Serving the Bottom Tier Markets

ITC eChoupal Experience Sharing

1999-2003 ITC ltd

Stockist Would buy Inputs like Seeds, fertilizers, pesticides frm the manufacturer and sell it to the Retailer

Retailer would further sell it to the farmer

Farmer would sell his produce to the Trader through Adat or Broker

Trader then thtough his Broker sell the merchandise to a Processor A money lender was involved in the process to finance the farmer at a very high rate of interest.

FARMER TRAPPED FROM THREE ENDS: 1.Retailer who sold the inputs to the farmer 2.Adat who arranged for buyer for the farmers produce and 3. The money lender.

1999-2003 ITC ltd

Low Risk Appetite

Low Margins

Caught in a vicious cycle of underdevelopment

Low Investment

Low Value Addition

Weak Market Orientation

Low Productivity

1999-2003 ITC ltd

Scope of Presentation

No access to market, no idea of prices of his produce in the market. Sell off Kachcha crop to Adat at a very low price farmer and the Indian Agriculture globally uncompetitive.

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GENERAL PRODUCTS OF ITC e- CHOUPAL

Processed Fruits (Mango, Guava, Papaya etc.) Food Grains (Rice, Wheat and Pulses) Feed Ingredients (Soya bean ) Edible Nut (Groundnut)

Coffee & Spices

Marine Products (Shrimps and Prawns )
1999-2003 ITC ltd

Inbound logistics include the receiving, warehousing, and inventory control of input materials. Operations are the value-creating activities that transform the inputs into the final product. Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfillment, etc. Marketing & Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc. Service activities are those that maintain and enhance the product's value including customer support, repair services, etc.
1999-2003 ITC ltd

FARMER MANDI BUYER

Inbound Logistics

Display & Inspection

Auction

Bagging & Weighing

Payment

Outbound Logistics

1999-2003 ITC ltd

The e-Choupal infrastructure

ITC launched e-choupal a knowledge portal

providing farmers with a range of information and services. Information in their own language on weather, market prices, knowledge on Scientific farming practices, risk management etc. Internet operated in the house of one trained farmer, Sanchalak Warehousing Hub with Internet Access (storing the farmers output)
Managed by the middleman, Samyojak
1999-2003 ITC ltd

Picture of Indian Agriculture before and after ITC e-choupal:

Before
Conventional farming methods Compromise on yield and quality of the produce Agree to whichever prices quoted Adat used any method to decide on the price of the output. No Incentive to invest on better quality of seeds.

After
Scientific farming methods Improve yield and quality of the Produce Get better prices on Output

Using Appropriate methods to decide on the price of output. Motivating the farmers to invest in better quality seeds.

Attractive export markets

Weak infrastructure & inconsistent quality

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The Network of 6500 e-choupal centers spread across 40000 villages has emerged as the gateway of an expanding spectrum of commodities like wheat, rice, soya, maize, spices, coffee and aqua products. The e-choupal initiative ahs been featured in the World Development report 2008 of the World Bank and Economic Survey of Government of India. It is a Havard Case study today.

1999-2003 ITC ltd

The Value Chain - Farm to Factory Gate

Agri Input Retailer

Input Cos Seed Fertilizers Chemicals Practices

Stockist

Kaccha Broker Trader

Processor

Adat Farmer Pakka

Govt Univ. Met Dep MSP Insurance Practices Weather

Dept of Agri

Adat

Money Lender

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ITC e- CHOUPAL SYSTEM

SANCHALA K CHOUP AL SAGAR SAMYOJAK

PC and INTERNET

FARMERS

ITC

1999-2003 ITC ltd

In other words..

Agri Input Retailer

Input Cos Seed Fertilizers Chemicals Practices

Kaccha

Stockist

Broker

Trader Adat

Processor

Farmer
Govt Univ. Met Dep MSP Insurance Practices Weather

Choupal

Dept of Agri

Sanchalak

Money Lender

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The e-Choupal assists the farmer in the following ways:

1) Provides farmers with real time information and customized knowledge, enabling them to improve productivity quality of produce and price realization. 2) Allows for aggregation of demand for farm inputs from individual farmers thus giving them, access to high quality inputs from reputed manufacturers at competitive prices. 3) Eliminates middle men multiple handling multiple transportation and wastages hereby significantly reducing transaction costs.

1999-2003 ITC ltd

 1999-2003 ITC ltd

Key Success Factor Self Sufficient Infrastructure

Power

Connectivity

Training

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Transaction cost in Mandi Chain (before e-Choupal)

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Transaction cost in Mandi Chain (after e-Choupal)

1999-2003 ITC ltd

The Privileged Assets of eChoupal

States covered: Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).
ITC Infrastructure: Computer Internet Multimedia Broadband Smart Card Physical Reach: Choupals within walking distance Multipurpose WH hubs within driving distance Key Intermediaries: Sanchalak (1 per cluster of 5-6 villages) 1500/state Sanyojak (1 per group of 10-15 choupals) 100/state ITC (support the farm produce marketing end)

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The New Wave..Sunehra Kal

!!

Using the e-choupal infrastructure of reach & scale & keeping the Sanchalak as the pivot .. The launch of initiatives that can : Improve Farmer Livelihoods Long Term Community Impact programmes Pilot in 4 districts of MP & UP Livestock Management programmes Water Management Self Help Groups focusing on women Synergising the skills of ITC s management skills, e-choupal reach The knowledge & experience of NGOs

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Our Vision

Rural Indias largest & most effective Interactive Transaction & Fulfillment Channel Covering 200,000 villages across 14 States through 50,000 choupals 1/3rd of all Indian Villages Building capability to deliver superior shareholder value sustainably Also contributing to Enhancing global competitiveness of Indian Agriculture And, Raising the standard of living in Indian villages

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Our Mission
Improve the Quality of Life in Rural India.

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QUESTIONS
1.

2. 3.

4.

The competitors try to attract the farmers by providing them higher prices for their produce than e- Choupal. How to overcome this? What could be done to improve the Samyojak- ITC eChoupal relationship? What action should be taken against the Sanchalaks, who unionize and extract unwarranted Rents from ITC e- Choupal? How to generate a sense of trust in the farmers mind with respect to the laboratory tests conducted?

1999-2003 ITC ltd

Thank You.

ITC Limited
e-Choupal
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