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Serving the Bottom Tier MarketsITC eChoupal Experience Sharing

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StockistWould buy Inputs like Seeds, fertilizers, pesticides frm the manufacturer and sell it to the Retailer

Retailer would further sell it to the farmer

Farmer would sell his produce to the Trader through Adat or Broker

Trader then thtough his Broker sell the merchandise to a ProcessorA money lender was involved in the process to finance the farmer at a very high rate of interest.

FARMER TRAPPED FROM THREE ENDS:1.Retailer who sold the inputs to the farmer2.Adat who arranged for buyer for the farmers produce and3. The money lender.

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Low Risk Appetite

Weak MarketOrientation

Low InvestmentLow Margins

Low ProductivityLow Value Addition

Caught in a vicious

cycle ofunderdevelopment

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Scope of Presentation

No access to market, no idea of prices of his produce in the market.Sell off Kachcha crop to Adat at a very low price farmer and the Indian Agriculture

globally uncompetitive.

#2

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GENERAL PRODUCTS OFITC e- CHOUPAL

Processed Fruits (Mango, Guava, Papaya etc.)

Food Grains (Rice, Wheat and Pulses)

Feed Ingredients (Soya bean )

Edible Nut (Groundnut)

Coffee & Spices

Marine Products (Shrimps and Prawns )

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Inbound logistics include the receiving,

warehousing, and inventory control of inputmaterials.Operations are the value-creating activities thattransform the inputs into the final product.Outbound logistics are the activities required toget the finished product to the customer, includingwarehousing, order fulfillment, etc.Marketing & Sales are those activitiesassociated with getting buyers to purchase the

product, including channel selection, advertising,pricing, etc.Service activities are those that maintain andenhance the product's value including customer

support, repair services, etc.

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InboundLogistics

Display &Inspection

AuctionBagging &Weighing

PaymentOutboundLogistics

FARMER MANDI BUYER

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The e-Choupal infrastructure

ITC launched e-choupal a knowledge portalproviding farmers with a range of informationand services.

Information in their own language on weather,market prices, knowledge on Scientific farmingpractices, risk management etc.

Internet operated in the house of one trained

farmer, Sanchalak Warehousing Hub with Internet Access (storing

the farmers output) Managed by the middleman, Samyojak

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Picture of Indian Agriculture before and after ITC e-choupal:

Before After

Conventional farming methods Scientific farming methods

Compromise on yield andquality of the produce

Improve yield and quality of theProduce

Agree to whichever pricesquoted

Get better prices on Output

Adat used any method todecide on the price of theoutput. No Incentive to investon better quality of seeds.

Using Appropriate methods todecide on the price of output.Motivating the farmers toinvest in better quality seeds.

Attractive export markets Weak infrastructure &inconsistent quality

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The Network of 6500 e-choupal centers spread across40000 villages has emerged as the gateway of anexpanding spectrum of commodities like wheat, rice, soya,maize, spices, coffee and aqua products.The e-choupal initiative ahs been featured in the WorldDevelopment report 2008 of the World Bank and EconomicSurvey of Government of India.It is a Havard Case study today.

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The Value Chain - Farm to Factory Gate

#9

AgriInputRetailer

Farmer

P

rocessor

Kaccha

Adat

Pakka

Adat

Money Lender

Trader

Broker

Dep

tofAgri

InputCos

SeedFertilizersChemicalsPractices

Stockist

GovtUniv.

Met Dep

MSPInsurancePracticesWeather

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SYSTEM

FARMERS

SANCHALAK

PC andINTERNET

CHOUPAL

SAGARSAMYOJAK

ITC

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In other words..

#13

AgriInputRetailer

Farmer

Processor

Kaccha

Adat

Money Lender

Trader

Broker

De

ptofAgri

InputCos

SeedFertilizersChemicalsPractices

Stockist

GovtUniv.

Met DepMSPInsurancePracticesWeather

Choupal

Sanchalak

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The e-Choupal assists the farmer in the following

ways:

1) Provides farmers with real time information andcustomized knowledge, enabling them to improveproductivity quality of produce and price realization.

2) Allows for aggregation of demand for farm inputsfrom individual farmers thus giving them, access tohigh quality inputs from reputed manufacturers atcompetitive prices.

3) Eliminates middle men multiple handling multipletransportation and wastages hereby significantlyreducing transaction costs.

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Key Success Factor Self Sufficient Infrastructure

Power Connectivity

Training

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Transaction cost in Mandi Chain

(before e-Choupal)

Transaction cost in Mandi Chain

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Transaction cost in Mandi Chain

(after e-Choupal)

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States covered: Madhya Pradesh, Haryana, Uttarakhand, Karnataka, AndhraPradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).

ITC Infrastructure:

Computer

Internet

Multimedia

Broadband

Smart Card

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 10-15 choupals) 100/state

ITC (support the farm produce marketing end)

#23

The Privileged Assets of eChoupal

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Using the e-choupal infrastructure of reach & scale & keeping the Sanchalakas the pivot ..

The launch of initiatives that can :

Improve Farmer Livelihoods

Long Term Community Impact programmes

Pilot in 4 districts of MP & UP

Livestock Management programmes

Water Management

Self Help Groups focusing on women

Synergising the skills of

ITC s management skills,

e-choupal reach

The knowledge & experience of NGOs

#25

The New Wave..Sunehra Kal !!

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Rural Indias largest & most effective Interactive Transaction & FulfillmentChannel

Covering 200,000 villages across 14 States through 50,000 choupals

1/3rd of all Indian Villages

Building capability to deliver superior shareholder value sustainably

Also contributing to

Enhancing global competitiveness of Indian Agriculture

And, Raising the standard of living in Indian villages

#26

Our Vision

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Our MissionImprove the Quality of Life in Rural India.

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QUESTIONS

1. The competitors try to attract the farmers by providingthem higher prices for their produce than e- Choupal.How to overcome this?

2. What could be done to improve the Samyojak- ITC e-

Choupal relationship?3. What action should be taken against the Sanchalaks,

who unionize and extract unwarranted Rents from

ITC e- Choupal?

4. How to generate a sense of trust in the farmers mindwith respect to the laboratory tests conducted?

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Thank You.

#31

ITC Limited

e-Choupal