4. Participation by the Rural Community
Rural communities differ from urban communities in several important ways, and these will affect the rate at which they are able to take advantage of e-commerce. Because the rural community is still the basis of New Zealand’s economy, it is vital that these differences are overcome.
4.1 Access
Rural areas are typically distant from telephone exchanges, and may be in difficult
terrain where cellphone coverage is difficult or impossible and where line-of-sight
telecommunications services are not feasible. In some rural areas it can be difficult to
maintain voice or fax connections, let alone making use of the internet.
Internet-based services require good access - the New Zealand Correspondence School, for example, needs better than 56kbps for interactive whiteboards and video conferencing for classroom sessions – but even 14.4kbps cannot be achieved in some rural areas [Box 4.1]. While some websites and web-based services could be ‘dumbed down’ by their designers using an absolute minimum of graphics, many rely heavily on graphic content, which can make them unusable on slow connections.
Some countries are considering national broadband (150kbps or faster) strategies – the Canadian telecommunications regulator is reported as implying that high-speed internet services may be designated as ‘essential’, particularly for small business.
Higher speeds available to urban users require short distances to exchanges (DSL, for example) or line of sight to a transmitter. The former is out of contention in rural areas for the foreseeable future, and line-of-sight solutions over long distances are still prohibitively expensive for small numbers of remote subscribers.
It is highly unlikely, in our view, that the copper wire based local loop will provide satisfactory communications support in the short to medium term. Wireless-based solutions will in the near future provide adequate bandwidth, but coverage will remain difficult and/or unreliable in remote rural areas.
Satellite-based applications are an obvious solution. Services currently available in New Zealand provide fast downlinks, transmitting one way only, requiring a phone connection for uploads. This is therefore a good but only partial solution.
Two-way satellite services are now available overseas, however. Starband Communications have implemented a satellite-based system providing high-speed two-way internet access for remote Indian communities in the USA, and are now operating commercially there.
The service is affordable, because it uses new developments in dish technology that have dramatically reduced the capital cost involved. The service includes voice communications.
This service is clearly complementary to television, and could be bundled as a single service. It should be noted that while users in the US tend to use their PCs for internet access, the British are more inclined to use interactive television (and have been accustomed to using Teletext). Pay TV is seen as the carrier for interactive services, and digital media companies are now strongly pushing interactive services like banking, shopping and email to their TV customers.
iHug has introduced interactive TV services here, and has a small satellite-based internet service (relying on modems and the phone line for uploading). Sky has a pilot two-way service operating in Auckland, which could be rolled out as a commercial service using Optus satellites within a matter of months, if it became clear that there was demand for the service and that it would be viable.
4.2 Resistance to Change
There are issues other than access that may make the rural sector slow to change: 
Industry Structure
A rigid industry structure may prevent or delay the changes needed to take advantage of the opportunities becoming available through e-commerce [Box 4.2].
For any sector to compete globally, there must be mechanisms for aggregation of producers / sellers, co-operative and orderly marketing, and research and development. There is also a need for facilitation and support of the marketplace.
Online exchanges effectively operate the marketplace, and must be independent, trusted parties in order for the market to be successful. The exchanges, if open, provide new opportunities for collaboration and enable current players to develop new roles. The flexibility provided by the online exchange is a vital element in re-engineering the sector, because it allows all parties to experiment. If some parties are prevented from doing so by external regulations, historical rigidities, current business models or attitudes, it is likely that they will be disadvantaged competitively relative to other parties who may not be similarly constrained.
Outlands Exporters, for example, could not have their meat products processed and returned to them for marketing - they found that the only solutions were to lease use of processing plants or acquire their own.
Where product is compulsorily acquired, producers may be unable to participate in e-commerce, although the marketing body is able to do so.
With product that must be aggregated, such as milk, it may of course be difficult if not impossible to provide traceability, which would enable marketers to differentiate product on the basis of the attributes of a particular farm or area from where the product is derived.
Skills and Attitudes
There are market segments that increasingly require specific attributes, such as organic produce, absence of genetic engineering, humane treatment, or proof of origin, and are prepared to pay a price premium for them. These attributes require traceability and involve extensive use of information systems right through the production process. There are three issues:
- The primary sector must be able to identify and satisfy these opportunities to differentiate
The ability to implement the processes needed rapidly could become a significant advantage in relation to offshore competitors. E-commerce, as an enabler, will play a vital role in identifying this advantage, delivering information to the market and promoting the points of differentiation.
- Product certification
Because buyers using online exchanges will be unable to see the produce for themselves, they will rely on certification from trusted service providers (Box 4.3).
All the marketable characteristics of a producer’s product must be quantitatively defined, especially for live, changing and perishable product, and these characteristics must be certified. It is important that the benefits and costs of the change are clear to producers, and that they are assisted through the transition.
- Terms of trade
In addition, Woolnet experience indicates that it can be difficult to get growers, who are often inexperienced sellers, to accept and honour terms of trade. A number of major buyers have been let down by the commercial naivety of some farmers not used to commercial obligations, and will now not buy any on-farm lots.
This suggests that part of the transition process is the co-operative development of terms of trade that are agreed to, accepted and honoured by all parties. Producers may need to change their business processes, and upgrade their skills.
Many producers currently treat their produce as a commodity, and have been happy to take the advice of their preferred buyer or agent. For the primary sector to realise the opportunities opening up to differentiate their product, producers will need to become aware of the benefits of change.
4.3 Community Participation
Research on the digital divide in the UK, USA and Canada has clearly demonstrated that access is not enough – there has to be a draw card to persuade people to participate on-line. There must therefore be a bundle of services available online – satisfying or facilitating business, administrative, social and entertainment needs for all members of each family.
The most common issue raised by those who could be online and are not is the lack of useful, local community content. There are a number of implications from this and similar findings:
Online content:
In order to maximise participation, there must be content online that is closely relevant to the everyday activities and interests of all members of the community, including such areas as:
- local job listings and employment news
- local social events, including entertainment, activities, ceremonies, etc
- the services available locally from clubs, churches, local government, central government
- the ability to interact online with service providers, especially with local and central government
- the ability to bank and pay bills online
- the ability to shop, and to track delivery
- communication with teachers and schools, and the ability to participate in school events online, to see children’s work, etc
- the ability for kids (and adults) to email, chat and play games with each other in a safe online environment
- access to health services and online entertainment for the elderly, the disabled or people unable to travel
- current weather forecasts, other environmental factors (such as water levels) and custom farm-based information, assistance or services
- the ability to monitor and control onfarm or business activity.
It should be noted that while interaction currently relies on PCs, there will be a rapid introduction over this decade of new devices able to be used online, including TVs, various handheld devices, appliances and equipment. Users will be increasingly networked at home, and be using the internet in parallel.
The community network:
A number of organisations already provide supply chain services to the rural community (fencepost, rd1, Wrightsons, etc) and online suppliers will proliferate in the short term (the time frame will primarily be dependent on the extent of suitable access for rural consumers).
Online suppliers will inevitably begin to compete with each other, making life more
complex for the end-user. Resistance to this by users and the inability of latecomers to
operate profitably will force these organisations to rationalise their online activity.
It is unlikely, however, that any one of these will become the community portal by default, because of the self-interest involved (each will attempt to capture consumers for its own product range, whereas consumers may prefer to retain free choice). It is more likely that the several sector-based vertical portals (such as the dairy industry ones, livestock, wool or wood products) interacting with one customer will eventually collaborate, particularly since many ancillary services such as transport will involve interaction with the same third parties. These verticals will then begin to specialise so that new or spin-off organisations provide specialist services to several vertical sectors (financial services, exporting, transport management, etc). One obvious potential horizontal speciality is the customer interface.
It is therefore likely that local community-based portals will develop, underpinned and administered by a local organisation, where the local population has recognised methods of adding content or interacting with the portal (Box 4.4).
The local district or regional council may be best placed to provide the support needed. These councils already have objectives in relation to community development and support.
Given the number of these councils, it may be useful for protocols or standards to be developed by local government, avoiding the need for many parallel development initiatives. These protocols would cover access to the local portal, structure of the portal, etc, providing a set of common standards while retaining the ability of each community to customise its own particular portal.
Central government services, as they move online, are likely to be provided in the same way through links from all portals, as will be services provided by national or regional businesses, so some standards will be provided by default.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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