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Creating Market Linkages For Farmers
- 1. CREATING MARKET LINKAGES FORFARMERS THE EFARM STORY VENKATA SUBRAMANIAN FOUNDER, MD IFAD CPMT meeting , Dec 6 2009, New Delhi
- 2. Introduction Venkata Subramanian Founder & Managing Director, Matchbox Solutions & eFarm, Chennai Brief profile : MS (Computer Science), 2003,University at Albany, NY , B.Arch , IIT Kharagpur ,1995 , India 12 years of experience in IT industry in both technology & commercial roles (7+ years in US) Head of key outsourcing & consulting accounts in Insurance, Capital Markets & Banking
- 3. Introduction • Srivalli , Co-Founder, CEO MBA , B.Com Taxation 8 years experience in Sales, Marketing, & Operations. Has run two start-ups and organised fund raising for NGOs as part of CSR programs. Responsible for business development, finance
- 4. Currently Better knownas …. IT enabled Annachee !!! Weekend beachside Hi-tech Organic Sabjeewallah Carbazaar ;-) guy
- 5. The Farmers’ crisis: A Reality check From crisis to concept : How we built the business model The story line What is eFarm ? How does eFarm work ? What are the key Benefit to Farmers ? Lessons Learnt IFAD & eFarm : Next steps
- 6. The Indian AgriSupply Chain Current State : Too Many Steps , Too Little Value Addition Harvesting of Terminal markets to Vegetables • Unorganized, unregulated, unprofessional & neighborhood wholesalers unprofitable • Lack of demand/supply data 1 • No reliable sales, distribution, marketing channels • Poor logistics and storage • A Middlemen’ dominated market 5 •No IT/ERP usage – decisions are adhoc and arbitrary Regional mandi to Wholesalers to Retailers 4 Terminal markets near A local mandi large cities auctioning 2 Local to Regional mandis for Auction 6 Loss in transit 40% Price hike Retailers to Dining Table 3 End to end > 400% 7
- 7. So many solutions, but why still a crisis ? R&D ICT solutions Increase yield Contract farming Export market Cold chain Modern Micro retail & finance & logistics Grants
- 8. Only a crystalclear question yields a transparent answer – Zen saying
- 9. Development of Model Studyof existing supply chain Visits to farms across Tamilnadu A Roadside farmers auction in a village Govt. farmers direct sales market , Theni & Hosur
- 10. Developing the model Discussions with Agri experts , Supply chain managers, existing models , industry veterans (centre) Forming pilot focus group with representative members across the chain Discussions with NGOs , Microfinance , Rural banks & self help group members
- 11. Farming in India: a Social activity or business ? Sales & Marketing R&D (Agri HR & research) Training (Labour) Production (Farmer) IT/MIS Logistics & (Market Supply info) chain(Trans port) Finance & Processing Accounting & QA (Post (Loans and Harvest Grants) techniques)
- 12. Marketing : Themissing link ? Other industries have differentiated production from marketing/sales Agriculture – Farmer handles both roles Brands have value !! Indian products though superior have not established a brand
- 13. What are themain end customer segments and their needs? Low Income Middle High Income Hotels & Food & Export Group Income Group caterers Drink • ~1% of • > 40% in Group • ~5% in volume • ~25% of processors volume volume • ~ 20% in • Buy from retail volume • ~5% of • Best quality / • Buy from volume chains • Buy from volume specific neighborhood • Quality & wholesale products only • Buy from • Product markets street vendors variety mandi specific buyer (evening) • Price + conscious • Large volume • Pay more for Quality + fixed price less quality conscious range
- 14. What are thetypical price points ? 42/kg Eg: Ooty Carrots (As of 29th June 32/kg 28/kg 2009) 24/kg 22/kg 20/kg End customer 5/kg 12/k price g Farmer’s market Regional Metro Terminal Neighbourhoodm Kirana Branded Retailers Premium Grade (In Ooty/ mandi Market arket stores, Pu (Export) Kothagiri) (Mettupala (Chennai) (Thiruvanmiyur sh carts yam) Chennai) 500 % Price hike Source : Ooty market traders, Chennai traders, indg.in Over 500% Price hike on average to customer , but no value addition Changes hands several times: 40-50% is wasted – which adds to the costs Prices set at each intermediate point arbitrarily by brokers/agents without any planned demand/supply data Farmer typically operates at 25% loss , End retailer less than 5% net margin
- 15. Current sales/distribution channels? The ‘sabjeewallahs’ – Unsung heroes of the Wholesale supply chain terminal Farmers markets Institutiona Traders l Buyers Street Non brand Neighbour vendors local shops hood market 99% of the distribution is through Branded Hotels & Food Exporters retailers caterers processors unorganized players
- 16. How to reducewastage in distribution ? Wastage in transit = 40% = 40,000 crore in LOST REVENUE TO FARMERS Key reasons : Poor demand/supply prediction Poor logistics & distribution chain “Penny saved is penny earned”
- 17. An efficient supplychain management model suited for India ? •IT Systems usage : NIL •Management team : Illiterate and average age of 55 •Age of company : Over 150 years •Customer Segment : From slum dwellers to crorepathis •Operational efficiency : Six sigma !!! The Mumbai Dubbawallahs !!! •Highly decentralized operations – agile, flexible , scalable •Use of low cost transport medium – trains •Use of human power for last mile delivery – No Fuel related hikes •Strong customer relationship – personal , localized •Simple coding, routing, labelling system – operates even without electricity ! •Delivery excellence – fixed time , professionalism
- 18. Why is agriindustry in negative growth ? Years of neglect & low growth figures of sector = EDUCATED YOUTH DO NOT WANT AN AGRI CAREER High uncertainty and risks = VERY LOW INVESTOR INTEREST Large scale conversion of agri land for industrial expansion = FARMERS FIND QUICK BUCK IN SELLING LAND THAN CULTIVATING
- 19. What technologies aremost appropriate for reaching BOP segment ? ICT Technology and the BOP segment : Challenges • High illiteracy • Even amongst educated – Mostly local language skills only Technology Adoption • Low computer skills , Low internet amongst BOP segment penetration • Highest and fastest penetration : The mobile phone • Self taught the phone interfaces , Interface points usage • Pay full price for new models , talk • Voice call centres / BPOs (local time language ) • Natural language IVRS ( 2 way – automated messages) • SMS
- 20. How do westart small, yet scale BIG? te Often large organizations fail in rapid xt text text te xt te xt text te xt expansion phase – too fast , too soon text te xt Create 1 fully functional, fully sustainable unit (eg could be a collection centre , or a text te text xt te xt distribution centre or even a store) text te xt text Replicate the successful model into two te xt text te text xt te xt text text te xt Ensure continued viability of this expanded te unit xt Continue to ‘divide and expand’ text te text xt te xt text te In case of any issues, we only need to take xt 1 -> 2 -> 4 -> 8 -> 16 one step back to prior state and rebuild … At a given time, number of units would be a measure of 2n where n is time taken to replicate 1 step
- 21. What is eFarm? A PVT LTD company registered in Chennai One stop Agri business enabler Sourcing + Marketing + Consulting + IT
- 22. What is eFarm? : The Big Picture Connecting the dots Value added resellers Sorting , Grading , Processing, Packing Storage Warehouses Bulk buyers Exporters Farmers Cooperatives Collection centers Kiranas Self Help Groups Hawkers Village ICT kiosks Phone booths Logistics Fleet Small Independent transporters Mobile operators operators Intra-city small tempos
- 23. Benefit to Farmers Unlockrevenue potential across the value chain Cleaning / Packing Quality Routing Inspection/ Grading Long haul Transportation Rural Produce Local vendors Collection Centres Small retailers Farmers Urban area Local Distribution centre Distribution Compost/Manure Food Processing from waste units Bulk buyers (Hotels / Caterers / Exports Retailers) eFarm Common Services Planning & Call centre / Training & Research Technology Coordination Communication Support
- 24. The eFarm Solution Create a network of farmers, intermediaries, logistics providers, distributors and retailers ‘Organize’ the ‘un-organized’ rural to urban supply chain to create sustainable prices for the rural members of the chain Create a shared sourcing/marketing/distribution/retailing platform which is a combination of offline delivery mechanism with online IT systems : IT based B2B order matching/fulfillment system (e.g. Amazon, eBay) + Low cost-efficient, ‘Indianised’ logistics & delivery mechanism (e.g. AMUL, Dubbawallahs) + People driven Direct To Consumer Marketing / Retailing channel (e.g. HLL’s Shakti, Amway) + Bottom Up Entrepreneur driven model to reach all customer segments (Self help groups, Micro finance) Our goal • Build a nationwide agri-supply chain network platform - Enable fair, efficient & reliable business across the community • Make agriculture self sustaining and curtail erratic fluctuations in price/quality • Generate job opportunities in BOP socio-economic strata in rural and urban areas
- 25. Setting up thepilot eFarm office and godown at Mylapore , Chennai Upgraded vending carts , standardised weights and measures Distribution centre at Chennai (godown)
- 26. Organizing the Unorganised.. To create a low cost, scalable distribution chain Fix the process first And THEN Implement technology Otherwise will be a failure …..
- 27. Social Impact :BOP segment Murugesan, c oconut farmer, with graded coconuts Small tempos for local deliveries – powered by eFarm Panjali picking up vegetables from our Mylapore centre Only a eFarm phone call mobile store away … a at an old vegetable age home vendor enquiring prices
- 28. DisABILITY : Workingwith their strengths Cut vegetables Peeled onions and garlic Sorting Grading Over 60% of our staff have some physical or mental disability & Natural Agri waste Ripening collection and Of fruits composting
- 29. How does eFarmwork ? Advanced Planning Hub & Spoke Distributed network Technology backend
- 30. Demand / SupplyForecasting and aggregation Strategic Forecast Stocking Sales & Plan marketing <Sample spreadsheet> COLLABORATION FOR PLANNING COLLABORATION FOR Farmer OPERATIONS Purchase Order Sourcing Confirmations Purchase manager Orders
- 31. eFarm : OperationsOverview Cooperatives Hub and Spoke Model For Catering/Hotels Producer Scalability and Organic Growth Corporations Exporters Rural Urban SHGs Collection Forward Logistics ( Fresh Produce) Distribution Centres Centers Food Processors Reverse Logistics ( Manure , Farmer supplies) Bulk buyers Small & mid sized farmers Retailers / Mom & Pop stores … organic growth and expansion
- 32. Technology Overview Behind thescenes Open source Tools & technologies AgriXML As a dataXchange format
- 33. Benefit to farmers WorldClass Technology tools backing the network Collaboration and B2B trading platform •Content : Daily pricelists, Schedules, Trends , Buyers guides •Order management •Search / Track items •Delivery tracking •Agri specific social networking Backoffice Systems •Customer relationship management •Supply chain management •Mobile/SMS gateway interface •Voice based interface •MIS & Data mart
- 34. ICT in Agrimarketing : Data collection from farmers Production data • Produce name, variety • Grade • Typical yield at harvest • Harvest cycles • Cost price at farm gate Farmer information • Name • Address • Contact number • Preferred mode of payment • Bank / Post office details • Photo • Attestation
- 35. ICT in Agrimarketing : Price determination through cost price analysis - worksheets Tools and calculators to assist farmers in determining their Sale price Click to open ->
- 36. AgriBusiness Consulting Market Analysis and Decision Support (data courtesy : TNAU-INDG market Koyambedu information portal) nadu tomato What to grow ? How much to grow ? When to harvest ? Where to sell ? At what price ? Ottanchatram •Head to head comparisons across nadu tomato •Markets •Insight - Support level prices and inflection points •High / Low variations •Identifying ‘hoarding’ and ‘cartelisation’
- 37. Example – Nendranbanana NENDRUM IN COIMBATORE MARKET NENDRUM IN CHENNAI MARKET 60 60 50 50 40 40 30 20 30 10 20 0 10 0 08/06/2009 08/07/2009 Nendram in Bangalore market 60 Customer : A major chips manufacturer In 50 40 chennai 30 Problem : Nendran variety availability & quality 20 10 was poor and price was very high 0 Identified alternate markets for viable bulk sourcing from alternate markets
- 38. AgriBusiness Consulting MIS/ Data Analysis Insights into customer’s procurement patterns and identifying cost saving opportunities Drill down to details Highlight Dashboard summary potential For senior management problems and issues for immediate action
- 39. ICT in Agrimarketing : Farmer’s Social Network/Portal Agri India – LinkedIn Group ( > Link ) •Operational since Jan 2009 •connecting farmers, buyers , social agencies, agri professionals , academicians , press reporters & students •Leads on key demands , info about agri expos/conferences , trade news , job announcements , new ideas , discussions … •Articles on key topics : •Agri business & entrepreneurship •Organic farming •Video clippings on key technologies & processes •Buyer’s guide to various fresh produce (for e.g. detecting carbide mangoes, health benefits of keerai , selecting brinjal without insects etc)
- 40. Benefit to Farmers Joining a growing, large network of Clients / Suppliers/ Partners Customers Major Suppliers / Farmers Consultants / Collaborators • VGP resorts • Green earth, Nilgiris • MOP Vaishnava Women’s • Savera hotel • Earth trust , Ooty college – Dept. of Food Science • Raj varadarajan farms , padalam & technology • Veggibazaar.com • Ecoville – organic produce • Tamilnadu Agri University – • NH47 / OVG caterers Agri Business Incubation • Banana farmers association, TN • Pizzaguy • ICRISAT, Hyderabad • Satguna Agro , Thanjavur • J’s Organo store, neelangarai • Dept. of Horticulture & Agri • PSG College of Tech – Business • Voluntary Health Services marketing, TN government school Hospital, taramani • SMILE , Nellore • Hospiexchange • Kalyani hospital, Mylapore • Nalamagal Trust, Dharapuram • RASA – School for Special • Venkateshwara hospital • Future agro, calicut Children , Nandanam • Major Collection regions • Nandini – Voice for Deprived • Bharani hotel, Thiruvanmiyur • Around Chennai /kancheepuram • Indian Bank – Microsate II • Picnic plaza, Mylapore • Karur, Namakkal • IFMR • Rayar mess , Mylapore • Thanjavur • Yes Bank / Wagenegan • SS Annamalai staff canteen • Ooty/Mettupalayam University • Hamilton bridge area vegetable • Krishnagiri, Hosur • Microsoft & fruit vendors association • Nellore, AP • SMS integra mobile gateway • Thiruvanmiyur market traders • Theni/Cumbum • Silicon house hosting association • Samanvaya • VAREWA • Ichiban consulting • ….etc Tap a wideExnora of expertise and support • range Access to wide range of customer base structure to promote agribusiness From the domestic to export houses across economic pyramid! As of August 2009
- 41. Spreading the message Workshops, Training, Agri business entrepreneurship development Innovations in Tie ups with Agri agriculture retailing research and Agri eFarm office and business incubation godown at Talk at MOP centres Mylapore , Chennai Vaishnava womens’s (ICRISAT) college, Chennai Talks in management (centre) schools and Setting shop - Our institutions home became the (IFMR , IBS) godown & store. Field trips to villages and address Conferences and Farmers gathering trade shows Upgraded vending carts , standardised weights and measures
- 42. eFarmstartup 2009 nominee •TATANEN Hottest in the news •IIM Kozhikode Whiteknight 2009 Business Plan contest winner •IIM Ahmedabad Leverage 2009 Showcase shortlisted startup •In the press •Entrepreneur , Sep 09 •The Hindu magazine’s Ergo tabloid (Mar 2009) •Times of India , May 2009 •NDTV News , June 2009 •Featured in leading e-zines – yourstory.in, startups.in •Featured in Tamil press- Kumudham , Dinakaran •Outlook Money , June 2009 •JADE , June 2009 •Academic •Faculty for Food SCM course, MOP Vaishnava college •Key note speaker – TNAU conferences
- 43. IFAD & eFarm Training and Consulting for farmers and NGOs Marketing of produce Scale up eFarm model and replicate in other regions Agri IT implementation partner (Agri SRM/CRM/ERP/SCM/MIS)