Feasibility Assessment for an E-commerce Cooperative to Market Hawaii's Agricultural Products

Agriculture in Hawaii has changed over the past few decades. In the place of large-scale production of two main crops, sugarcane and pineapple, by a few large companies, we now have many smaller operations pro­ ducing a wide variety of crops. Today’s farmers often cater to small niche markets, but they may be compet­ ing in a large international market. Hawaii’s remote lo­ cation presents challenges for its producers who are at­ tempting to deliver high-quality products to distant lo­ cations. The Internet, as a means to engage in e-com­ merce, can assist Hawaii producers in their efforts to connect with buyers around the world. Some of Hawaii’s agricultural producers have Web sites that allow consumers from anywhere in the world to learn about their products and place an order. To suc­ cessfully compete with the multitude of suppliers mar­ keting products on the Web is technically complex and often costly. Consumers expect professional Web site design and layout, multimedia presentations, educational information, price lists with detailed delivery options, order confirmation, and, most important, transaction security. A site capable of delivering content from a va­ riety of sources, including databases, video and audio feeds, and downloadable documents, can provide some of the new technologies that make selling on the Web more effective. However, these same technologies also make it more expensive for individual entrepreneurs to create and maintain their own Web sites. Many sellers will need a professional Web developer if their e-com­ merce business is to be a success. Small firms may find the costs of providing all the Web services expected by consumers prohibitive, and therefore they may not be able to take full advantage of the Web for marketing their products. In addition, the volume for an individual business may not be large enough to support the costs associated with this type of direct marketing. Many of Hawaii’s agricultural products complement each other and could be marketed together on the same site. Farm produce, including nursery plants, flowers, herbs, spices, specialty crops, and value-added products, including meat, macadamia nut candies, and Kona cof­ fee, could be sold on the same e-commerce “shelves.” Other efforts by private firms, nonprofit organizations, and government agencies to market Hawaii agricultural products as a group have been or are now being under­ taken. An e-commerce cooperative or other similar group-marketing arrangement may provide the needed leverage for small companies to be competitive and suc­ cessful. This publication presents results of a survey done to determine if members of Hawaii’s agricultural com­ munity would be interested in forming an e-commerce cooperative. We also estimate some of the start-up costs for examples of two such efforts. Finally, we describe related follow-up activities undertaken by the Univer­ sity of Hawaii to increase the competitiveness of Ha­ waii agricultural products.