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.

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

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

… 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

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!

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

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

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