FAI WORKSHOP ON IMPORTANCE OF ICT

IN THE FERTILISER AND AGRICULTURE SECTORS

Use of ICT
in
Agri Business: Prospects and Challenges

Sanjiv Sharma
Head Agri-Inputs
ITC International Business Division
Date: 11th May 2006

FLOW OF PRESENTATION

• INTRODUCTION

• CHALLENGES ICT

• PROSPECTS ICT

• CASE STUDY ON ECHOUPAL

• CONCLUSION

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 CHALLENGES ICT
1.INFRASTRUCTURE

POWER
-1 lac villages yet receive power
- existing ones receive for only a few hrs

BANDWIDTH
-100 kbps required to reduce any fatigue

MAINTAINANCE
-Adverse conditions
-Resource required for timely action

CHALLENGES ICT

2.DEMOGRAPHY
LANGUAGE
- Barely any input company has a vernacular website
USAGE SKILLS
- Excessive training required

3.Business Viability
SUSTAINABILITY
- half hearted approaches
SCALABILITY
- Should provide a substantial impact` for further adoption

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 PROSPECTS - ICT

MOA = BUYING

M: Motivation
O: Opportunity
A: Ability

Focus on increasing ability required

PROSPECTS - ICT
• AGRI EXTENSION

• INTERACTIVE MARKETING

• AGRIFINANCE/INSURANCE

• EMPLOYMENT

• MARKET RESEARCH

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 ECHOUPAL

ITC e-Choupal

Introduction

Why?
Some Constraints…
•Small farms = Weak bargaining power
•Dispersed habitations = Expensive to deliver information
•Heterogeneous circumstances = Difficult to customise

… And Some Challenges

• Dependence on monsoon rains = High Risk

• Weak infrastructure = Few Alternatives
– Physical, Social & Institutional

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 Introduction

Traditional Transactions
Sell: sunk costs, inconvenience,
other losses Price Discovery
@ Sell Transaction
Video
Mandi

Transaction
Farmer Market PRODUCT
&
Financing
Money SERVICE
Information Lender PROVIDERS
(Aggr)

Extension
VILLAGE Center
Knowledge
(Use) Middleman

TOWN
Buy: high prices, spurious goods, information not timely

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 Introduction

How does this manifest at transaction level?

Output Sales:
Price information is available only when the farmer is ready to transact.
By then he has already traveled 30 KM out of his village.
Sunk costs put pressure to sell, whatever the price is…
Middlemen extract high transaction fee, since there is no other option for
the farmer.
Input Purchase:
Exactly the reverse of the above situation, but again to farmers’
disadvantage.
Information and Knowledge not available when he wants to transact.

What did ITC come up with………

echoupal
An ICT based Solution

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 What is eChoupal ?
The echoupal Infrastructure

Tier 1: An ICT kiosk with Internet Access

•In the house of a trained farmer Sanchalak
•Within walking distance of target farmers
•Additional investments in Solar Power & VSATs to overcome weak
infrastructure

Topology ofoperations
Maharashtra eChoupal

Power Socket

Choupal Site Power Socket

DW

Hughes Hub

Battery2

Battery1
UPS2

UPS1

DMP Printer
eChoupal Computer
Solar Panel 1

Solar Panel 2

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 What is eChoupal ?
The eChoupal Services

• Relevant & Real-time Information

– Commodity prices, Local Weather, News
• Customised Knowledge
– Farm Management, Risk Management
• Direct Marketing Channel for Farm Produce
– Lower Transaction Costs, Better Value through Traceability
• Supply Chain for Farm Inputs
– Screened for Quality, Demand Aggregation for Competitive
Prices & Efficient Logistics
• Education
• Financial services – Life,General, Health & Crop Insurance

How is eChoupal different?

1. Freedom of Information
Information & Knowledge is free of cost
No initial investment of the Sanchalak
Not subsidized- Govt does not pay , the shareholders look for a
competitive return.

2. Freedom of Transaction
Farmers are free to sell their produce anywhere

3. Entrepreneurship
No salary paid to Sanchalaks – a commission based model

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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

• Shareholder Value through Serving Society

– Also, the infrastructure serves as a reliable delivery mechanism for
resource development initiatives (e.g. water,animal management)

What’s in it for the farmer?

Bottom line for the farmer

Increased yields
Improved Quality
Reduction in Transaction costs

Power of Scale to the Small Farmer

Customized Knowledge despite Heterogeneity
Real time information despite Distances

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 Transactions through ITC eChoupal
Sell: Price discovery @ village, choice, efficiency

Knowledge
Information
(Customized) (e.g., Price
Discovery)
Video
Mandi

Farmer PRODUCT
Choupal Saagar
&
Transactions SERVICE
PROVIDERS

Samyojak
Sanchalak

PAN-INDIAN
VILLAGE TOWN

Buy: Information + Customized Knowledge @ village, high quality,

competitive prices, superior service

ECHOUPAL WEBSITE MARATHI- KRISHI SEVA

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ECHOUPAL WEBSITE MARATHI – PARICHARCHA

ECHOUPAL WEBSITE MARATHI - SOYABEEN

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ECHOUPAL WEBSITE MARATHI – SOIL TESTING

ECHOUPAL WEBSITE MARATHI – WEATHER

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 ECHOUPAL WEBSITE MARATHI – EMAIL

eChoupal : Choupals & Hubs

Catchment Catchment
Village Choupal Village

Catchment
Catchment Choupal Choupal Village
Village
Choupal Choupal
Hub
Choupal ~40 Choupals in a hub Choupal
Within Tractor-able distance of a farmer
Choupal Choupal
Catchment
Catchment Choupal Choupal Village
Village
Catchment Choupal Catchment
Village Village
IT Infrastructure
Within walking distance of a farmer

HUB – Planned to graduate to a Rural Superstore

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 What is eChoupal ?
The echoupal Infrastructure
Tier 2: Hub /Choupal Sagar @ Cluster level
Managed by the erstwhile middleman Samyojak- A trader appointed by ITC,
provides various services under ITC supervision e.g. Quality Testing,
Electronic Weighment, Storage, Payments.

New made-to-design hubs(Choupal Sagar) being built, to overcome the

shortage of space in the traditional warehouses for parking (tractors /
trollies) and farmer utilities,besides many operational problems.

चौपाल सागर
ज रत अनेक. जगह एक.

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 The eChoupal Value Proposition
• Low Cost Last Mile
– Distribution at Low cost
– Wide reach in Rural India
– High Credibility – Increased product penetration
– Right prices to consumers
– Continuous visibility/ availability
• Intelligent First Mile:
– Sharply Targeted Consumers
– Product endorsement
– Education on product usage and benefits
– Brand building at low cost
– Superior understanding of rural consumers
• Footfall to Business
– One stop shop at a tractor-able distance
– High Quality of Products and Services
– Right Prices
– Shopping environment

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 Scale Today and Vision
Tomorrow
Year 2005:
Kiosks: 5,400
Villages: 31,000
Farmers: 3.5 million

Year 2010:
Kiosks: 20,000 Wheat

Soybean
Villages: 100,000 Soybean
& Wheat
Farmers: 10 million Coffee

Aqua

Alliances:
Farm Inputs
Advanta
UP Seed & TDC
International Panacea Limited

Khaitan

NFL 16
RCFL

Durables/ Vehicles:
12

Maxima

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FMCG Alliances:
9

Godrej Saralee

Gillete/ Kodak/ ACC/ Tata Steel/ Duraline.

THANK YOU

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