E chaupal

© 1999-2003 ITC ltd

Serving the Bottom Tier MarketsITC eChoupal Experience Sharing

© 1999-2003 ITC ltd

© 1999-2003 ITC ltd

Low Risk Appetite

Weak Market Orientation

Low InvestmentLow Margins

Low ProductivityLow Value Addition

Caught in a vicious cycle of

underdevelopment

© 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.

#2

© 1999-2003 ITC ltd

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

© 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 farmer’s output)Managed by the middleman, Samyojak

© 1999-2003 ITC ltd #3

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

Before After

Conventional farming methods Scientific farming methods

Compromise on yield and quality of the produce

Improve yield and quality of the Produce

Agree to whichever prices quoted

Get better prices on Output

Adat used any method to decide on the price of the output. No Incentive to invest on better quality of seeds.

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

© 1999-2003 ITC ltd

•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

#9A

gri Input Re

tailer

Farmer

Pro

cesso

r

Kaccha

Adat

Pakka

Adat

Money Lender

Trader

Broke

r

Dept o

f Agri

InputCos

SeedFertilizersChemicalsPractices

Stockist

GovtUniv.

Met DepMSP

InsurancePracticesWeather

© 1999-2003 ITC ltd

ITC e- CHOUPAL SYSTEM

FARMERS

SANCHALAK

PC and INTERNE

T

CHOUPAL

SAGARSAMYOJAKSAMYOJAK

ITC

© 1999-2003 ITC ltd

In other words..

#13A

gri Input Re

tailer

Farmer

Pro

cesso

rKaccha

Adat

Money Lender

Trader

Brok

er

Dept o

f Agri

InputCos

SeedFertilizersChemicalsPractices

Stockist

GovtUniv.

Met DepMSP

InsurancePracticesWeather

Choupal

Sanchalak

© 1999-2003 ITC ltd

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 #17

Key Success Factor Self Sufficient Infrastructure

Power Connectivity

Training

© 1999-2003 ITC ltd

Transaction cost in Mandi Chain (before e-Choupal)

© 1999-2003 ITC ltd

Transaction cost in Mandi Chain (after e-Choupal)

© 1999-2003 ITC ltd

• 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)

#23

The Privileged Assets of eChoupal

© 1999-2003 ITC ltd

• 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 NGO’s

#25

The New Wave…..Sunehra Kal !!

© 1999-2003 ITC ltd

• Rural India’s 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

#26

Our Vision

© 1999-2003 ITC ltd #30

Our Mission“Improve the Quality of Life in Rural India.”

© 1999-2003 ITC ltd

QUESTIONS1. The competitors try to attract the farmers by

providing them higher prices for their produce than e- Choupal. How to overcome this?

2. What could be done to improve the Samyojak- ITC e- Choupal relationship?

3. What action should be taken against the Sanchalaks, who unionize and extract unwarranted “Rents” from ITC e- Choupal?

4. How to generate a sense of trust in the farmers’ mind with respect to the laboratory tests conducted?

© 1999-2003 ITC ltd

Thank You.

#31

ITC Limited e-Choupal