ITC e-Choupal

iksaanaaMo ko iht
maMo ¸iksaanaaoM ka
Apnaa

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Agriculture Scenario in India
• India has second largest arable land in the
world
• One of the largest domestic consumption
base
• Attractive emerging export market
• Diverse climatic zones allow growing of a
variety of crops through the year
• Growing demand for processed food
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 Continued…

• Necessity to go beyond Rural markets

• Government doubling it rural spending
• New tax incentives for food exports

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 About ITC …..
• ITC is one of the largest corporation with its
presence in Tobacco, Hotels, Paper Boards,
Foods, Fashion Retailing And Commodity
Export
• ITC international business division was created in
1990 as an Agri Trading Company engaged in
exports of a range of agriculture commodities
• They believe in using a business model that does
good to society and helps in improving the
standard of living of Stake Holders

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 e-Choupal Concept
• E-Choupal is a virtual market place where
farmers can transact directly with the
processor and can realize the better price for
the produce.
• Provides for transparent transactions by free
flow of information
• Elimination of some levels of intermediaries
• Connects large / small crop producers and
small/ large users
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 Mandi Distribution system
Money Lenders
Dept. of Agriculture Seed Companies
(Weather, Insurance) stockiest & retailers

Village Trader Farmer Ghani

Wholesaler Regulated Markets

(20-80%) Or Mandis (15-75%)

Commission Agent Trader Producer Co-ops

(Kachha Adtiya) (pakka Adtiya) (3 – 5 %)

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Producers, Private Oil Miller Cooperative Mill
 Mandi Operation Process

Inbound Display & Bagging & Outbound

Auction Payment
Logistics Inspection Weighing Logistics

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 Limitations of Mandi System
• It is inefficient as there are no resources
to analyze price trends
• The timing of the sale may not result in the
optimal price for the crop
• Also the delayed sale time at the auction
makes it more difficult for the farmer to sell
his product at some other Mandi
• Farmers also bear the cost of bagging
and weighing
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 Continued…..
• The inspection process does not provide
incentive to the farmer to invest in better
seeds and better practices (water project)
• The key problem is the agents control the
market asymmetrical information flow
(price, quality)
• Mandi system Doesn’t Give the assurance
of Sale of Crop on a Particular day, that
Increases the Transportation cost.
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The desired necessities for e-Choupal

• Re-engineer, Not Reconstruct

• Caters to the entire community needs
and not focusing on just one necessity
• Fusion of agriculture and IT
• Risk assessment and mitigation
• Moving away from government shadow

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 e-Choupal Distribution System

Farmer

Dept. of Agriculture
Money Lenders Seed Companies
(Weather, Insurance) stockiest & retailers

e - Choupal

Producers, Private Oil Miller Cooperative Mill

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 Continued…

Inbound Inspection Weighing Hub

Pricing
Logistics & Grading & Payment Logistics

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 Sources for scaling the model

• Crop Specific Intervention

• Low-Cost Last Mile

• Intelligent first-mile

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 The e-Choupal Services
• Relevant & Real-time Information
– Commodity prices, Local Weather, News
• Customised Knowledge
– Farm Management, Risk Management
• Supply Chain for Farm Inputs
– Screened for Quality, Demand Aggregation for
Competitive Prices & Efficient Logistics
• Direct Marketing Channel for Farm Produce
– Lower Transaction Costs, Better Value through
Traceability 15
 Continued………
• Marketing Services
– Market Research
– Brand Building
– Product Demonstration
• Governance services
– Bhoomi
• Health with Private Health Service Providers
– Apollo
• Education
– ILFS 16
 Choupal Sagar level Services
 Soil Testing
 Medical facilities
 Bank & Insurance
 Entertainment
 Cafeteria
 Petrol/ Diesel
Station 17
 Operating Environment
• Power Constraints
• Transportation
• Telecom Infrastructure
• Customer Base
• Technical Architecture
• Application Architecture
• Information Architecture

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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, eGovernance
• Shareholder Value through Serving Society
– Also, the infrastructure serves as a reliable delivery
mechanism for resource development initiatives (e.g. water
management) 19
 Social Impact of e-Choupal
• Educating Rural Masses
• Weather Forecasting
• Best Agricultural Practices
• Spoon Feeding Quality Solution
• Intelligent product Development
• Educating the farmers regarding seeds
and fertilizers and providing the required
materials.
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 Losers……

• Commission Agents
• Mandi Laborers
• Bazaars Near the Mandi
• Some Mandi operations
• Competing Processors

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 The Impact …
• ITC procures 80% of its procurement via
Web Channels
• In 9 months ended Dec 2006 ITC-IBD
clocked revenues of Rs2762.63 Cr as per
the turnover of 9137.17Cr
• It covers over 31000 villages, reaching out
to 3 million farmers through 5200 kiosks
• Adding Six New Choupals Every Day
Intend Scaling up to 100,000 Villages in 15
States by 2010.
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 Current Network Size

State Choupals Hubs

Madhya Pradesh 1750 43
Uttar Pradesh 1750 42
Maharashtra 900 22
Rajasthan 500 15
Karnataka 100 2
Andhra Pradesh 150 3
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 Success Factors
• Cost effective model
• Contraction of supply chain
• Own storage facilities
• Reduction in transportation cost and time
• Lower but more specialized skill labor
• Higher equipment utilization
• Easier production planning and control
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 Thank
A Glimpse You!!!
into ITC e-Choupal…

From:
Nitin Sehgal 62
Pranav Arora 67
Uzma Qumar 70
Shitiz Wadhawa 93
Sumit Agrawal 107
Sumit Rawal 108

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