Rural Marketing

A case on Rural Marketing: E Choupal

ITCs supply chain of soya bean (before e-Choupal initiative)

Pakka Adtiya (Registered Dealer)
Agri-Input Companies
Dealer/ Stockiest Retailer

Trader

Broker

ITC-IBD
Agril University, Met Dept, Insurance Co.
VLW (of Dept of Agriculture)

Kaccha Adtiya (Un-Registered Dealer)

Processor

Money Lender

Farmer

Farmers basically suffered from 2 DS Deep Sea Institutional support Information of farming best practices Information on weather Quality and Information on inputs Devil Middle man Price Discovery Quality and Weightment Handling Loss

Supply chain post re-engineering

Pricing
Previous days closing price used as benchmark price for

next day Mandi prices communicated to Sanchalak through eChoupal portal Sanchalak inspects the sample, assesses quality and gives farmer a conditional quote and a note (name/village/quality tests/approx. quantity/conditional price), if farmer decides to sell to ITC

 Inbound Logistics
Farmer proceeds to the nearest ITC procurement hub with

the note Some procurement hubs are ITC factories, others are purely warehouse operations ITCs aim is to have a processing centre within 30-40 km radius of its farmers

 Inspection and Grading

At the ITC procurement hub, laboratory tests are

conducted on a sample of farmers produce To change farmers attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply

 Weighing and Payment

Farmers produce is weighed on electronic weighbridge He is then given full cash payment Freight expenses are reimbursed Appropriate documentation at each stage and farmer is

given a copy of that Samyojaks handle cash operations

 Hub Logistics
Farmer transports his produce to the nearest processing

centre or storage hub ITC incurs the transportation cost The farmer bears the risk of transportation until produce is delivered and the sale is completed

 Technological support
Nodal platform catering to commodity blending, agricultural

trading, e-choupal &rural distribution Integrated Business Systems for Direct Agriculture Procurement, Rural Distribution, e-Choupal Management, Exports, Insurance, Aqua Processing & Commodity blending Support for 8 local languages

Transaction cost in Mandi Chain (before e-Choupal)

Transaction cost in Mandi Chain (after e-Choupal)

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Rural Marketing 4 As
Availability

Sanchalaks maintains continuous inventory and maintains aggregate demand Affordability Buys from farmers directly, weighs electronically Acceptability Provides updated information on weather, financial services, lower transaction cost Awareness Increases awareness with wide product categories encouraging entrepreneurs