IBM, Agridata Sign Joint Development Agreement; New Services To Sprout On Information Network

Agridata Resources, Inc. and IBM Corp. have signed an agreement to jointly develop new services to be distributed over the IBM Information Network. Details of their plans are not available, but the deal should permit Agridata to leverage its existing online database of market and other agricultural information into new areas, possibly including online trading of agricultural commodities.

"Our business concept is tying agriculture together electronically," says Agridata president Richard Weening. "The relationship with IBM will very substantially broaden our information products." The company's chief electronic service is the Agridata Network, founded in 1983, which provides a range of data to the agricultural community -- comparable to what Dow Jones/ News Retrieval provides to the business and financial community. Farmer-producers and other agribusiness customers equipped with PCs or dumb terminals dial into Agridata's host in Milwaukee to access news, advisory services, and cash and futures prices, as well as to communicate electronically among themselves. Electronic mail is "a very big part of our business," says Weening.

Unlike the International Marketnet joint venture with Merrill Lynch, the Agridata deal was signed not with IBM corporate, but with the IBM Information Network, part of the company's Information Services independent business unit. The arrangement will allow IBM to serve an "important set of customers," says spokesperson Elise Schepler. "They have a business compatible with and complementary to the types of services that IBM is interested in offering through its Information Network."

The IBM Information Network is not particularly well-known. Like a conventional packet network, it provides protocol conversion and other value-added services, and is said to be the largest SNA network in existence. One of its chief aims is to connect the computer systems of customers and their suppliers, a task it performs in the insurance industry, for example, where independent agents can transact with hosts at 20 different property and liability companies.

It is possible that IBM and Agridata have a similar plan for trading agricultural commodities. Agridata has previously announced its intent to provide transactional services for agricultural chemicals and animal drugs, but observers doubt that IBM would have got involved unless something bigger was in the works. Weening declines comment on the question of arranging or executing trades online, but does say that the IBM venture will create new data, "much of which we will own in a proprietary way." Agridata/IBM has "some plans" to build a base of contributed price information, he says, "and that will ultimately inure to the benefit of the quote vendors."

Weening insists that quotes are "absolutely strictly not our business." Nevertheless, his company is a partner in Satellite Data Network, a broadcast service which delivers agricultural news and futures market data to the personal computers of farmers who own home satellite earth stations. Only delayed futures prices are currently available, but as we reported (MTR, November 1985), Satellite Data has plans to add real-time quotes to its feed after the first of the year.

Agridata Network is "very close" to being profitable, Weening says, although he declines to reveal the size of its subscriber base. IBM characterized Agridata as "a growing and successful business." Terms of the deal were not revealed, but the Wall Street Journal reports that it involves subordinated debentures which IBM could convert into perhaps a 15 per cent stake in Agridata.