ITC Agribusiness
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ITC Agribusiness

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ITC Agribusiness ITC Agribusiness Presentation Transcript

  •  
  • ITC's Agri-Business
    • one of India's largest exporters of agricultural products.
    • ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade.
    • The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet.
  • Problem in agri-business
    • For ITC For Farmer
    • Inconsistent supply of raw a) lack of information
    • material.
    • Involvement of third party in b) less productivity
    • supply chain.
    • C) Delay in supply c) low price for their product
    • d) Bed quality of material
    • e) Getting raw material at high cost d) fails to supply on time
    • f) Less production.
    • g) less profit
  • To enhance rural incomes, there is a need for a system which can…
    • … deliver an end-to-end solution
      • who should be able to take an informed decision !!
      • with farmer having the freedom of choice !
    • … deliver effective service
      • at low cost !!!
    • And the opportunity lies in building capacity to induce productivity led growth by providing last mile connectivity
    • ©1999-2005 ITC ltd
  •  
  • 3 Key Principles
    • Empowerment
      • Information and knowledge free of cost
    • Choice
      • Farmer choice to transact
    • Business Model
      • Fee to e-choupal Sanchalak for transactions through him
  • Execution isn’t Easy!
    • No telecom reach
      • They use Satellite communications
    • No Power; Erratic Voltage where it exists
      • They use Solar Power
    • First Time Computer Users
      • Lot of effort on Capacity Building
    • Resistance from traditional middlemen
      • Farmers dealt with them!
  • Production Channel Prior to e-Choupal Farmer Regulated Markets (15-75%) Trader Commission Agent Wholesaler (20-80%) Village Trader Ghani Producer Coop (3-5%) Cooperative Mill
  • The e-Choupal Business Model Farmer Regulated Markets (Fair Market Price) Private Miller Commission Agent (hired by ITC) Village Trader Ghani Producer Coop (Negotiated Price) Cooperative Mill E-Choupa l ITC ITC Commission
  • Transaction Costs in Mandi Chain Soybeans Example Farmer Incurs Trolley Freight to Mandi = 120 Labour = 50 Kacchha Adat = 150 Handling Loss = 50 Rs per MT 370 Processor Incurs Commission to Agent = 100 Cost of Gunny Bags (net) = 75 Freight to Factory = 120 Handling at Mandi = 40 335 Total Chain 705
  • Transaction Costs in Choupal Chain Soybeans Example Farmer Incurs Trolley Freight to ITC Hub = 120 Labour = 50 Kacchha Adat = 150 Handling Loss = 50 Rs per MT 370 Processor Incurs Commission to Sanchalak = 100 Cost of Gunny Bags (net) = 75 Freight to Factory = 120 Storage & Handling at Hub = 40 335 Total Chain 705 120 50 Cash Disbursement Costs = 50 215 335
  • e Choupal benefits the farmer, by
    • Enhancing farm productivity
      • Through bundling customised knowledge with input deliveries
    • Increasing farm gate price realisation
      • Through bundling information with cropping & output marketing decisions
      • Through unbundling produce delivery, cash flow and pricing
  • e Choupal benefits ITC, by
    • Cutting down net cost of procurement, despite offering better prices to the farmers
      • By eliminating non-value adding costs in the value chain
    • Creating new business opportunities
      • e.g. marketing several goods & services to the rural consumers
      • linking non-farm skill based services of rural origin with the global markets
  • Thank you