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Electronic Marketing of
Cattle
a a
Jacques Viaene , Xavier Gellynck & Wim
a
Verbeke
a
Agricultural Marketing , University of Gent ,
Coupure Links 653, B-9000, Gent, Belgium
Published online: 22 Oct 2008.

To cite this article: Jacques Viaene , Xavier Gellynck & Wim Verbeke (1998)
Electronic Marketing of Cattle, Journal of International Food & Agribusiness
Marketing, 9:4, 81-97

To link to this article: http://dx.doi.org/10.1300/J047v09n04_05

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 Electronic Marketing of Cattle:
Possibilities and Problems
Jacques Viaene
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Xavier Gelly nck

Wim Verbeke

ABSTRACT. The ob,iective of this paper is to evaluate the possibili-

ties and problems related to the introduction of electronic marketing
for cattle in Belgium. By evaluating existing electronic marketing
systems in the UK and France, followed by a survey of farmers and
slaughterhouses in Belgium, the necessary information was collected
to determine conditions for si~ccessfulintroduction. Possibilities and
problems can hc summarized as seven necessary conditions to he
fulfilled, namely the creation of the potentially competitive market,
the presence of suficient trading potential, the development of an
acceptable method of product description, the guarantee of perfor-
mance, the market support, the presence of entreprcneurship backed
up by vcnturc capital and the development of human capital. Introduc-
tion of electronic marketing for cattle in Belgium could be worth-
while, if these seven clemcnts are worked out as essential parts of a
marketing plan, including objectives, strategic options related to the
four P's, actions for implementation, marketing budget and method
for control and feedback. [Article copies avuiloble for u fee Jro~nThe
Huworth Doc~~n~e~lt Delivery Service: 1-800-342-9678. E-mail address:
geti~fo@ltuwor-tl~prersi~ic.co~i~J

INTRODUCTION
Traditionally, markets in general and livestock markets in particular
opcrate as a place for price discovery and to realize transaction. Supply

Jacques Viaene is Professor, Xavier Gellynck is Researcher, and Wim Verbeke

is Assistant, Agricultural Marketing, University of Gent, Coupure Links 653,
B-9000 Gent, Belgium.
Journal of lnlernational Food & Agribusiness Marketing, Vol. 9(4) 1998
O 1995 by The Haworth Press, Inc. All rights reserved. 81
 82 Jorrr.11~1 h o d cC Agribusit~essMurkelir~g
o/'I~i!er~~u!ior~ul

and demand are confronted with each other, which results in a pricc. This
price also is directive for tranbactions outside the livestock market.
Marketing mcthods are difficult to change. The introduction of ncw
communication technologies such as computers also has potential in the
marketing of agricultural products in gcneral and cattle in particulz~r.The
objective of this paper is to evaluate the possibility and problems related to
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the introduction of clectronic marketing for cattlc in Belgium, without

transportation of cattle from thc farm to thc market placc, but directly to
the slaughterhouse. Hereby, the paper focuscs on a particular typc of
cattle, namely the cattle ready to slaughter.

RESEARCH METHODOLOGY

The different links in the marketing chain for beef are illustra~ed in
Figure 1 (Viaenc & Debrabander, 1990).
During the past 25 years, agriculture in general and cattle farming in
particular are characterized by increasing specialization, which implics
intcrdependence, less independcnce and more risks for each link in the
markct chain. To lower thesc risks, more direct marketing is used.
Open markets guarantce competition and pricing efliciency, while di-
rect marketing is characterized by weaknesscs such as insufficient com-
petition, lack of transparency and inaccurate prices. To avoid thcse prob-
lems, electronic marketing could bc a solution. Figure 1 indicates the
marketing chain for cattle and meat. The institutions involved are:

Farmers;
Cattle market;
Slaughterhouses.

To analyze the relationships in the market, both secondary and primary

data are used. Secondary data consist of statistics, books and reports.
Primary data are collected in thc market itsclf by survey and interviews
with professionals. Two types of information were collected. Firstly, exist-
ing electronic markets in the UK and France were visited. During these
visits, both problems with starting up the electronic markcling system and
the actual situation were discussed. Secondly, a survey of farmers and
slaughterhouses was conducted in Belgium. During the personal intcr-
views, a videotape illustrating the working of thc system was used as an
introduction. Then, a structurcd questionnaire was cornpletcd considering
the following topics:
 Viae~le,Gellyrtck, U Verbeke
I I ~ 83

Actual sales/purchase channels and pitfalls;

Important components today related to buyindselling of cattle;
Acceptability of electronic marketing.
In total 66 farmers and seven slaughterhouse managers were interviewed
during the period May-June 1995. The data obtained by the survey of the
farmers were processed through the software package SPSS (Statistical
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Package for Social Sciences). The data obtained from the interviews with
the slaughterhoitse managers were interpreted in a qualitative way. Based
on the collected information, conditions for successful introduction are
determined.

FIGURE 1. Marketing chain for cattle and beef in Belgium.

:.-;.rrcr<>rr;.c,.... .*..c...p7<;.rz7cri.r. .r;c<~r...h.<vcc..;r;.d-r; .ccc,-.. .<;rs r<;.rr;rrc< ..........;ps.<<A.c;rr.--

:1

--+EXPORTATION OF C A T T L ~
E
iI
$
IMPORTATION OF CATTLE:
.. ............. .
...............
....................................
L.. !
r'
b EXPORTATION.OFMEAT
I
IMPORTATIONOF MEAT

us-'-
1
PROCESSED MEAT
HOUSES

CATERING INSTITUTIONS + HOUSEHOLDS I

EXPORTATION OF MEAT

Source: Adapted from Viaene. J. R Debrabander. J. 11990)

 84 Jourr~ulof I~tlerr~alior~ul
Food CC Agri6u.si11e.s~
Murkefirrg

ELECTRONIC MARKETING FOR C A T X E IN EUROPE

Essentials of EMS
All EMS (Electronic Marketing Systems) are based on similar prin-
ciples and five essential chi~racteristics can be identil'ied (Henderson,
1982):
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Organized trading;
Centralized sales negotiation;
Remote market access;
Description selling;
Post-sale shipment.
Organized trading or exchanging products implies a set of behavioral
rules, which apply to all participants. It means that all participants know
the rules of market behavior and respect these consistently. These rules are
not limited to delivery and payment, but include also sanctions against
participants who do not respect the accepted rules.
EMS irnplics centralized salcs ncgotiation. Numcrous buyers and scI1-
ers interface with one another to realize transactions. It is the opposite of
one-to-one trading, in that alternative buyers and sellers are readily avail-
able and accessible. The use of progressive auction bidding illustrates this
quite well. The second highest bidder stands as a ready buyer at a margin-
ally lower price.
One of the most important characteristics of EMS is that neither buyers
nor sellers need to be physically present at one and the same location. It
means remote market access. Participants entcr the market via telephone
lines and Personal Computers. In this way, participants can bc dispersed
over a widc geographic area.
Transaction is realizcd on description of the product. It means that it is
not necessary to move products to a central location for inspection by
potential buyers. Description implies the creation of a language, which can
he casily understood by all participants. Product description by third-party
assessors may be necessary to assure accuracy, objectivity and integrity.
The EMS includes post-sale shipmcnt. Since products are sold hy de-
scription, product delivcry can be made on a direct basis from seller to
buyer. Products must not be transported to a central point for inspection. In
this way, sellers maintain physical control over the product until i t is sold
and shipping time is saved.
None of these five essential characteristics are unique to EMS, hut the
combination of all of them makes EMS a unique alternative to convention-
al marketing systems for agricultural products.
 Viue~te,Gellynck, and Verbeke

Working of EMSfor Cattle Livestock in the UK

An overvicw of the process in EMS is given in Figure 2. Whcn the
farmcr decides to sell cattle, he contacts the company organizing the
electronic market (the auctioneer). The auctioneer will send an assessor to
collect information related to thc livestock for sale and to agree about a
minimum price. One assessor is able to classify about 300 bovine animals
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per week.
The dcscription includes information such as breed, sex, age, estimated
livc and carcass weight, assessment of the likely carcass classification
based on thc SEUROP-grid, followed feed programme, housing tcchnique
and location of the animals.
The description of each lot to be sold is entered into the central comput-
er and a catalogue for the coming sale is compiled. In thc UK, the average
size of a lot varies from eight to ten bovine animals, with a maximum of 30
heads.
Buyers connect to the central computer via their personal computer, oftice
telephone and modcm, through the publ~cdata network. Each buyer is given
his own secure uscr namc and password to permit access to the system.
Sales are conducted using thc central computer of the auctioneer. Buy-
crs "log in" at the appointed sale time and bid from their own office on the
basis of the on-screen description. The EMS is a competitive sale. Buyers
bid against each other simply by pressing the return key on their computer
terminal.

FIGURE 2. Process in EMS for cattle livestock.

1 . Decide to sell
4
4
2. Description
J
4
3. Central computer
I
1
4.
t
Sale informationto buyers
1 I
and documentation
 86 Jortrr~ulof l ~ l l e r ~ l u ~ i oFood
~ r u [ cC Agribllsi~ressMorkelir~g

As the salc progresses, the computer automatically brings up the lots in

catalogue number order. The auctioneer enters thc asking price from his
computer terminal, which appears sin~ultaneouslyon the computer scrcen
of the buyers.
Prices descend in a pre-determined pattern, for example, 2 pcnces per
kg, until the first bid is registered. When the bidding starts, the price
ascends with each new bid. If the predetermined hidding period elapses
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with no further bid being placed, thcn the auction of that lot is complete.
The auctionecr will either notify all buyers that the lot has bcen sold or,
if the lot has failed to reach its reserve price, that the lot has bcen with-
drawn. It happens that a lot is offercd again at the cnd of the sale.
The bidding is based on the R2-4L classification (Table I.) with prede-
termined premiums for carcasses classifying E or U and discounts for
poorer quality and over-fat carcasses.
Cattle is collecied within seven days of sale and slaughtered within 24
hours. Carcasses are graded by the Meat and Livestock Commission and
trimming is based on the Ncw National Standard.
Invoices are raiscd and payments arranged according to the carcass
weight and classification. Thc slaughterhouse pays within 14 days and a
price of Sf an hour is charged for use of thc software. Commission is
payable to the auctioneer by the scller. Eventually, the price is adjusted,
taking into account any variations from the catalogue description.
Payment to the farmer is made by the auctionecr within 7 to 14 days of
slaughter and is guaranteed. The farmer receivcs a full report on the
slaughtering of his cattle. Thc commission for the auctionecr, a had debt
levy and statutory MLC charges are deducted.

TABLE 1. Basis for bidding on cattle livestock in the UK, including premiums
and discounts, 1995 in pencesikg.

Source: APEX (1995).

 In 1990, the EMS was introduced in the UK from Canada by Electronic
Auction Systems Europe (EASE) (Christie et a]., 1991). In 1995, five
other conipanies were competing in the market. Based on interviews, the
market share of EMS as a purchase channel for cattle is indicated in Figue 3.
In 1995 total slaughterings of cattle were about 3.3 million heads. In 1995,
the share of EMS was estimated at 6% or about 200.000 animals and is
expected to increase in the coming years. This market share was realized
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ovcr a period of five years at the expense of both the live auction and the
niiddlemcn (cattle merchant). Related to the quality of the cattle being
auctioned, most animals are of the types R, 0 and P according to the
SEUROP-classification. The types of cattle can be considered as a quite
standardized type of animal.
Working of EMS for Cattle Livestock in Frarice
Sicamob, located in Brittany, has developed an EMS very similar to the
ones operating in the UK. The systcm became operational in February
1991. The starting point is the description of cattle by an asscssor of Sica-
mob. This assessor is able to visit approximately 10 f m s per day. The
description comprises information concerning number, category, race, SEU-
ROP-grade and location of the cattle. Jn agreement with the farmer, the
asscssor composes lots of eight to ten heads. Before the auction takes place,
a catalogue, containing all information about the presented lots, is available
to the buyers at 'Minitel.' The auction is held every Friday afternoon.
Buyers connect to the system by use of the telephone network and
'Minitel.' To entcr the EMS as buyer, a bank guarantee covering two
weeks purchases must be available. Sicamob installs all necessary equip-
ment for thc buyer. This equipment comprises 'Minitel' and an operation
panel. The operating panel is connected with Sicamob through thc tele-
phone network and comprises a mini auction clock, a bidding button and a
loudspeaker, transmitt~ngthe voice of the auctioneer during the auction.
Thc information about every lot appears on the 'Minitel'-screen.

FIGURE 3. Market share of EMS for cattle in the UK, 1995 in % of total
slaughtering cattle.

,
I 464%

Slaughterhouse
, , CATTLE FARMER

126%

Life auction
, 46%

EMS
Source: Based on interviews and 'The Livestock Audioneers' Association,'annual report 1995.
 Parallel with the remote marketing, the bidding can bc followcd and
,joined by potential buyers, physically present at thc auction. Some buyers
still prefer to be at the auction. Especially the social aspect of meeting
some colleagues accounts for this preference. The lots are sold to the
highest bidder if the farmer, oftcn present at the auction place, or the
auctioneer agrees with the price obtained. Sicamob guarantees transporta-
tion and payment to the farmers. Payment is realized to farmers and by
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slaughterhouses within 14 days. Assessors in the slaughterhouses grade

the carcasses. The Ministry of Agriculture controls Lhese assessors. An
independent organization, named 'Interbovi' operates as a 'referee' if
problems or disagrecments arise.
Through this system, Sicamoh markets weekly ahaut 100 to 300 heads
to a maximum of 15 buyers, of which eight can be considered lo be regular
buyers. About 50 heads are marketed in a pcriod of no more than threc
minutes. The auction commission accounts for 1.5%to thc seller and 0.5%
to the buyer.
The Sicamob EMS operates beside a more traditional cattle livestock
markct. The rather small amount of cattle sold through EMS is part of
Sicanlob's strategy, in which traditional markcling, with the physical pres-
ence of cattle and buyers, still takes precedence.

'SWOT' stands for Strcngths, Weaknesscs, Opportunities and Threats

(Day, 1984). Strengths and Weaknesscs of EMS result from its competi-
tive position on the onc hand and from its technological and managerial
capabilities (resources and competencies) on the other hand. Strcngths and
Weaknesses refer to the internal characteristics of EMS and rise from
substitutes, suppliers and customers, tcchnology and development of new
products.
On the contrary, Opportunities and Threats refer to the external envi-
ronmental factors and the competitive position of EMS related to thcse
factors. Examples of Opportunities and Threats are regulations, consumer
behavior and price evolution. Based on the experience with the existence
systems in the UK and France, a SWOT-analysis is realized.
The strerzgtlrs of EMS can he summarized as follows:
Because of direct transportation of livestock from farm to slaughter-
house and search-time saving, reduction in purchase costs.
Easy access to a widc range of sellers and buyers which generally
implies better prices than through the use of conventional marketing
methods.
 Viaerrs Gellyr~ck,and Verheke 89

Possihility for buyers to purchase a much tighter specification.

Selling on deadweight classification which means that the slaughter-
houses participating in thc EMS apply the same rulcs. It results in
higher pricc transparency.
Cost effective ~narkctingsystem bccause commission is modest and
only charged on completed salcs.
The auctioneer guarantees payment.
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According to contacts with users of EMS in the UK, the following

weukrresscs can be identified:
Convincing slaughterhouse managers to participate in EMS is hard
because current purchase channels give satisfaction. Thc use of EMS
could result in a loss of bargainingpower for the slaughterhouse. It
means that the move to more extended use of EMS must come from
the cattle farmer. It is estimated that a market share of about 20% is
required to force enough slaughterhouses to participate in EMS.
Collecting farmers to participate in the system requires a lot of ad-
vertising.
The subjective classification of livestock by the fields-men could
anger both farmers and slaughterhouses if it differs a lot from the
SEUROP-classitication.
for EMS:
External changes crcate the tollowing opporli~~~ilies
The public cares about animal welfare and more and more criticism
can be heard related to transportation of animals and live auctions.
Supermarkets prefer and sometimes insist that cattle come straight
from the farm and should be traceable back to the farm. It implies
that cattle under quality assurance schemes can he clearly identified.
Actually, prices on the cattle market are low. This could force farm-
ers to look for new selling systems, which could give them a better
return.
The EMS as it has been developed for cattle can easily be copied for
other farm products, which could broaden the market.
Also some drreats can be identified:
Most farmers selling directly to slaughterhouses are committed and
loyal to them and will not change their habits.
Slaughterhouses do not always use the MLC grading system and ap-
ply their own classification system. Based on these systems, cattle
are purchased.
 POTENTIALS AND EVENTUAL PROBLEMS IN BELGIUM

In Belgium, total slaughterings of cattle represented about 640,000

heads in 1995 and two main channels can bc distinguished for the pur-
chase of slaughtcring cattle by slaughterhouses, namely (Figurc 4):

directly at the farm;

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through thc livestock markct.

During the last 35 years, the share of purchases through the livestock
market is characlerized by a continuous decline. In 1959, thc share of
livestock markets still reprcsented SO% of the total supply of slaughtering
cattle (Baptist ct a]., 1961), while during the seventies this share decreaszd
to 60%-70% (Studien zur Agrarwirtschaft, 1971). Based on the interviews
with farmers, and the managers of slaugh~erhouses/cutti~ units and livc-
stock markcts, the share of slaughtering cattle purchases on the livestock
-
market in total slaughterines is estima~edat 40% in 1995.
Despite the fact ;hat direct supply from the farm to slaughterhouses has
increased, thc role of thc cattle merchant remains important. About 85% of
all slaughtering cattle pass through cattlc merchants:
The cattle merchant works as an independent or a$ a commission agent
for slaughterhouses. The share of slaughtering cattle coming directly from
the h r n i and going to the slaughterhouses, through the hands of the cattlc
merchant, is cstimatcd at 50%. Thc share of slaughtering cattle delivered
by the cattle merchant and which passed over the livestock market is 40%.
Slaughterhouses buy 10% of total slaughtering cattle directly at the fnrm
and 20% on the livestock market.
In 1995, thc conformation of cattle slaughtered in Belgium was domi-
nated by thc classes S and E, which represcnted 57% of total sleughter-

FIGURE 4. Purchase channels for slaughtering cattle in Belgium, 1995in %

of total slaughtering cattle.

10% 50% 20% 20%

r SLAUGHTERHOUSES
 Viaet~e,Gellytlck, a t ~ dVerbeke 91

ings. I t concerned mostly young bulls, while thc conformation of cows is

much more spread over all classes.
Based on the survey of farms and slaughlerhouses, potentials and
eventual problcms by introducing EMS on the Belgian market are deter-
mined. More than three quarters of the interviewed farmers intend to sell
cattle through an electronic marketing system. Especially the larger farm-
ers favor selling through an EMS (Table 2). As the interviewcd sample of
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farmers consists mainly of dairy farmers, the typcs of cattle concerned are
mostly U, R, 0 and P cattle, namely culled cows, suckler cows and heifers.
The main benetits sought by the farmers havc to do with information
and payment (Figure 5). The farmers are in scarch of adequate market
intormation, which implies better information about market pricc,s and
quality demanded. In the same context, the farmer attaches high impor-
tance to a clearly structured and complete reporting of the sale.
The farmer looks forward to payment on carcass quality. Correct and
guaranteed payment is a priority for the farmer. The EMS is an opportuni-
ty to meet these farmer's needs, rather than selling through the cattle
merchant.
The cattle merchant is perceived to be very resistant to the introduction
of the new technology since it eliminates his role in the marketing of
cattle. By introducing the EMS, farmers remarked that a problem could
occur related to selling remainders or emergency slaughtering cattle. The
cattle merchant will probably refuse to pick it up, as the 'good' cattle are
no longcr available to him.
The farmers believe in the feasibility of an EMS. The few objections
have to do with selling cattle without seeing it and selling through comput-
ers.
Fanners with few cattle to sell considdr EMS to be not useful for them.
Further question marks reniain according to insurance (tapeworm), re-

TABLE 2. Farmer's intentions towards selling through an EMS according to

farm size in Belgium, in % of respondents (N = 66).

Total number of cattle

Sell through EMS? 400 1 00-150 >I 50 TOTAL

YES 55 92 100 78
NO 45 8 0 22
 92 J o i ~ r ~ of
~ aItrtert~u~iorrcrl
l Food c t Ag~.ibrtsit~ess
Murkeliti~

FIGURE 5. Importance of selling criteria

Totally not important Very important
1 2 3 4 5
easy access to
livestock markets t-
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face to face contact

with the buyer

complete reporting
of the sale

direct payment by
the buyer

limited transport of
cattle

payment on carcass
quality

I
getting adequate
market information

saving time when

selling cattle

correct delivery and

payment

auction costs = 3%
of sales volume
t1
 sponsibilities (ownership of the cattle), payment guarantees and minimum
numbers of cattle required to sell through EMS.
Although farmers' intentions rate positive, little credit is to be expected
due to their traditional attitudes and skeptical nature. The EMS will have
to hit the bull's eye from thc first trial on.
Slaughterhouses and cutting units can be divided into two groups ac-
cording to the purchasing intention. The groups are indicated as advocates
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or adversaries of purchasing slaughtering cattle through an EMS. Advo-

cates favor EMS whereas adversaries are pcrceived to be resistant.
Both groups make remarks according to the working and characteristics
of an EMS. The concerning topics are:
Eliminating the cattle merchant who performs the task of assembly
and transportation of livestock;
Disappearance in the long run of the livestock markets as a meeting
place of beef business peoplc;
Purchasing cattle without visual rcpresentation and personal contact
with the seller;
Sclect, train and control trustworthy classitiers for grading livestock
in the ficld and carcasses in the slaughterhouse;
Compatibility of thc SEUROP classification grid with the Belgian
type of cattle.

These items are considered to be insurmountable by the adversaries;

The advocates indicatc the importance of each topic but are convinced that
a convenient solution can be found for each mentioned pitfall.
Related to EMS, buyers identify the following benefits:

According to the issue of animal welfare: limited transportation and

costs by avoiding livestock markets;
Better opportunities to trace the origin of each animal, which is nec-
essary to establishing quality labels and guarantees of safety and
healthiness;
Possibility to postpone the payment terms compared with cash pay-
ment to cattle merchants or farmers on livestock markets.

SUCCESSFUL INTRODUCTION:
POSSIBILITIES AND PROBLEMS
Seven conditions (Henderson, 1982) for successful introduction of EMS
on the Belgian market are discussed.
 94 .Iour~~al
ojl~ller~ratio~rd
Food & Agrihusi~ressMrr~-keling

A potcntially competitive market is the first conditio~~ for success. It

means that there is no scnse in developing an EMS whcn a singlc party
controls thc markct. However, in the case of cattlc selling in Belgi~lm,
EMS has an opportunity to broaden the exposure of individual market
participants to potential traders on thc other side of thcir transaction. I t
refers to confronting farmers (scllers of cattle) to more slaughterhouses
(buyers of cattlc) and vice versa. This systern could be cspecially helpful
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to farmers, since they are in contact with very few buyers, in most cases
sonic cattle merchants. It i~npliesthat therc is 2111 imbalancc in m:~rkct
power, which favors buycrs of cattle.
Second, to be successful, sutYicient trading potential is necessary for
reasons of both costs and trader interest. Compared with direct purchase of
cattle, EMS imposcs some additional costs such as computer hardware and
software, fieldsmen, credit insurance and financing the whole activity.
Direct purchase of cattle requires search-time, which means money. How-
ever, establishing direct purchasc implies that the individual slaughtcr-
house is confronted with a limited number of regular suppliers. Through
EMS, slaughterhouses obtain an additional purchase channel, which can
completc current supply and allow morc efficient planning of thc slaugh-
tering activity. Compared with purchases through livestock markets, costs
of EMS must remain undcr the additional costs of livestock markets
( 2 1.350 BEF/bovinc animal). Also in this case, a n~inimurntrade volume,
cstilnated at 600 cattle per auction, is rcquired. To obtain a solid niarkct
position and to force slaughterhouses to continue participating in the sys-
tem, a minimum share of 20%) of total slaughtering in participating
slaugh[erhouses is required.
Third, to exchangc products through EMS an acccptahle method of
product description is required. The SEUROP-classification for carcasses
as such enables it to describe cattle, but both buycrs and sellers must be
willing to accept it as a cc~mmondescriptive system. Thc description of
cattle is made by ficldsmen, who play a crucial role in EMS. Mosr cattle
are sold live, but far~nersprefcr to bc paid on deadweight. Since thc
market pull must come from the f;~rniers,i t implies that selling on dead-
weight has to be prornotcd at the Drm level. At the level ol'the slaughter-
houses, few efl'ectively work with the SEUROP-classification system.
Their share is estimated at about 15% to 20% of total slaughtering. These
sl:rughterhouses consider the SEUROP-classification grid satislactnry for
the middle (U and R ) and lower quality (0 and P) when sub-classes arc
used. For the superior quality (S t E), sluughterhouses have difficulties
classifying the carcasses, even by using sub-classes. Other variables such
as color are important. An additional problem related to the SEUROP-
 Muerle, Gellyrlck, arid Verbeke

classification consists of the fact that it is the buyer (the slaughterhouse)

who classifies the carcasses. Despite the fact that the Ministry of Agricul-
ture controls classifiers, these people are paid by and work for the
slaughterhouse. This aspcct results in different grades from different
slaughterhouses. This problem could be solvcd by organizing classifica-
tion by indcpendcnt classifiers from the Ministry of Agriculture. These
people could be paid by a levy per slaughtered animal, just as it is orga-
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nized in the Netherlands or by using an indcpendent organization as in

France, which operates as a referee.
The fourth condition for success concerns performance guarantec. Be-
cause face-to-face dealing does not occur in EMS, it is important to assure
confidence by participants. Sellers must deliver what was offered and
buyers must pay as agrced. It means that some method of warranting
trader behavior is required. To introduce EMS on the Bclgian market, it is
suggested that the auctioneer guarantees payment to the farmer within
scven days after haulage of the animals. Some kind of sanction has to be
foresecn for sellers not delivering and for buyers not picking up the ani-
mals. To be able to guarantee payment to the farmer, the auctionecr needs
to be paid by the slaiightcrhouse. Because of the large amount of capital
involved, it is suggested that only buycrs ablc to present a bank guarantee
or for whom it is possible to obtain credit insurance, should be acceptcd to
participate in EMS.
The ffth condition for successful introduction relates to market sup-
port. Introducing an EMS for cattle in Belgium will certainly be consid-
ered as a threat to some existing market participants. The system aims to
eliminate the cattlc merchant, at least as a buyer of slaughtering cattle, and
a competitive rcaction can bc expected from this side. As far as the cattle
merchants' fnancial means reach, a reaction through higher prices paid to
the farmer can bc expccted. Because the introduction of EMS will be
cheaper than purchasing through the livcstock markct, its market share
will decline. These livcstock markets can react by declining market taxes
and by creating new services for both buyers and sellers. Resistance to-
wards EMS could occur from slaughterhouses dominating a local market
situation. Strategies have to be developed to takc care of thesc resistances.
The sixth condition for successful introduction concerns venture capital
and entrcpreneurship. Innovative spirit is an essential ingredient in the
successful development and implementation of EMS. It will be necessary
bccause peoplc with vested interests in the current system have much
reason to argue that it cannot be done and to discourage its use by whatev-
cr means possible. Something which could help to tempcr the slaicghter-
houses' resistance concerns new product development. Since retail chains
 install integrated quality insur;~nczschemes and supply must be guaran-
teed, both farmers and slaughterhouses could benefit from EMS. I t offers
possibilities to auction contracts at term. For cxample, farlncrs offer con-
tracts for the production of slaughtering cattle within a pcriod of six
months and slaughtcrhouses bid for these contracts. However, this entre-
preneurial spirit must bc backed by adcquate venture capital. An undercap-
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italized EMS is likely to wither beforc it can be fully and fairly tested in
the marketplace.
The seventh and last essential condition for a succcssful tesr on the
Belgian market concerns the development of human capital. Because
electronic marketing is a relatively new and innovative concept, fcw
operators in the market chain for cattle undcrstand how it functions and
much less their potential benefits and costs. Considerable investment in
education is required. It concerns the fieldsmen and both buyers and
su~uliers.
r .
Fieldsmen must be cducatcd in the various ways that EMS can
he dcsigned and operatzd. Farmers and slaughtcrhouses must bc educated
in both the procedures and the potential bcnefits and costs associated
with EMS.

CONCLUSIONS

EMS for cattle aims to buy and sell cattle livestock by personid comput-
er, without transportation to the market place. It guarantees competition
and pricing efficiency.
In hoth thc UK and France, several EMS werc introduced during thc
period 1990-1995,The market share of EMS in these countries is growing
rather slowly because of the strongly traditional market structure for scll-
ing and buying cattle. However, market share of EMS is expected to
continuc its growth.
The introduction of EMS in Belgium for cattle is worthwhile, if 501112
conditions are fulfilled. The most important condition for success con-
cerns thc development of a method of product description and rclated
payment, acceptable for both parties, nanicly the buyers and the sellers.
The SEUROP-classification grid could be used as the basis for product
description; the market pull must come from thc farmers.
However, bcfore introducing EMS in Belgium thc essential parts of a
marketing plan should be worked out, including objectives, strategic op-
tions related to the four P's, actions for implementation, marketing budget
and methods for control and feedback.
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