Serving the Bottom Tier Markets

ITC eChoupal Experience Sharing

© 1999-2003 ITC ltd

© 1999-2003 ITC ltd
 Low Risk Appetite

Low Margins Low Investment

Caught in a vicious
cycle of
underdevelopment
Low Value Addition Low Productivity

Weak Market
Orientation

© 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.

© 1999-2003 ITC ltd #2

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

Before After
Conventional farming methods Scientific farming methods
Compromise on yield and quality Improve yield and quality of the
of the produce Produce

Agree to whichever prices Get better prices on Output

quoted

Adat used any method to decide Using Appropriate methods to

on the price of the output. No decide on the price of output.
Incentive to invest on better Motivating the farmers to invest
quality of seeds. in better quality seeds.

Attractive export markets Weak infrastructure &

inconsistent quality

© 1999-2003 ITC ltd #3

•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
Stockist
Seed Kaccha
Fertilizers

Broker
Chemicals
Trader
Practices

Processor
Adat

Farmer
Pakka
Govt
Dept of Agri

Univ.
Met Dep
MSP
Insurance
Practices
Adat
Weather

Money Lender

© 1999-2003 ITC ltd #9

 ITC e- CHOUPAL
SYSTEM

SANCHAL
AK

FARMER
CHOUP
AL ITC
S
SAGAR
SAMYOJAK
PC and
INTERNE
T

© 1999-2003 ITC ltd

In other words..

Kaccha

Agri Input Retailer

Input
Cos
Stockist
Seed
Fertilizers

Broker
Chemicals
Trader
Practices
Adat

Processor
Farmer Choupal

Govt
Dept of Agri

Univ.
Met Dep
MSP Sanchalak
Insurance
Practices
Weather

Money Lender

© 1999-2003 ITC ltd #13

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

© 1999-2003 ITC ltd #17

Transaction cost in Mandi Chain
(before e-Choupal)

© 1999-2003 ITC ltd

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)

© 1999-2003 ITC ltd #23

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 NGO’s

© 1999-2003 ITC ltd #25

Our Vision

• 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

© 1999-2003 ITC ltd #26

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

© 1999-2003 ITC ltd #30

QUESTIONS
1. 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.

ITC Limited
e-Choupal
© 1999-2003 ITC ltd #31