ITCs E-Choupal Transforming lives of farmersPooja Choudhary Priyanka Kejriwal

AgendaMandi System Mandi Distribution System Mandi Operation Process Limitations of Mandi System

E-Choupal

E-Choupal System Benefit for ITC and farmers Technology Characteristics E-Choupal Services

Scope

Choupal saagar Efficiency and Sustainable solution Vision Challenges

Mandi Distribution SystemFarmer Village trader Ghani

Wholesaler

Regulated markets/ Mandis Trader (Pukka adatiya)

Producer Co-ops

Commission Agents (Kachha Adatiya)

Private oil miller

Cooperative Mill

Mandi Operation process

Inbound Logistics

Display and inspection

Auction

Bagging and Weighing

Payment

Outbound logistics

Limitations of Mandi SystemSystem Crop quality subject to weather conditions as crop is displayed in open weather No proper way of monitoring crop quality Fluctuating prices favoring the buyer Prices set locally and reliably tracked and reported nationally No incentive for improving quality to farmers thus lowers quality Multiple handling points requires produced to be bagged increasing loading time by 4-5 times

Farmers Bear the cost of transportation ,stay, bagging and weighing Loss of 1-2 kgs per quintal as weighers under-weigh Never receive the full purchase price Farmer has to make several return trips to receive entire amount costing them time and money

ITC Agents control of market leads to distortions of price and quality Agents inflate prices to trading companies Agents mix superior and inferior quality produce together Agents are aware of intra-day prices and take advantage of that Officially agents margin : 1% , ITC estimates it to be upto 3%

ITC e-ChoupalStarted in 2000 Target: 6500 kiosks, 10 states,40000 villages Designed to address issues like Fragmented farms Weak institutions Involvement of intermediaries Information asymmetry

Transactions through ITC e-Choupal

e-Choupal SystemWeighing and Payment Sample is taken for laboratory tests Bonus Points in case of better quality

Pricing Previous days Mandi Closing Price Price Communicated through Sanchalak Commission agents at mandi enter daily mandi prices

Inspection and Grading Farmer brings a sample of produce to e-Choupal Sanchalak inspects the product, performs the quality check and quotes the price

Hub Logistics Farmer collects payment and get reimbursed for transport Samyojaks handle hub logistics, transport, bagging etc, 0.5% commission

Model Choupal Nagar

Whats in it for the farmer? Real time information despite Distances Increased yields Improved Quality Better price Reduction in Transaction costs Faster Transaction Electronic weighing scales More Transparent and reliable system

Whats in it for ITC? Better supply chain for ITCs Food & Agri Businesses in terms of Costs, Quality Intermediary cost reduced from 2.5% to 0.5% Payment for transport cost reduced by half Long term relationship with farmers Supply Security Plan future operations based on information from Sanchalaks and Samyojaks

Transaction Cost - Mandi

Transaction cost - Choupal

e-Choupal 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

Supply Chain for Farm Inputs Screened for Quality

Education Basic training to Sanchalaks

Financial services Life, General, Health & Crop Insurance Easy to capture credit history, lower transaction costs

ITC Choupal SaagarMade-to-design agri-business hubs ITC agri-sourcing centre Shopping centre Facilitation centre 24 Choupal Saagar hubs are already in operation in 3 states, to grow to 100 by 2010.

Sustainable solutionsWhat are the solutions? Knowledge transfer Co-operative application of technology Mobilization and optimization of local resources

How is it being implemented? Develop water and forest resources: Soil fertility Adopt soil and water management practices Superior farming methods: Farm yields

Efficiency of e-Choupal networkCrop Specific Intervention Inefficiencies in supply chain Magnitude and timing of e-Choupal Low cost last mile Penetrations into areas having population < 5000

Intelligent first mile Avenue to see farmers ideas Farmers suggesting products and servicesBi-directional demand and supply of goods and services Build a close relationship with farmers Data mining and data warehousing: consumer behavior

Growth of e-Choupal

ITC e-Choupal Scale

e-Choupal States covered Villages covered No. of e-Choupals Farmers e-empowered

Now 10 40,000 6,500 4.9 million

Challenges faced by e-choupal Check the authenticity of information As power and numbers of sanchalaks increase, there is a threat of unionization The scope of operation: the diversity of activities required of every operative and the speed of expansion Increased expectations of the farmers

Future StrategyStrategy Wave 2 (Post- Pilot) Wave 3 (Post Pilot) Value proposition Identity preservation ITCs intervention Food type Grade of grain determines its end use Perishable food products Food safety Example Procurement Wheat (UP)

Traceability

Production level

Shrimp

Wave 4 (Pilot)

Creating institutions

Market place for multiple buyers and sellers Knowledge of business, customer and prior experience

Markets have reached high degree Coffee of efficiency Value added products to rural India

Wave 5 (Conceptual)

Rural marketing and distribution strategy

Wave 6 (Conceptual)

Sourcing IT enabled services from rural India

Eco-tourism Traditional Crafts, medicine

Thank You