Digital deals

by Emily Wilson
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The definition of a signature — traditionally a person's name, written, stamped or inscribed as a sign of agreement or acknowledgement — is being challenged across the globe. Heated debates and proposed legislation concern just how to apply the role of traditional, handwritten, pen and paper signatures that designate authorization or authenticity into the new realm of electronic commerce.

But the growing issue of electronic (or digital) signatures is just one of the concerns surrounding electronic commerce. The Organization for Economic Cooperation & Development (OECD), which includes 29 member countries and is based in Paris, France, held a forum on e-commerce last October. The organization's report on the conference pointed out several themes concerning international policy-makers' views on e-commerce, including building trust, developing infrastructure and building regulatory frameworks.

"To get consumers involved more, the issue of public trust has to be resolved," the OECD report said. "Apart from the cost of technology, …trust (or the lack of it) is one of the main barriers preventing a more rapid, pervasive spread of e-commerce." The report noted that authentication is a key issue to gaining this trust.

Governments around the world are trying to pass legislation that gives electronic versions of signatures a legally binding status. Argentina has been working on such legislation for years, as has the U.K., which recently passed an electronic communications bill that legally recognizes electronic signatures.

On June 30, U.S. President Bill Clinton signed into law the Electronic Signatures in Global and National Commerce bill, which extends full legal status to any electronic or digital signature and is recognized as a milestone in the growth of e-commerce. The bill's significance is apparent when considering the OECD's recent report on indicators of the Internet and e-commerce. The report stated that as of April 2000, the U.S. had 52,000 secure servers — by far the most secure servers for electronic commerce on a per capita basis (193 per million inhabitants) in the world.

POSITIVE STEP FORWARD. This bill, which takes effect in October 2000, also will benefit online transactions between producers, grain buyers and processors via the new agricultural business-to-business web sites that have emerged within the past year, including online cash grain exchanges.

According to Forbes magazine's report, "Best of the Web B2B," agriculture is among the top 25 industries crowded with young dot-com sites.

Steve Dunn, vice-president of transportation at, an online cash grain trading exchange for the Midwest region of the U.S, views the passage of the electronic signatures law as a positive step forward. "It validates the venues," he said. "The digital signatures act will be the DNA of e-commerce, validating the process to all management and encouraging them to accept and adopt the digital exchange of data.", based in Shawnee Mission, Kansas, U.S., has already started integrating electronic signatures into its new application package for grain transportation, which will be released soon. The new application, which will track grain shipments, requires drivers to "electronically sign" at the point of pickup for verification., a recently launched, online cash grain exchange for producers and buyers in the central U.S., also is excited about the new legislation. Scott Deeter, chief executive officer of, said valid e-signatures would be crucial for grain buyers and sellers on the Internet because state and federal warehousing agencies have historically required a manual signature for audit purposes.

There are two main benefits to extending legal privileges to electronic signatures, according to Mr. Deeter. "First, it eliminates any question about legality issues. This is really important for the U.S. Department of Agriculture," he said. "Second, state regulatory agencies can look to these electronic contracts for record verification, and it can reduce their work loads."

Based in Fort Collins, Colorado, U.S., previously worked with producers, buyers and state and federal grain warehousing agencies to develop a trading password application that would simplify the e-business process and still meet requirements for a manual signature. "The new e-signature law will make the registration process simpler, faster, less onerous and less intrusive for farmers to do business on the Internet," Mr. Deeter said. "It also provides grain buyers with absolute assurance that regulators will accept e-signatures for grain contracts."

Allen Hurley, a producer of corn, soybeans, wheat and milo on about 3,000 acres in north-central Kansas, U.S., has been posting grain sales on and is glad the law was passed. "It adds confidence that the system is legitimate," Mr. Hurley said. "You can be sure that signatures are binding. For me, it adds legitimacy and responsibility,"

That legitimacy is important because Mr. Hurley sees many advantages in trading online. "The idea to go to one place and check lots of bids is very interesting," he said.

Mr. Hurley said he also likes the variety of information, the ability to check bids any time of the day and faster contracts. "It certainly saves time and money," he added.

Speed and timeliness of contracts is a major benefit to online trading, Mr. Deeter explained.

"Before, the producer and buyer would have to agree to price and quality concerns," he said. "Then the buyer would make a contract and mail it to the producer, who then returns it. That process could take seven to 10 days. Now, it literally takes seconds."

Grain trading on the Internet is picking up momentum, Mr. Deeter said. "Most people in the grain industry realize that they will be buying a lot of their grain online in the next five years," he said. "[The signing of this law] is really just icing on the cake."

David Pfizenmaier, a truck grain merchant for AgMark, L.L.C., Beloit, Kansas, U.S., said his facility has already been posting bids online for about two months. He thinks the passage of the electronic signature law will promote more online trading activity through the additional public awareness that trading online is a safe, legally binding process.

"I know that it will make a difference in the mind of commercial traders," Mr. Pfizenmaier said. "I think there are plenty of folks just getting started; it will just take a little time until people trust it completely."

AgMark would eventually like to sell products online to producers, and is working on a new application package for such transactions. Mr. Deeter said he has received a lot of feedback from milling companies who are buying online or are interested in it.

AROUND THE GLOBE. The U.S. may be leading the world in electronic commerce, but agricultural dot-coms, interest in them and subsequent electronic signature debates are popping up around the world. is serving Canada's agricultural sector by supplying a grain trading exchange and complete business services to move grain throughout Canada. The company later plans to extend its range into the U.S.

In just a few months, an online exchange — — will be launched in England. In a press release, c.e.o. Jonathon Land said the agricultural sector, which is key to the economy of Scotland and the U.K., must embrace new ways of working together in the new marketplace to drive efficiencies and savings.

Located in the Royal Highland Centre in Edinburgh and already employing more than 50 people, is one of the U.K.'s largest-ever privately funded dot-com start-ups, with U.S.$5.86 million of funding.

"When we go live, will deliver the country's foremost business-to-business service and a valuable new channel tailored specifically to the needs of all areas of the agricultural sector," Mr. Land said., a leader in agricultural e-commerce in Argentina, anxiously awaits the passage of an electronic signature bill in that country. Marcelo Di Cugno, chief operating officer for MegaAgro, said the electronic signature will open a wide range of opportunities to improve and optimize commercial transactions, especially in the agricultural sector.

"We think that in the future, all types of commercial and administrative transactions will be closed electronically in a more efficient way, leaving more time for improving production and new businesses," Mr. Di Cugno said.

"The electronic signature will be a key tool for international e-commerce, and if e-signature laws launched along the world are in some way similar in their structure, e-transactions can be increased substantially," he added. "We have received inquiries from many of our customers in the different commercial chains for the rapid implementation of electronic signature."

Mr. Deeter of also noted the potential of e-commerce to connect the international agricultural community, but that is a long way off, he said. plans to launch similar grain trading sites internationally, but the number of Internet connections in other parts of the world needs to increase first. "And first we will deliver on our promises to the U.S. grain buying community," Mr. Deeter said. has had a number of companies around the world, including businesses in France, India and several African countries, log on to its web site to review procedures and evaluate the potential for implementing such exchanges for their regions. Mr. Dunn also noted that all the programming for applications can be easily translated into any other language.

In London, the Grain and Feed Trade Association (GAFTA), which writes contracts for international grain and feed trade, however, has not begun conducting transactions online, said Randall Warin, trade policy manager.

"E-commerce is growing first on the domestic markets," Mr. Warin said. "But it is something that GAFTA is looking into."

In fact, GAFTA just formed an e-business committee at the end of July to address current and upcoming e-commerce issues developing in grain trade. And for its November convention in Egypt, GAFTA is attempting to arrange a speaker to address the benefits and risks of online trading.