Leveraging IT in Indian Agriculture

e-Choupal Experience SharingR P Singh, Associate Director Extension

Indian Agriculture Past, Future and the Present

Creditable Accomplishments (Past !)• Able to Feed a Billion People

Even Greater Potential (Future !!)• Food Factory to the World

But, the stark reality (Present !!!)• Yields are low• Quality is inconsistent• Farmers are poor• Millions can’t afford two square meals a day

The Potential & The Constraintsof Indian Agriculture are well known

Fragmented farm sizes

Heavy dependence on Monsoon

Poor extension work at the farm level

Numerous intermediaries

Weak infrastructure & inconsistent quality

Large arable land

Rich & Diverse Agro-climatic Zones

Strong institutional base in R&D

Large domestic consumption base

Attractive export markets

Business Models tried hitherto

Producers’ Cooperatives

Captive Corporate Farming

Government Corporations

Vertically Integrated Enterprises

Contract farming

Have been successful more by exception than as a rule

And, unlocking the potential of Indian Agriculture still remains a dream

Fast globalising marketplace

Underscores the need to seek new solutions with some urgency…

… solutions which can actualise the potential of Indian agriculture, and also distribute the resources / benefits more equitably

Information Age Solutions are very different from the Industrial Age Structures

The Making of

ITC eChoupal

The Value Chain (Farm to Factory Gate)

Agri Input R

etailer

Farmer

Process

or

Money Lender

Pakka

Adat

Kaccha

Adat

Trader

Broker

Dept of A

gri VLW

InputCosSeed

FertilisersChemicalsPractices

Stockist

GovtUniv.

Met DepMSP

InsurancePracticesWeather

Mandi A W P

The Insight - 1

Actually, these numerous intermediaries makeup for weak infrastructure, and deliver critical value in each leg at very low cost But their aggregate cost makes the chain uncompetitive And many times, by blocking flow of information & market

signals, they are able to extract more profits for themselves than the value they are delivering

A more effective business model must be able to leverage the physical transmission capabilities of these intermediaries, yet disintermediate them from the flow of information and market signals Answer : Leverage the power of Information Technology

The Insight - 2

Low Risk Taking Ability

Low Investment

Low ProductivityLow Value Addition

Low Margin

Weak market Orientation

Answer : Leverage the power of collaborative business models

The Insight - 3

Information Technology and Collaborative Business Models gave us the power to design a new model But physically reaching the nook & corner of India, and

facilitating Net access to the largely illiterate farmers at low cost, and delivering effective service is still a challenge…

The only historical success stories we could rely on were cross-industry ! Wide & Deep penetration of the FMCG retail channel Rapid scale-up of Public Telephone Booths Low cost reach & effective customer servicing by Cable TV

Operators

Answer: Unleash the power of small scale entrepreneur

Ingredients of ITC eChoupal

1. Leverage IT, toa. deliver real-time information and customised knowledge to

improve farmers’ decision making ability to align farm output with market demands, and to improve productivity

b. aggregate demand like a virtual producers’ cooperative and access high quality farm inputs at lower cost

c. act as a direct marketing channel with more efficient price discovery and lower transaction costs in output marketing

2. Physical Net Access and Community Interface through a lead farmer identified from within the village and appointed as Choupal Sanchalak

3. Interlocking network of partnerships brings the “best-in-class” information, knowledge and inputs ITC + Met Dept + Universities + Input Cos + Sanyojaks (erstwhile

Commission Agents)

One Typical Transaction

Choupal TransactionIntroduction

Price Information

Moisture Testing

Q & A

That bundled• Knowledge (what to use) and• Information (when to use), with• Transaction (ordering an input)

to deliver unique value to the farmer

The Web Portals also have

Localised and customised weather information…

…Best Practices in Farming

Farmers across villages can interact among themselves

Laboratory Services are integrated too

For soil testing (agriculture) and virus testing (aquaculture)

eChoupal addresses the farmer’s difficulties in marketing of his output as well

Farmer knows the sale price for his produce even before he leaves the village through online real-time information• who otherwise has to sink in the cost of taking the

produce to Mandi before knowing the price

Transparent weighment and quality testing practices

Factory Weighment Reception

And more importantly, offers the facility to delink produce delivery, cash payment and price finalisation for the benefit of small farmer Payment

• who otherwise ends up selling his produce immediately after harvest at low price because of cash needs and lack of storage

Transaction Costs

The Mandi Chain

Farmer Incurs

Trolley Freight to Mandi = 100Filling & Weighing Labour = 70Labour Khadi Karai = 50Handling Loss = 50

Rs per MT

270

V V2

Transaction Costs

The eChoupal Chain

Farmer Incurs

Trolley Freight to Mandi = 100Filling & Weighing Labour = 70Labour Khadi Karai = 50Handling Loss = 50

Rs per MT

270

Bottomline

For the farmer• Market aligned production, higher productivity,

better farm-gate prices

For ITC• Cost effective procurement of quality farm output

& New Business Opportunities

Above all, for the nation• Global competitiveness, without putting the small

farmer at a disadvantage

Speed Breaker 1 : Power

We are supplementing with Solar Power

Speed Breaker 2 : Connectivity

We are setting up VSATs

Speed Breaker 3 : First Time Net Usage

Significant amount of time & effort on training

Ensuring Equitable Distribution

The Public OathVideo

eChoupal & Agri Extension

Increase in the yield • Foundation seed programme covering more than

1500 villages

Yield Protection• Best farm practices in model plots• Expert advice and village meetings• Scientist evaluation & web casting

Soil testing Post Harvest advisory services

RURAL DISTRIBUTION Agri Inputs

• Seeds• Fertilisers/Pesticides• Tractors

E-governance • Land Records• Information on government subsidy schemes• Application forms for PAN,Ration Cards etc.

Health • Telemedicine

Education• Distant Learning – Tie up with universities like IGNOU etc.• Work with NGOs & SHGs for Girl and free education.

Consumer Goods• Soya Oil • Lanterns , Salt & Sugar etc.

Choupal Sagar The Second layer of infrastructure, a place where

farmer gets “One Stop Shop” for all his needs• Storage of Agriculture Produce

• Super Market – Agri Inputs, FMCG, Agri implements, Durables, Clothing etc.

• e Health facility (with Apollo Hospitals), pharmacy and laboratory

• Weighment facility

• Cafeteria

• Soil testing Laboratory

• Training Centre for farmers

• Life & General Insurance

• Diesel Station

• Other amenities

Providing world class services and products to rural India, with superior quality at the right prices.

Current SetupState (Crop)

MP (Soy, Wheat) 1700

Karnataka (Coffee) 70

AP (Shrimps) 50

UP (Wheat + Rice) 1500

Maharashtra(Soya) 1000

Rajasthan(Soya+Mustard) 700

Choupals 5020

Villages 26000

Farmers 2.6 million

Adding Six New Kiosks Every Day

Scale Up Road Map

15 States

100,000 Villages

Wider range of crops (Grains, Oilseeds, Coffee, Spices, Cotton, Horticulture and Aquaculture)

Over the next 7 years

e-Choupal

Thank You

ITC Limited