the
agriculture community to interact and do trading online. This paper will highlight the current problem
faced by farmers and how AgriBazaar application is used to address the problem.
Supply Chain Management(SCM) is the combination of art and science that goes into
improving the way your company finds the raw components it need to make a product or service,
manufactures that product or service and delivers it to customers [7]. From the definition, SCM is
about the process or the value chain involved in the agriculture industry from the farmers planting the
crops, or the small industries processing the raw materials, up to the commercial or marketing of the
product and includes customer purchasing the product and getting the product or service delivered.
Based on this notion, we have come up with seven modules in SCM that are eBuy/Sell, eStock,
eLogistic, ePlan, eSupport, ePayment and eManufacturer.
Several types of player plays an important role in the SC. They can be identified and
categorized as :-
 Customer - ones who buy products or services
 Retailer - A merchant who sells goods
 WholeSaler/Distributor - Someone who buys in large quantities of goods
 Manufacturer - A business related in making or processing (a raw material) into a finished
product
 Supplier - A company, which supplies parts or services to another company. Supplier is also
called vendor.
 Financial Institution - Institution (e.g. banks, insurance and investment companies)
 Logistic Service Provider - A company which provides transport services
 Collector – one who brought together agriculture product from various sources, which has been
arranged as a collection
 Farmer - one who planting the crops, fruits etc
 Seller/Buyer – one who sells or buys product or service

The common problem faced by the players in the supply chain of the agricultural industry
includes :
 Quality & Quantity: Produce low quality of products, unable to supply in large quantity, short-
age or excessive stocks of supply for processed food based activities(IKS)
 Skills & Planning: lack of skills in marketing, entrepreneurial and ICT, unable to forecast the de-
mands of potential crops, excess/shortage of supply due to poor planning
 Infrastructure: low infrastructure setup for example the access to and from the plantation area to
market the products
 Technology : The used of new technology to improve the produce quality and to retain freshness
 Poor Marketing Channel: lack of information and skills in marketing, rely too much on middle-
men, lack of promotions for the products
 Financial: low capital, inefficient usage of loans obtained.

Content Provider
Min. of
Department of Domestic Universities Financial Research Other NGOs
Agriculture Trade & IPTA/IPTS Institutions Govt.
Consumers Agencies
Affair

e-Buysell Latest info

e-Stock Market Analysis
e-Logistic Related
E-Payment Supply Chain
information
E-Make Management
Emel
E-Plan
E-Support
Users
Logistic
provider Retailers Wholesalers Collectors Distributors Farmers IKS Individual

Figure 1: AgriBazaar Conceptual Framework

The objectives of AgriBazaar are aligned with AgriBazaar Conceptual Framework and di-
vided into three main elements;
 Economic : increasing and improving the quality and productivity of the product hence
generating more income for the farmers, strengthening the industry supply chain links and create
value adds and efficiencies throughout the supply chain, price transparency throughout the supply
chain, improve planning and strategy on the agriculture produce
 Social : improving communication and interaction among different communities and will link
community to relevant government & private agencies
 Educational : increase ICT literacy in community, improve the knowledge on the latest
agriculture technology and increase marketing and entrepreneurial skill in community

The Figure 1 above shows the Conceptual Framework that shows how abstractly the Content
Provider, component of AgriBazaar and the various types of users could play their specific role to
the portal. The Content Provider can be described as a company who is responsible to provide a
valuable information or resources that are related to the agriculture .They could be DOA, Universities
HLI or PHL etc . The seven components of SCM as explained before are the features or application
offered in the portal. Each of the components have their own function in AgriBazaar. The compo-
nent later could be used as a tool by the members of AgriBazaar to enable their trading on-line.
The portal planned to consists of seven modules applications as mentioned before. The
eBuy/eSell features allow the user's post offers and respond to it, requesting and negotiating for the
quotation. Through the Offer, users are able to promote or sell their products or services to all users
of AgriBazaar. There are several types of Offer which users can choose depending on their suit-
ability. The types are ‘Offer to Buy’ , ‘Offer to Sell’, ‘Business Opportunity’ and ‘Excess Stock’.
Users who interested to the published offer will then used the RFQ (Request For Quotation) service
to get the quotation from the offer owner.
The Order process enable the users or buyers to make the order through on line from the
Quotation received. Buyer can issue Purchase Order (PO) if they agree to buy the products or ser-
vices from the offer published. The buyer will then received the Delivery Order (DO) and Invoice
along with the products received.
The users from Small Medium Industry (SMI) or those who have their inventory or stock ,
can utilise the eStock component for their inventory management including new inventory, updat-
ing the product information and the warehouse information. The features also allow the users to
manage the desired quantity to avoid the shortage of inventory.
Through the eLogistics features, the users are able to set up the logistic company, view
the logistic service providers and managed on-line booking for its logistics services. The users are
able to view the transport list before deciding to select the appropriate one.
The ePlan features enable for forecasting the availability of seasonal fruits based on state,
location or fruit type. This will enable the suppliers to know where to get the stock in what
quantity.
The ePayment features capable for managing the payment of goods or product which
have been purchased by the buyers. Therefore, it allows the buyer to do the payment using credit
card or any other payment method.
The eSupport enable the users to address their problems and difficulties related to
AgriBazaar and also is a channel for the users to share their knowledge information on AgriBazaar
or any that related to Agriculture. This knowledge base support is then published through article,
FAQ, Glossory and URL sharing for the other users to see and view .
The users have the benefits on the usage of AgriBazaar such as better pricing, reduce buying
and selling administration costs therefore can save time in selling and buying of agriculture products.
Other benefit, is that the portal can be accessed at anywhere and any time. Users can also have latest
or up-to-date market and agriculture technology information which they need for their daily business
and so have an accurate reports on their transactions.

2.1 Benefits of AgriBazaar

The features or application in AgriBazaar are designed to meet users need and are strongly
beneficial. Among the benefits from AgriBazaar is better pricing where the seller and buyer can
negotiate within themselves. Through the portal, the buyers can directly contact and negotiate with
the seller on the product offered. Thus, the seller can get better price by selling direct the product to
the buyer with negotiated price agreed upon by buyer and seller.
Second, it reduces the buying and selling administration costs by saving the time of doing
business. The portal acts as a gateway and exchange center for agriculture communities where they
can meet in the portal virtually to do business. Features in the portal enable them to reduce the time to
search for a new market and other activities.
Third, AgriBazaar is a portal that can be accessible anywhere and anytime. Portal can be
accessed globally with no boundaries. Other people from other countries can browsed and used the
portal, thus expand the market worldwide.
 Finally, the users will be served with an up to date information regarding agriculture
technology and market analysis, so the user is better informed.
As a conclusion, AgriBazaar will beneficial to the companies in agriculture and related fields
in term of expanded reach, improved efficiency and improved productivity and will become the
country’s most valuable site for buyers and sellers of agriculture products.

3.0 PILOT IMPLEMENTATION

AgriBazaar is a portal or exchange for malaysia agriculture products and services where
suppliers and buyers can:
 meet, interact, and do business on-line anytime or anywhere
 access the latest information for better planning, production and pricing, hence the portal
members especially farmers or cottage industry players will be more competitive
Assessment of the portal and applications is necessary for the portal to be evaluated on the
effectiveness of the usage among the users. The approach is to use pilot site as a proof of concept.
The observation made during the site selections shows that , the farmers in district of Batu Pahat in
Johor are active and can be a good potential users for the pilot program. Therefore a center called
“E-Dagang Community Center” is created to support the effort. The center is use to provide the
access for the local community to promote AgriBazaar as the enabler to assist them in the daily
trading activity.

Table 1: State Production Year 2000

States Fruits Vegetables Cash Crops
Johor 83,829.5 15,098.4 2,617.9
Kedah 16,825.4 1,410.2 489.5
Kelantan 55,515.7 3,173.5 1,499.6
Melaka 8,876.6 1,023.9 117.6
Negeri Sembilan 8,961.9 915.2 86.6
Pahang 21,073.9 7,050.0 1,099.8
Perak 23,094.6 2,726.8 1,819.5
Perlis 1,572.4 135.7 36.0
Pulau Pinang 7,297.2 1,574.1 196.0
Selangor 10,945.2 1,070.3 873.0
Terengganu 22,447.7 1,402.6 562.3
Source : Crops statistic 2000 (DOA)

Why Batu Pahat has been chosen? .The statistics from above in Table 1, shows that Johor is
the major contributor for fruits, vegetables and cash crops production compared to other states in
Peninsular Malaysia.
For pilot run, the 3 comodities that have been chosen as a focus commodities on are fruits,
vegetables and cash crops. Batu Pahat shows the most producers on the commodities than other
districts in Malaysia. Finally, the district of Batu Pahat in Johor has been selected for the pilot
program because of the following factor:
 Has fairly high and balance production for all three focus commodities (Vegetables, Fruits, Cash
Crops)
 Active and committed participants/community
 High ISO certified ‘kelompok’
 Active and productive SMI nearby area
 Good infrastructure and accessible
 Table 2: Source commodities by State
District Fruits Vegetables Cash Crops
Batu Pahat 115,971.0 35,680.6 2,856.5
Johor Baharu 15,904.7 86,513.1 13,860.8
Kluang 29,283.5 8,674.0 2,059.0
Kota Tinggi 36,854.7 26,969.9 2,135.0
Mersing 1,059.5 1,696.2 127.5
Muar 110,239.5 13,976.0 3,453.7
Pontian 159,644.1 1,146.8 2,272.4
Segamat 43,470.8 1,151.2 445.0

The district of Batu Pahat also has a large production of fruits, vegetables and cash crops.
Batu Pahat also has a balance production of fruits and vegetables compare to other districts. This can
be shown by the statistic above in Table 2, where the total productions are one of the largest among
the districts producing the same commodities. Geograhically, Batu Pahat is situated in the center of
Johore, surrounded by districts with high potential production of vegetables and fruits. Other
potential districts of bigger production of vegetables and fruits are Kluang, Muar, Pontian, Kota
Tinggi and Segamat.
MIMOS has contributed about 10 PC or namely 10 thin clients for the center in Batu Pahat
Agriculture Office .The center or the physical building is leveraging on the existing infrastructure
available in the DOA. The network topology proposed for the center is using the thin-client set-up.
Besides the hardware, the network access and the basic software are also provided as below:

Table 3: Hardware, Software and Network Access

Hardware Servers – Boot, Database and Application Server, Backup Server
Thin Clients (10 units) Switch, UPS, Voltage Regulator,
Lightning Arrestor
Firewall, Router, Laser printer, Scanner
Software Operating System – Linux OS
Office Application – OpenOffice/StarOffice
Communication Tools
Security – Firewall, Proxies, SSH, SSL, Anti-virus
Network Access Internet access (Jaring or TMnet)
Secure Network

Thin Client System consists of two major elements. They are client and server. All the clients
or workstations are diskless and the server is where all the management is carried out. With a
centrally managed system like this, system administrators need not run around fixing dispersedly
located problematic machines with drives, software and hardware. Upgrades are done only at the
server, user accounts are managed easier and more securely, and backing-up jobs carried out in one
place. The keys to the Open Source based Thin Client System are ease of management, Low Total
Cost of Ownership (TCO), and the availability of intellectually rich source code for learning.
The diskless computers linked each other via switch hub or Local Area Network (LAN). All
the computers are controlled and boot from a server using thin client technology. The server is using
free operating system such as Linux with office suit applications and the web browser.

Server
Client30
 Internet
Centralized
Switch ed
Management hubs
ISP

Client2

Client1

Printer

Figure 2: Thin clients system

Some of the benefits using this technology :-

 Lower Set-Up Cost, and significantly lower operating Cost due to reduced upgrades, reduced
training, and reduced system administration.
 Clients are diskless (no hard disk). Hence, reduce trouble due to hard disk crushed.
 All data are stored and managed centrally at the server and free from virus.
 Data back-up and software upgrades are done at one place only, which is the server.
 The system uses GNU/Linux Operating System and software applications. Hence, reduced
overall cost.

3.1 Challenges Faced During Pilot Implementation

The real problem for developing any ICT tool is not so much on the technology to develop it
but to diffuse new technology for user adoption is a big challenge. User adoptions of the technology
are the main factor contributing to a successful program rather than the sophistication of the system
itself. The human factors such as affordability, knowledge or skill capabilities, trust and socio-
cultural accessibility are such examples. In 5 to 6 years ago, computers are seen as a luxury item
especially for the rural folks and farmers. They could not afford to buy or to explore its potential and
the ICT knowledge is directly related to their formal education.
The common approach to any ICT project is to build a community center as a proof of
concept for the accessibility issue. The AgriBazaar E-Commerce Community center has been
commissioned on July 2003 is physically located at Batu Pahat town beside District Agriculture
office. In selecting the appropriate center, factors such as easy to access physically, secure, near to
public utility and has all the basic infrastructures such as electricity and water have been looked into.
The farmers and the rural folks involved in SMI(Small and Medium Industry) come to the
center to learn about the AgriBazaar portal. As they see the need to the benefits of using the
AgriBazaar portal, they indirectly adapted to the new process. A “train-the-trainer” concept is
introduced to create a chain reaction process. As the caretaker of the center, the DOA staffs have to
be trained first before they can train the farmers.
Training was conducted by DOA and supervised by MIMOS. The training for system
administration and the AgriBazaar application was conducted initially by MIMOS to the selected
DOA personnel who will be in charge of the center. MIMOS also conducted training for the DOA
district officers from other state in Peninsular Malaysia on the AgriBazaar application. The training
took place at all DOA training center located in 4 zones which includes Serdang Training Center in
Selangor, Telok Cengai Training Center in Kedah, Besut Training Center in Trengganu and Ayer
Hitam Training Center in Johore. Authorized personnel selected by Department of Agriculture will
supervise the center which provide training and assistance to the users. About 500 SMI and cottage
industry participants, 400 farmers and 200 Agriculture staff have been trained.
After multiple usage, it is hope the farmers and IKS people have to use AgriBazaar system
and in time they will adopt the portal on daily basis. In the long run regardless of their position,
gender, age or their educational background, the usage will benefiting them.

4.0 ACHIEVEMENTS AND PROGRAM UPDATE

As of 30th July 2004, there are 2275 AgriBazaar’s registered members. From the total, 1796
are individual and the rest are from company. The numbers of registered users in Selangor are the
highest among the state. This followed by Johore. Refer to figure 3.

Figure 3 - AgriBazaar users’ statistic

About 2 percent of the registered users are from outside Malaysia includes Brunei, China,
Mexico, Vietnam, Canada, Iran, Indonesia and Singapore. The portal have more than 400 categories
agriculture products and at about 200 active offers valued more than one million ringgit (July,2004)
Promotion is critical to achieve critical mass of participation and to increase the awareness of
the target users. The portal has been promoted through local media; radio, new papers, television and
other means such as internet or agriculture national calendar events. This includes seminars, talks and
academic forums. The Agribazaar had been actively promoted through a few National Agriculture
event such as Hari Penternak, Peladang, dan Nelayan(HPPN) in seven states between August and
September last year.
The users need and requirement should be taken into consideration while developing the
applications. The applications will be meaningful and can be immediately used by them. A few
considerations that are important to factor when drafting ICT applications are user ownership,
sustainability, continues value added content or services and promotion activity.

5. CONCLUSION
 AgriBazaar is a trading portal or B2B e-commerce exchange platform for agriculture
community which enable the producers, supplier, buyers and the professionals to meet, to interact and
to make online business regardless time and place. The portal and SCM applications is built based on
the need of the agriculture community and provides a cost effective platform for the farmers. It has
been tested through the pilot implementation and shows a good response of how ICT can be
leveraged in improving how we do business and it’s a timely as agriculture is becoming important for
our strategic implementation. It is hoped that AgriBazaar will continue to grow and in the long run
the socio-economic impact give a positive. It could be used to access updated information for better
planning, production, a better price, refine the SCM process through its seven module applications.
Therefore, AgriBazaar would increase ICT skills and knowledge and would narrow the digital divide
for local agriculture community and rural society in order to join knowledge economy.
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