ITC e-Choupal

iksaanaaMo ko iht maMo ¸iksaanaaoM ka Apnaa

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Agriculture Scenario in India
• India has second largest arable land in the world • One of the largest domestic consumption base • Attractive emerging export market • Diverse climatic zones allow growing of a variety of crops through the year • Growing demand for processed food
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Continued…
• Necessity to go beyond Rural markets • Government doubling it rural spending • New tax incentives for food exports

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About ITC …..
• ITC is one of the largest corporation with its presence in Tobacco, Hotels, Paper Boards, Foods, Fashion Retailing And Commodity Export • ITC international business division was created in 1990 as an Agri Trading Company engaged in exports of a range of agriculture commodities • They believe in using a business model that does good to society and helps in improving the standard of living of Stake Holders
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e-Choupal Concept
• E-Choupal is a virtual market place where farmers can transact directly with the processor and can realize the better price for the produce. • Provides for transparent transactions by free flow of information • Elimination of some levels of intermediaries • Connects large / small crop producers and small/ large users
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Mandi Distribution system
Dept. of Agriculture (Weather, Insurance) Village Trader Money Lenders Seed Companies stockiest & retailers Ghani

Farmer

Wholesaler (20-80%)

Regulated Markets Or Mandis (15-75%)

Commission Agent (Kachha Adtiya)

Trader (pakka Adtiya)

Producer Co-ops (3 – 5 %)

Producers, Private Oil Miller

Cooperative Mill

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Mandi Operation Process

Inbound Logistics

Display & Inspection

Auction

Bagging & Weighing

Payment

Outbound Logistics

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Limitations of Mandi System
• It is inefficient as there are no resources to analyze price trends • The timing of the sale may not result in the optimal price for the crop • Also the delayed sale time at the auction makes it more difficult for the farmer to sell his product at some other Mandi • Farmers also bear the cost of bagging and weighing
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Continued…..
• The inspection process does not provide incentive to the farmer to invest in better seeds and better practices (water project) • The key problem is the agents control the market asymmetrical information flow (price, quality) • Mandi system Doesn’t Give the assurance of Sale of Crop on a Particular day, that Increases the Transportation cost.
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The desired necessities for e-Choupal
• Re-engineer, Not Reconstruct • Caters to the entire community needs and not focusing on just one necessity • Fusion of agriculture and IT • Risk assessment and mitigation • Moving away from government shadow

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e-Choupal Distribution System
Farmer

Dept. of Agriculture (Weather, Insurance)

Money Lenders

Seed Companies stockiest & retailers

e - Choupal

Producers, Private Oil Miller

Cooperative Mill
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Continued…

Pricing

Inbound Logistics

Inspection Weighing & Grading & Payment

Hub Logistics

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Sources for scaling the model
• Crop Specific Intervention • Low-Cost Last Mile • Intelligent first-mile

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The e-Choupal Services
• Relevant & Real-time Information
– Commodity prices, Local Weather, News

• Customised Knowledge
– Farm Management, Risk Management

• Supply Chain for Farm Inputs
– Screened for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics

• Direct Marketing Channel for Farm Produce
– Lower Transaction Costs, Better Value through 15 Traceability

Continued………
• Marketing Services
– Market Research – Brand Building – Product Demonstration

• Governance services
– Bhoomi

• Health with Private Health Service Providers
– Apollo

• Education
– ILFS
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Choupal Sagar level Services
 Soil Testing  Medical facilities  Bank & Insurance  Entertainment  Cafeteria  Petrol/ Diesel Station

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Operating Environment
• • • • • • • Power Constraints Transportation Telecom Infrastructure Customer Base Technical Architecture Application Architecture Information Architecture
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What’s in it for ITC
• Better supply chain for ITC’s Food & Agri Businesses
– Costs, Quality, Traceability

• Access to the Underserved Rural Markets
– Through a Virtuous Cycle created by “Larger Incomes”, and founded on “Trust” that is built

• New ITES Business Opportunities
– Health, Education, Entertainment, eGovernance

• Shareholder Value through Serving Society
– Also, the infrastructure serves as a reliable delivery mechanism for resource development initiatives (e.g. water management) 19

Social Impact of e-Choupal
• • • • • • Educating Rural Masses Weather Forecasting Best Agricultural Practices Spoon Feeding Quality Solution Intelligent product Development Educating the farmers regarding seeds and fertilizers and providing the required materials.
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Losers……
• • • • • Commission Agents Mandi Laborers Bazaars Near the Mandi Some Mandi operations Competing Processors

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The Impact …
• ITC procures 80% of its procurement via Web Channels • In 9 months ended Dec 2006 ITC-IBD clocked revenues of Rs2762.63 Cr as per the turnover of 9137.17Cr • It covers over 31000 villages, reaching out to 3 million farmers through 5200 kiosks • Adding Six New Choupals Every Day Intend Scaling up to 100,000 Villages in 15 States by 2010.
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Current Network Size
State Madhya Pradesh Uttar Pradesh Maharashtra Rajasthan Karnataka Andhra Pradesh Choupals 1750 1750 900 500 100 150 Hubs 43 42 22 15 2 3
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Success Factors
• • • • • • • Cost effective model Contraction of supply chain Own storage facilities Reduction in transportation cost and time Lower but more specialized skill labor Higher equipment utilization Easier production planning and control
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A Glimpse into ITC e-Choupal… Thank You!!!

From:
Nitin Sehgal 62 Pranav Arora 67 Uzma Qumar 70 Shitiz Wadhawa 93 Sumit Agrawal 107 Sumit Rawal 108

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