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E-CHOUPAL

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Background 23% of GDP from agriculture, 66% of workforce, feeding 1 billion people. Green revolution India is a net exporter of food grains. – PowerPoint PPT presentation

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Title: E-CHOUPAL


1
E-CHOUPAL
2
Background
  • 23 of GDP from agriculture, 66 of workforce,
    feeding 1 billion people.
  • Green revolution India is a net exporter of
    food grains.
  • Indian farmer remains poor.
  • Agriculture system based on small inefficient
    land holding
  • Primary producers have been traditionally paid
    much less - exploited by traders
    intermediaries.
  • Traders well positioned to exploit buyers and
    sellers in mandi system.
  • Farmers bring the goods to mandi, sell in auction.

3
WHAT IS E-CHOUPAL
  • Choupal means gathering place in Hindi.
  • The e-Choupals serve as both a social gathering
    place for exchange of information and an
    e-commerce hub.
  • It has re-modelled the procurement process for
    soy, tobacco, wheat, shrimp.
  • E-commerce and E-education platform focused on
    the needs of rural India.

4
Concept
  • Why is this venture so popular right now?
  • Initiative to attempt to combine Services and an
    Effective Business Model successfully
  • Designed to address the rural problems of
  • Fragmented farms
  • Weak institutions
  • Involvement of intermediaries
  • Information Asymmetry
  • Three tier structure
  • Local part for Responsiveness
  • Regional level for Controlling
  • Apex element for Resources Allocation

5
The Business Model
  • The idea One choupal would serve 10 villages
    within a 5 km radius
  • The village e-choupal is housed in the Sanchalak/
    Co-ordinators house.
  • The Sanchalak is central to the business model.
    Such a role helps ITC by
  • Providing trust among the farmers on behalf of
    the community
  • Removing the need of a physical infrastructure
    such as the kiosk
  • As a communication channel between the illiterate
    farmers and ITC
  • The Sanchalak is paid a commission on each
    transaction undertaken (0.5). The main
    attractions for such a post are
  • Increased social standing among the community
  • Willingness to help the village
  • Profit motive

6
The Web Portal
7
Farmer Queries
Market Rates of Different Mandis
8
Website
  • weather pricing news best practices
    Q A
  • Market Prices Entertainment
  • Sports Education
    Communication

9
Building Blocks of E-Choupal
10
Assets of E-Choupal
  • ICT Infrastructure -
  • Computer
  • Internet
  • Multimedia
  • Broadband
  • Physical Reach
  • Choupals within walking distance
  • Multipurpose WH hubs within driving distance
  • Key Intermediaries
  • Sanchalak (1 per cluster of 5-6 villages)
    1500/state
  • Sanyojak (1 per group of 25-30 choupals) 50/state
  • ITC (support the farm produce marketing end)

11
Operating Model
  • Computer connected to VSAT or internet, serves an
    average of 600 farmers in 10 villages within 5
    km.
  • Each e-Choupal costs US 3-6,000 to set up and
    about US 100 per year to maintain
  • System support
  • 15 engineers
  • 25 motorcycles
  • Estimated cost for per visit US6.60
  • 30 calls for UPS problems

12
Technology Specification
  • Technical Architecture
  • From Dial-up to VSAT Connectivity Evolution in
    e-Choupal.
  • Hardware-
  • Power Solar battery charger, UPS
  • Connectivity Dial-up modemVSAT modem, antennae
  • PC with Intel Celeron processor, printer
  • Software-
  • Operating System Windows 98
  • Word processor Ankur (Hindi word processor)
  • Other Sunera Kal Short movie on e-Choupal
    Video Clips Soil testing

13
Mandi Operation Process
Disadvantages - Long distances between
mandis(grain markets). - Monopolization of
information by the trader communities. -
Fragmented payments by traders to framers.


14
E Choupal Supply Chain
Benefits - Able to differentiate between
Risks in Farming and Financial risks in
Trading Possible by correcting the
information asymmetry - Also allows the farmer
an enlarged choice set whether he wants to sell
to ITC or to the mandi
15
E-Choupal Services
  • Relevant Real-time Information
  • Commodity prices, Local Weather, News
  • Customized 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

16
Farmer Gains
  • Farmers have access to prices and can make
    critical decisions of when and where to sell
  • Saving on transportation costs from the field to
    the mandi
  • ITCs electronic weighing scales and transparent
    checks ensure intentional spillage doesnt
    occur
  • ITCs agricultural inputs cost substantially less
    than those offered at the mandi
  • Farmers save almost 2.5 over the mandi system (
    Rs.400 500 per ton of soy) thanks to a more
    efficient market system e.g. cultivation of soy
    has increased from 50 90 in e choupal areas
  • They can take advantage of services provided by
    the e-choupal to improve their crop output and
    farming practices
  • Increased self respect as they are treated as co
    partners in a business relationship

17
ITC Gains
  • Lower transaction costs
  • ITC pays only a 0.5 commission to the Sanchalak
    as compared to the 2.5 3 paid to the agents
    under the mandi system (including true cost of
    inefficiency and intermediary costs)
  • Has found it cheaper to reimburse farmers
    transportation costs that pay agents for
    transportation. (managed to save almost RS. 200
    per ton)
  • Direct virtual vertical integration through e
    -choupal allows ITC to communicate directly with
    the farmers
  • It gets excellent bottom up information on
    pricing, product quality, soil conditions etc.
    from the Sanchalak
  • Allows them to develop a long term supplier
    relationship with the farmers, ensuring supply
    security over time
  • By providing quality agricultural inputs and
    buying quality crops, ITC can ensure a satisfied
    customer base

18
Losers
  • Commission agents
  • Mandi laborers
  • Bazaars near the mandi
  • Some mandi operations
  • Competing processors

19
Futuristics - Services through eChoupal
  • Distribution of Products and Services to Rural
    Markets
  • Micro marketing
  • Product/Services Demos
  • Marketing and Brand Building activities
  • Pilots
  • Bhoomi
  • eHealth with Private Health Service Providers
  • eEducation
  • Rural BPO

20
Future plans - partner with banks
  • Non-cash loans for farm inputs
  • Insurance and Risk Management Services
  • Loans to sanchalaks, create enterpreneurs
  • Direct loans to farmers based on sanchalak
    recommendations

21
Solution Access to Price Information Anytime
In the Village
22
Taking ICTs Biz Models to Rural India
Training
23
Taking ICTs Biz Models to Rural India
Power
Connectivity
Website
24
Laboratory Services
For soil testing (agriculture) and virus testing
(aquaculture)
25
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
Choupals 5,150 127
Villages 31,000
Farmers 3,500,000
Adding Six New Choupals Every Day Intend Scaling
up to 100,000 Villages in 15 States by 2010
26
THE SOCIAL IMPACT OF E-CHOUPAL
  • Agricultural Best Practices
  • Customized Quality Solutions
  • Intelligent Product Deployment
  • E.g.-In Khasrod, soy production declined from a
    high of 100 to 50. After ITCs involvement, soy
    is seen that 90 of farmers are planting the
    crop.
  • Link farmer and their families to the world
  • Tracking of future prices from Chicago board of
    trade as well as from Mandi
  • Children use computer for schoolwork, play games
    and obtaining print out of mark sheets
  • Youngsters use computers to research the latest
    movies, cell-phone models, and cricket news etc.

27
Summary
  • Price sensitive and cash leveraged system to
    knowledge based operation - The ITC e-choupal
    model shows that ICT can be creatively used on
    win-win basis.
  • All stakeholders part of the system.
  • A creative business model is required to spur
    economic growth at the village level, mere
    dissemination of information may be inadequate in
    certain contexts

28
ITC
  • Leading private company, 90 year old history
  • Market capitalization US 14 billion, turnover
    US 5 Billion
  • Amongst World's Most Reputable Companies by
    Forbes magazine
  • Diversified presence in Cigarettes, Hotels,
    Paperboards Agri-Business, Information
    Technology, Branded Apparel, Personal Care,
    Stationery, other FMCG products.

29
ITC
  • Created ABD in 1990 as an agri-trading company -
    aiming to offer the world the best of India's
    produce.
  • Feed ingredients, Food grains, Coffee, edible
    nuts, Shrimps, processed foods.
  • 60 of groups forex earning
  • INR 200 crore export, INR 300 crore local
    earning.
  • Awards UNIDO, TERI, NASSCOM Golden peacock
    award, Business Transformation award.

30
Thank You
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