e farm presentation part1 intro
DESCRIPTION
An introduction to eFarm - background of India's Agri crisis, supply chain issues, eFarm solution and FAQTRANSCRIPT
eFarm : A Farmer To Consumer Agri Supply Chain Network
Part 1 : Introduction
Presented By : Venkat and Valli
Founders , eFarm
The Agri-Supply Chain Crisis : Background The eFarm Solution Operations Overview USP and Key differentiators Technology Strategy Current Status FAQ
Wholesalers to Retailers
Terminal markets to neighborhood wholesalers
Regional mandi to Terminal markets near
large cities
Harvesting of Vegetables
A local mandi auctioning
Local to Regional mandis for Auction
• Unorganized, unregulated, unprofessional
• Lack of demand/supply data
• Poor logistics and storage
• No reliable sales , distribution , marketing channels
• Black marketing, adulteration, wastage
• Prices fixed by agents , crude and unscientific methods
of determining operating margin
• It is neither a „buyer‟ nor a „seller‟s market !
Middlemen‟s strong hold is predominant
•No IT usage , No transactional data
1
2
3
4
5
6
Retailers to Dining Table
7
Loss in transit 40%
Price hike
End to end
> 4 times
Contract farming : Pepsico , HLL etc., One stop solutions – Mahindra Shubhlabh, Tata KK Third party logistics & sourcing – Radhakrishna foodlands/Sodekho Retail chains – Reliance fresh, More, Subhiksha ICT kiosks– e-Chaupal Regulated markets- Government mandis, Commodity exchanges Unorganized Rural markets (mandis) and agents
Issues / Gaps
Most organised players focused only on ‘top of pyramid’ markets and hence very low volumes (less than 1%)
Non-payment of bills, not keeping up commitments . Farmers unable to fight the giants
Heavy initial investments required, with very long gestation period for results Retail shops no longer focussed only on veggies- diversifying into other higher margin
items/FMCG goods ICTs have failed owing to illiteracy, lack of proper business model . Also Mobile usage
more than PC usage
The Farmer : Need professional, reliable sales /marketing /distribution channels . No
alternative to the ‘mandi’ system Need advanced demand/supply data to plan cultivation . Currenty,
very adhoc and whimsical.
The Seller : The ‘sabjeewallah’ (vegetable vendor) is the missing link and unsung
hero of the supply chain. No proper benefits / finance / support to run his shop. Pressure in urban areas from branded retailers undercutting on rates But they represent over 90% of volume sales!!
RESULT : Both farmers and sellers of agri produce are quitting trade.
1. Perishable produce demand and supply data is not available/accurate/reliable , leading to over production and wrong crop selection.
2. Agri Sales primarily through unorganised sector – high fluctuations in price, availability and quality
3. No efficient marketing and distribution alternative to current ‘mandi’ system . Too many middlemen, too little value addition
4. Poor post harvest management results in high wastage (~50%)
5. There is little or no IT usage/MIS/Technology
eFarm : The Big PictureA shared platform connecting all stakeholders
Farmers
Cooperatives
Collection centers
Village ICT kiosks
Phone booths
Mobile operators
Storage
Warehouses
Value added resellers
Sorting , Grading , Processing, Packing
Small Independent transporters
Intra-city small tempos
Kiranas
Self Help
Groups
Hawkers
eFarm
Bulk buyers
Exporters
Logistics Fleet
operators
Create a network of farmers, intermediaries, logistics providers, distributors and retailers
‘Organize’ the ‘un-organized’ rural to urban supply chain to create sustainable prices forthe rural members of the chain
Create a shared and streamlined sourcing/marketing/distribution /retailing platformwhich is :
Our goal
• To build a nationwide agri-supply chain network platform , and enable fair, efficient, reliable businessacross the community.
• Make agriculture self sustaining and Curtail erratic fluctuations in perishables & commodities
• Generate job opportunities in BOP socio-economic strata in rural and urban areas
A IT based B2B order matching/fulfillment system (e.g. Amazon, eBay)
+
A low cost-efficient, ‘Indianised’ logistics & delivery mechanism (e.g. AMUL,Dubbawallahs)
+
A people driven Direct To Consumer Marketing/Retailing channel (e.g. HLL’s Shakti,Amway)
+
Bottom Up Entrepreneur driven model to reach all customer segments (Self help groups, Micro
finance)
-
-
eFarm Registers the farmers,
transporters and other intermediaries
with basic details such as produce
type, volume, expected price range
etc.,
1
eFarm Retail co-coordinators (ie.,NGO
/small retailers) consolidate the Orders
from buyers received through phone,
email and walk-in to make one
consolidated demand list
2
eFarm sourcing managers track prices
across different areas and feed in the
data. The central order matching
system determines best
source, location and logistics channel
for fulfillment.
3
Advance amounts are collected from buyers
.Payments are made to farmers and
intermediaries upon delivery.
4
The vegetables are sorted and graded at the
eFarm Distribution centers across the city by
members of women‟s self help groups of the
area..
The orders are delivered immediately through
delivery vans,push carts etc to end
customers
5
6
7Lessons learnt, feed back and data analysis conducted on the order received is shared with
the members in the chain. This helps to optimize the operation continuously and increase the
value creation across the chain.
BOP segment
Self help groups, Neighborhood markets , Street vendors
Highly price conscious segmentLow margins/High Volume
Middle segment
Mom and Pop stores, hotels , Canteens , Caterers
Price + Quality conscious High volume / Good margins
High End segment
Branded stores, High end restaurants , Hospitals , Organic stores, Food processors
Highly quality consciousTimeliness , professionalismLow volume/High margins
Premium segment
Export Very high quality , customer specificationsHigh volume / Very High premiumHigh investments
Vo
lum
e
Marg
ins
Low
High
High
Low
Small & mid sized farmers
Rural
Collection
Centres
Urban
Distribution
Centers
Retailers /
Mom & Pop stores
Bulk buyers
Exporters
Hub and Spoke Model
… organic growth and
expansion
Cooperatives
Logistics
Food Processors
Catering/Hotels
Order quantity ‘Aggegating’ the demand from multiple buyers , ‘wholesale’ volumes broken down into retail lots.
Better Predictability Demand and supply prediction , more realistic, long term pricing avoids erratic daily
swings.Price Multiple buyers AND sellers ,hence better price discovery ,transparent and
competitive. Users can set their own price , rather than being driven by market conditions.
Location A ‘click and mortar operation. 24 x 7 access to system , day time deliveries Decentralized, organic growth of system
Freshness As the buyer can set his own schedule and routes , fresh goods can be shipped with minimal halts or delays.
Availability Multiple choice of sources, wide variety of choice
Delivery Hub and spoke delivery model (much like how dubbawallahs operate)
Low cost transport (push carts, cycles) in combination with vehicles for widest reach
Branding A common brand called ‘efarm’, which adds value and quality to seller . new to agri field
Job creation Agri-sector employs over 70% of our population directly. Several more are involved indirectly through the supply chain. Through SHG women, we hope to create new jobs at various nodes of the chain.
Social change ‘Organise the unorganised’ , Create sustainable ventures across the chain ,Job creation , Promote underprivileged
Open source
Tools &
technologies
AgriXML
As a dataXchange
format
•Collaboration and B2B trading
platform
•Content : Daily pricelists,
Schedules, Trends , Buyers
guides
•Order management
•Search / Track items
•Delivery tracking
•Customer relationship
management
•Supply chain management
•Mobile/SMS gateway interface
•Voice based interface
•Agri specific social networking
•MIS & Data mart
eFarm won’t ‘OWN’ any of the assets / independent
elements of the chain – we would „CONNECT‟ existing
elements which would all be independently owned and
operated – Low cost of ownership
eFarm doesn’t threaten the livelihood of existing
people in this trade. We help to ‘re-train’, ‘re-group’
and ‘re-vitalize’ them to become more professional and
successful in their CURRENT activities
Technologies and processes are built to be simple, low
cost and with widest reach across customer base
Entrepreneur driven model , riding on top of existing
networks
Growth through innovation and research
Standardised weights , counts, bagging/packaging units
Simple tagging/tracking system for traceability
0% wastage target
Daily produce waste converted to manure which can be sold back
Separate focused unit for Organic produce
Assistance in certification & cultivation, separate logistics ,creating awareness to promote demand etc.,
Quick calculation : (Taking Chennai metro as an example)
Chennai population : 8 million
Avg. consumption : 250 gms
Volume : 2000 tonnes (400 lorries inflow Koyambedu)
Value : 3 crores per day
Even a 1% penetration
= 3 lakhs Turnover per day = 9 crores per annum
Market Size
Income from sale of produce (~15%
of turnover)
User Registration fees and database
listing in portal
Franchisee fees for retailers (Based
on typical daily order volume) ,
Training
Systems integration /consulting
Advertisements in retail vans/push
carts/web portal
10%
44%
3%7%
19%
1% 16%
Income Distribution
Website registrations
Income from produce sale
Advertisements
Franchisee fees
Consulting
Contest wins
Revenue Stream
June 07 – May 08 : Information gathering , discussions, solution proposals to focus groups May’08- Jun’08 : Website launched, Initial prototype system
development
Aug’08- Oct’08 : Concept pitching to pilot customer base/SHGs. Pilot launched with weekly deliveries. Different retailing options such as push carts, stores, mobile trucks
tried out. User feedback has been positive from all strata. Avg. weekly delivery = 2 tonnes
Oct’08 – till date : Distribution centre and retail outlets. established . Daily operations launched to cater to wider customer base . Promotional events, publicity drive. Core
Concept and processes constantly being upgraded and evolved based on trial run results.
Farmers in network : Direct 25 , Indirect 1500 (through associations)
Truckers : 10
Vehicle capacity : (all individually owned but operating for efarm) Push carts : 2
Mobile trucks : 2
Long haul trucks : 2
Organizations who are liasioning with eFarm for marketing support: NGOs : 3 , Agri Food parks : 3
Distribution centre setup and functioning in Chennai. Capacity : 4
tonnes per day
Customers (Pilot phase) Restaurants : 3 , Canteens : 2 , SHGs : 25 , Hospitals : 2, Shops : 4
Walkin individuals / door deliveries : 150
Current run rate : 4 tonnes per week , Rs 2 lakhs per month
10 member core team , 10+ advisors
Current Status : Summary Pilot completed . Growth mode
Phase I : Pilot
(Status –
Completed)
Aug 15 to Oct 15
Thiruvanmiyur, Valmiki Nagar (Chennai)
Volume : 2 tonnes per week , Turnover = Rs 30000/week
Goal : Road test of the concept in immediate vicinity, capture
detailed lessons learnt and feedback, achieve break even
Phase II :
Stabilisation
(Status – In
progress)
Oct 15 2008 to May
15 2009
Across 5 sample neighbourhoods
Volume target : 4 tonnes per day , per locality
Turnover target : Rs 75000 per day, per locality
Goal : Regularise operations, Identify and fix gaps,
Demonstration-cum-training centre in base of all
wholesale/retail activities, Data analysis and systems
enhancements.
Phase III : Growth–
May 15
2009 to Dec 15 2010
Goal : Metro wide growth (Chennai), Deeper sourcing
channels, hub and spoke operation in Tier II cities
Phase IV : Expansion
(2011 – 2013)
Goal : Expand to other metros/regions , Cross region
sourcing & delivery
Growth Plan
Management
• Venkata Subramanian Founder & Managing Director:
MS (Computer Science), University at Albany, NY , B.Arch , IIT Kharagpur (1995) , India
12 years of experience in IT industry , lead key accounts in BFSI for Wipro, Satyam in USA. Very strong expertise in
analysis & design of complex systems , portal development , back office operations.
Responsible for overall strategy , technology and public relations
• Srivalli , Co-Founder, CEO
MBA , B.Com Taxation
8 years experience in Sales, Marketing, & Operations. Has run two start-ups and organised fund raising for NGOs as
part of CSR programs.
Responsible for operations, business development, finance, administration
• Yamuna , Manager , Customer Relations
M.Phil , M.A , B.Ed, B.Sc
Retired head from Doordarshan Kendra, Chennai
Over 35 years experience in media , public relations, heading public sector organization
• Consultants and advisors from leading agricultural universities, management schools, government and industry
Combination of different background ,skills and experience to provide creative perspectives to solving key
problems in the supply chain area
Our Vision •Bring people together through creative use of technology platforms ('connecting the dots' ) to form socio-economic-webs•Create successful entrepreneurial, social enterprises which are profitable and sustainable•Make corporate social responsibility our core business model and differentiator •Measure success not just in financial growth , but also in the social growth in the areas we serve
Why the government or Private sector not been able to solve this problem ?
Farmer‟s Market : A utopian concept but impractical
Farmers selling direct to buyers through special markets has failed as
„Selling‟ is a separate specialized activity which requires time , energy
and additional investment
Loan waivers and subsidies come with caveats and vested interests
Corruption, bureacracy and vested interest to push certain schemes
have added insult to injury to farmers
Frequent changes in administrators & bureacrats derail most
projects
There is no „single‟ entity owning responsibility of entire chain
The systems are usually closed, vendor specific or too complex
that predominantly it‟s reach and volume is limited
They cater only to the top 5% of the income/social bracket , and that
too in metros. Hence the effects aren‟t felt at the „bottom of the
pyramid‟.
In some cases, it has resulted in a David v/s Goliath fight where the
large retailers are trying to completely by-pass existing traders and
small time vendors, leading to stiff resistance and negativity
Big investments made . But Recession has hit retail
Why the government or Private sector not been able to solve this ? - Continued
Prices are arrived at based on fair negotiations and in advance
All grades (High/Medium/Low) produce is picked at different rates and
matched with suitable end customer preferences
By reducing wastage across the chain , farmer gets price from more
quantity sold
Pick-up is done from farm or from local collection centers , reducing
transportation costs to farmer
Payments are made in full upon delivery , through transparent means with
proper paper bills
Data about current demand, price levels, buyer preferences, projected
volumes available for aiding in planning phase
Your biggest customers are branded retail chains like Reliance ? NO . Organised retail penetration less than 2%. Food processing and exports players are also very low
(less than 1% each)
Unorganised sector does over 95% of volume in Agri perishables business. They are our biggest end
target segment
How does eFarm benefit end customers ? For bulk buyers :
▪ Collapsing multiple middlemen improves efficiency and accountability
▪ Assured availability, quality, less price fluctuations
▪ Less wastage owing to pre-sorting
For retail buyers :
▪ Farm fresh quality at reasonable prices (about 20% cheaper on avg)
▪ A trust worthy, safe , honest place to shop
So you are also a middleman ? ▪ YES ! But with BIG PLUS points
▪ Examples of “System” as a middleman
▪ Marriage market : broker v/s Bharathmatrimony
▪ Travel booking : Agents v/s Yatra.com,IRCTC
Frequently Asked Questions
So what happens to current middle men ? Value added resellers
Intermediaries – Sorting, Grading, Packing, Transporting
Storage – Dry / Cold
Processing – juices, extracts, powders
Distributors
Retailers – many formats
Doesn’t eFarm face any resistance from people/mafia ?
“Gabbar singh kehkar gaya , Jo dar gayaa , Who Mar Gayaa” –(From a
Hindi movie – One who is Afraid, is already Dead “
Only brokers/agents make money
Highly unceratin trade across entire chain , hence even brokers
impacted as commissions fluctuate
Value addition and predictability brings stable revenue and assuarnce
for everyone
Frequently Asked Questions
So how is eFarm different from a typical trader or agent ?
Frequently Asked Questions
Agent eFarm
Operates on commision basis on volume transacted. Rates vary daily as sourcing is from auction mandis and wholesale markets.
Has worked out long term price plans with farmers /suppliers /transporters based on ‘cost price’ model. Prices are more stable
Has a few sources , usually from a certain radius of his operation. Handles only a few items . Hence need to have different agents to map out entire order requirement.
eFarm is a network of networks. Sourcing is across regions. We offer wider variety in items, grade. This provides alternatives and choices to manage any scale and any risks.
Predominantly limited education , professional background and trust worthiness.
eFarm is founded by an IIT alumni with over 12 years of experience in serving Fortune 500 customers worldwide. It is a collaboration of professionals across various industries/disciplines – agriculture, technology, SCM , Sales & Marketing, Finance, Government and Non-profit organizations.
Agents being mostly individuals, have limited exposure. Cannot handle financial risks and uncertainties in market.
eFarm is backed by social investors and leading banks and is financially in better position to handle the scale of growth.
But how can someone buy vegetables online ? Thats impossible ! Its not mandatory to use our web ordering feature. What we advocate is
„advanced planning and ordering‟ reduces wastage and ensures availability.
Customers can order through phone .
All Orders get collated at our backoffice each day.
Demand Supply prediction – Use statistical tools to „predict‟ demand from
walkin and adhoc customers
Current examples – Train, bus, movie tickets
Gradual change in mindset – From walkin , to phone-in, to paper, to email
to online forms
Why a social enterprise and not a regular corporate firm ?• Pure corporates – Failing on greed and personal egos
• Pure govt. initiatives – Failing on corruption & bureaCRAZY
• Pure NGO/NPO – Driven by passion, but lack sustainability and governance
• Working for a social cause DOES NOT MEAN we need to be making LOSS
The middle path : Social + Business goals
Frequently Asked Questions
What are the risk factors ?
People issues :
Agri industry has been on a slow/negative growth .
Both farmers and end retailers want to quit
Initial adoption and understanding amongst the buyer community
may be slow
Finance issues :
Payments and Collections.
Environmental issues :
• Weather, calamities affect sourcing
Frequently Asked Questions
