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FAI WORKSHOP ON IMPORTANCE OF ICTIN THE FERTILISER AND AGRICULTURE SECTORS
Use of ICTin
Agri Business: Prospects and Challenges
Sanjiv SharmaHead 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 ICT1.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
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
CHALLENGES ICT
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MOA = BUYING
M: Motivation
O: Opportunity
A: Ability
Focus on increasing ability required
PROSPECTS - ICT
AGRI EXTENSION
INTERACTIVE MARKETING
AGRIFINANCE/INSURANCE
EMPLOYMENT
MARKET RESEARCH
PROSPECTS - ICT
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ECHOUPAL
ITC e-Choupal
Introduction
Why?
And Some Challenges
Dependence on monsoon rains = High Risk
Weak infrastructure = Few Alternatives
Physical, Social & Institutional
Some Constraints
Small farms = Weak bargaining power
Dispersed habitations = Expensive to deliver information
Heterogeneous circumstances = Difficult to customise
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Introduction
VILLAGE
TOWN
Farmer
Mandi
Price Discovery@ Sell Transaction
Video
PRODUCT&
SERVICEPROVIDERS
MoneyLender
Financing
Market
Transaction
ExtensionCenter
Knowledge(Use)
Traditional TransactionsSell:
Buy:
Middleman
sunk costs, inconvenience,
other losses
high prices, spurious goods, information not timely
Information(Aggr)
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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 farmersdisadvantage.
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
Maharashtra operationsTopology of eChoupal
UPS1
Battery1
Power Socket
UPS2
Battery2
Solar Panel 1
Solar Panel 2
Hughes Hub
Choupal Site
DW
Power Socket
eChoupal ComputerDMP Printer
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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
What is eChoupal ?
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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Whats in it for ITC?
Better supply chain for ITCs Food & Agri Businesses
Costs, Quality, Traceability
Access to the Underserved Rural Markets
Through a Virtuous Cycle created by Larger Incomes, andfounded 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 forresource development initiatives (e.g. water,animal management)
Whats in it for the farmer?
Bottom line for the farmer
Increased yieldsIncreased yields
Improved QualityImproved Quality
Reduction in Transaction costsReduction in Transaction costs
Power of Scale to the Small Farmer
Customized Knowledge despite Heterogeneity
Real time information despite Distances
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TOWN
Mandi
Samyojak
Choupal Saagar
VILLAGE
Farmer
Sanchalak
Transactions
Transactions through ITC eChoupalSell:
Buy:
Information(e.g., PriceDiscovery)
Video
Knowledge(Customized)
PAN-INDIAN
PRODUCT&
SERVICEPROVIDERS
Price discovery @ village, choice, efficiency
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 EMAIL
eChoupal : Choupals & Hubs
Choupal
Within walking distance of a farmer
Hub
Within Tractor-able distance of a farmer
~40 Choupals in a hub
Choupal
Choupal
Choupal
Choupal
Choupal
Choupal
Choupal Choupal
Choupal Choupal
Choupal
HUBHUBPlanned to graduate to a Rural SuperstorePlanned to graduate to a Rural Superstore
IT Infrastructure
Catchment
Village
CatchmentVillage
CatchmentVillage
CatchmentVillage
CatchmentVillage
CatchmentVillage
CatchmentVillage
CatchmentVillage
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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.
What is eChoupal ?
The echoupal InfrastructureTier 2: Hub /Choupal Sagar @ Cluster level
. .
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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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Wheat
Soybean
Soybean
& Wheat
Coffee
Aqua
Wheat
Soybean
Soybean
& Wheat
Coffee
Aqua
Scale Today and VisionTomorrow
Kiosks: 5,400
Villages: 31,000
Farmers: 3.5 million
Year 2005:
Kiosks: 20,000
Villages: 100,000
Farmers: 10 million
Year 2010:
Alliances:
UP Seed & TDC
NFL
Khaitan
International Panacea Limited
RCFL
Advanta
Farm Inputs
16
Maxima
Durables/ Vehicles:
12
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Alliances:FMCG9
Gillete/ Kodak/ ACC/ Tata Steel/ Duraline.
Godrej Saralee
THANK YOU