E Farm Presentation Part1 Intro


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An introduction to eFarm - background of India's Agri crisis, supply chain issues, eFarm solution and FAQ

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E Farm Presentation Part1 Intro

  1. 1. eFarm : A Farmer To Consumer Agri Supply Chain Network Part 1 : Introduction Presented By : Venkat and Valli Founders , eFarm
  2. 2.  The Agri-Supply Chain Crisis : Background  The eFarm Solution  Operations Overview  USP and Key differentiators  Technology Strategy  Current Status  FAQ
  3. 3. Harvesting of • Unorganized, unregulated, unprofessional Terminal markets to Vegetables • Lack of demand/supply data neighborhood wholesalers • Poor logistics and storage • No reliable sales , distribution , marketing channels 1 • Black marketing, adulteration, wastage • Prices fixed by agents , crude and unscientific methods of determining operating margin • It is neither a „buyer‟ nor a „seller‟s market ! 5 Middlemen‟s strong hold is predominant •No IT usage , No transactional data 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% Retailers to Dining Table Price hike 3 End to end > 4 times 7
  4. 4.  Contract farming : Pepsico , HLL etc.,  One stop solutions – Mahindra Shubhlabh, Tata KK  Third party logistics & sourcing – Radhakrishna foodlands/Sodekho  Retail chains – Reliance fresh, More, Subhiksha  ICT kiosks– e-Chaupal  Regulated markets- Government mandis, Commodity exchanges  Unorganized Rural markets (mandis) and agents  Issues / Gaps  Most organised players focused only on ‘top of pyramid’ markets and hence very low volumes (less than 1%)  Non-payment of bills, not keeping up commitments . Farmers unable to fight the giants  Heavy initial investments required, with very long gestation period for results  Retail shops no longer focussed only on veggies- diversifying into other higher margin items/FMCG goods  ICTs have failed owing to illiteracy, lack of proper business model . Also Mobile usage more than PC usage
  5. 5.  The Farmer :  Need professional, reliable sales /marketing /distribution channels . No alternative to the ‘mandi’ system  Need advanced demand/supply data to plan cultivation . Currenty, very adhoc and whimsical.  The Seller :  The ‘sabjeewallah’ (vegetable vendor) is the missing link and unsung hero of the supply chain.  No proper benefits / finance / support to run his shop.  Pressure in urban areas from branded retailers undercutting on rates  But they represent over 90% of volume sales!!  RESULT : Both farmers and sellers of agri produce are quitting trade.
  6. 6. 1. Perishable produce demand and supply data is not available/accurate/reliable , leading to over production and wrong crop selection. 2. Agri Sales primarily through unorganised sector – high fluctuations in price, availability and quality 3. No efficient marketing and distribution alternative to current ‘mandi’ system . Too many middlemen, too little value addition 4. Poor post harvest management results in high wastage (~50%) 5. There is little or no IT usage/MIS/Technology
  7. 7. eFarm : The Big Picture A shared platform connecting all stakeholders Value added resellers Sorting , Grading , Processing, Packing Storage Warehouses Bulk buyers Exporters Farmers eFarm 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
  8. 8. 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 and streamlined sourcing/marketing/distribution /retailing platform which is : A IT based B2B order matching/fulfillment system (e.g. Amazon, eBay) + A low cost-efficient, ‘Indianised’ logistics & delivery mechanism (e.g. AMUL,Dubbawallahs) + A 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 • To build a nationwide agri-supply chain network platform , and enable fair, efficient, reliable business across the community. • Make agriculture self sustaining and Curtail erratic fluctuations in perishables & commodities • Generate job opportunities in BOP socio-economic strata in rural and urban areas
  9. 9. eFarm Registers the farmers, 1 transporters and other intermediaries with basic details such as produce type, volume, expected price range etc., Advance amounts are collected from buyers 4 .Payments are made to farmers and - 2 eFarm Retail co-coordinators (ie.,NGO intermediaries upon delivery. /small retailers) consolidate the Orders from buyers received through phone, email and walk-in to make one consolidated demand list 5 The vegetables are sorted and graded at the eFarm Distribution centers across the city by members of women‟s self help groups of the area.. - 3 eFarm sourcing managers track prices across different areas and feed in the data. The central order matching system determines best source, location and logistics channel The orders are delivered immediately through 6 delivery vans,push carts etc to end for fulfillment. customers Lessons learnt, feed back and data analysis conducted on the order received is shared with 7 the members in the chain. This helps to optimize the operation continuously and increase the value creation across the chain.
  10. 10. BOP Self help groups, Highly price conscious segment Neighborhood markets , segment Low High Street vendors Low margins/High Volume Middle Mom and Pop stores, Price + Quality conscious segment hotels , Canteens , High volume / Good margins Caterers Margins Volume High End Branded stores, High end Highly quality conscious segment restaurants , Hospitals , Timeliness , professionalism Organic stores, Food Low volume/High margins processors Premium Export Very high quality , customer segment specifications Low High volume / Very High High premium High investments
  11. 11. Catering/Hotels Cooperatives Hub and Spoke Model Exporters Rural Urban Collection Logistics Distribution Centres Centers Food Processors Bulk buyers Small & mid sized farmers Retailers / Mom & Pop stores … organic growth and expansion
  12. 12. Order quantity ‘Aggegating’ the demand from multiple buyers , ‘wholesale’ volumes broken down into retail lots. Better Demand and supply prediction , more realistic, long term pricing avoids erratic daily Predictability swings. Price Multiple buyers AND sellers ,hence better price discovery ,transparent and competitive. Users can set their own price , rather than being driven by market conditions. Location A ‘click and mortar operation. 24 x 7 access to system , day time deliveries Decentralized, organic growth of system Freshness As the buyer can set his own schedule and routes , fresh goods can be shipped with minimal halts or delays. Availability Multiple choice of sources, wide variety of choice Delivery Hub and spoke delivery model (much like how dubbawallahs operate) Low cost transport (push carts, cycles) in combination with vehicles for widest reach Branding A common brand called ‘efarm’, which adds value and quality to seller . new to agri field Job creation Agri-sector employs over 70% of our population directly. Several more are involved indirectly through the supply chain. Through SHG women, we hope to create new jobs at various nodes of the chain. Social change ‘Organise the unorganised’ , Create sustainable ventures across the chain ,Job creation , Promote underprivileged
  13. 13. Open source Tools & technologies AgriXML As a dataXchange format
  14. 14. •Collaboration and B2B trading platform •Content : Daily pricelists, Schedules, Trends , Buyers guides •Order management •Search / Track items •Delivery tracking •Customer relationship management •Supply chain management •Mobile/SMS gateway interface •Voice based interface •Agri specific social networking •MIS & Data mart
  15. 15. eFarm won’t ‘OWN’ any of the assets / independent elements of the chain – we would „CONNECT‟ existing elements which would all be independently owned and operated – Low cost of ownership eFarm doesn’t threaten the livelihood of existing people in this trade. We help to ‘re-train’, ‘re-group’ and ‘re-vitalize’ them to become more professional and successful in their CURRENT activities Technologies and processes are built to be simple, low cost and with widest reach across customer base Entrepreneur driven model , riding on top of existing networks
  16. 16.  Growth through innovation and research  Standardised weights , counts, bagging/packaging units  Simple tagging/tracking system for traceability  0% wastage target  Daily produce waste converted to manure which can be sold back  Separate focused unit for Organic produce  Assistance in certification & cultivation, separate logistics ,creating awareness to promote demand etc.,
  17. 17. Market Size  Quick calculation : (Taking Chennai metro as an example)  Chennai population : 8 million  Avg. consumption : 250 gms  Volume : 2000 tonnes (400 lorries inflow Koyambedu)  Value : 3 crores per day  Even a 1% penetration  = 3 lakhs Turnover per day = 9 crores per annum
  18. 18. Revenue Stream  Income from sale of produce (~15% Income Distribution of turnover) 10% Website registrations 1% 16%  User Registration fees and database Income from produce sale Advertisements listing in portal 19% 44% Franchisee fees  Franchisee fees for retailers (Based Consulting 7% 3% on typical daily order volume) , Contest wins  Training  Systems integration /consulting  Advertisements in retail vans/push carts/web portal
  19. 19. May’08- Jun’08 : Website launched, Initial prototype system June 07 – May 08 : Information gathering , discussions, solution proposals to focus groups development Aug’08- Oct’08 : Concept pitching to pilot customer base/SHGs. Pilot launched with weekly deliveries. Different retailing options such as push carts, stores, mobile trucks tried out. User feedback has been positive from all strata. Avg. weekly delivery = 2 tonnes Oct’08 – till date : Distribution centre and retail outlets. established . Daily operations launched to cater to wider customer base . Promotional events, publicity drive. Core Concept and processes constantly being upgraded and evolved based on trial run results.
  20. 20. Current Status : Summary Pilot completed . Growth mode  Farmers in network : Direct 25 , Indirect 1500 (through associations)  Truckers : 10  Vehicle capacity : (all individually owned but operating for efarm)  Push carts : 2  Mobile trucks : 2  Long haul trucks : 2  Organizations who are liasioning with eFarm for marketing support:  NGOs : 3 , Agri Food parks : 3  Distribution centre setup and functioning in Chennai. Capacity : 4 tonnes per day  Customers (Pilot phase)  Restaurants : 3 , Canteens : 2 , SHGs : 25 , Hospitals : 2, Shops : 4  Walkin individuals / door deliveries : 150  Current run rate : 4 tonnes per week , Rs 2 lakhs per month  10 member core team , 10+ advisors
  21. 21. Growth Plan Phase I : Pilot Thiruvanmiyur, Valmiki Nagar (Chennai) (Status – Volume : 2 tonnes per week , Turnover = Rs 30000/week Completed) Goal : Road test of the concept in immediate vicinity, capture Aug 15 to Oct 15 detailed lessons learnt and feedback, achieve break even Phase II : Across 5 sample neighbourhoods Stabilisation Volume target : 4 tonnes per day , per locality (Status – In Turnover target : Rs 75000 per day, per locality progress) Goal : Regularise operations, Identify and fix gaps, Oct 15 2008 to May Demonstration-cum-training centre in base of all 15 2009 wholesale/retail activities, Data analysis and systems enhancements. Phase III : Growth– Goal : Metro wide growth (Chennai), Deeper sourcing May 15 channels, hub and spoke operation in Tier II cities 2009 to Dec 15 2010 Phase IV : Expansion Goal : Expand to other metros/regions , Cross region (2011 – 2013) sourcing & delivery
  22. 22. Our Vision •Bring people together through creative use of technology platforms ('connecting the dots' ) to form socio-economic-webs •Create successful entrepreneurial, social enterprises which are profitable and sustainable •Make corporate social responsibility our core business model and differentiator •Measure success not just in financial growth , but also in the social growth in the areas we serve Management • Venkata Subramanian Founder & Managing Director: MS (Computer Science), University at Albany, NY , B.Arch , IIT Kharagpur (1995) , India 12 years of experience in IT industry , lead key accounts in BFSI for Wipro, Satyam in USA. Very strong expertise in analysis & design of complex systems , portal development , back office operations. Responsible for overall strategy , technology and public relations • 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 operations, business development, finance, administration • Yamuna , Manager , Customer Relations M.Phil , M.A , B.Ed, B.Sc Retired head from Doordarshan Kendra, Chennai Over 35 years experience in media , public relations, heading public sector organization • Consultants and advisors from leading agricultural universities, management schools, government and industry Combination of different background ,skills and experience to provide creative perspectives to solving key problems in the supply chain area
  23. 23. Why the government or Private sector not been able to solve this problem ?  Farmer‟s Market : A utopian concept but impractical  Farmers selling direct to buyers through special markets has failed as „Selling‟ is a separate specialized activity which requires time , energy and additional investment  Loan waivers and subsidies come with caveats and vested interests  Corruption, bureacracy and vested interest to push certain schemes have added insult to injury to farmers  Frequent changes in administrators & bureacrats derail most projects
  24. 24. Why the government or Private sector not been able to solve this ? - Continued  There is no „single‟ entity owning responsibility of entire chain  The systems are usually closed, vendor specific or too complex that predominantly it‟s reach and volume is limited  They cater only to the top 5% of the income/social bracket , and that too in metros. Hence the effects aren‟t felt at the „bottom of the pyramid‟.  In some cases, it has resulted in a David v/s Goliath fight where the large retailers are trying to completely by-pass existing traders and small time vendors, leading to stiff resistance and negativity  Big investments made . But Recession has hit retail
  25. 25.  Prices are arrived at based on fair negotiations and in advance  All grades (High/Medium/Low) produce is picked at different rates and matched with suitable end customer preferences  By reducing wastage across the chain , farmer gets price from more quantity sold  Pick-up is done from farm or from local collection centers , reducing transportation costs to farmer  Payments are made in full upon delivery , through transparent means with proper paper bills  Data about current demand, price levels, buyer preferences, projected volumes available for aiding in planning phase
  26. 26. Frequently Asked Questions  Your biggest customers are branded retail chains like Reliance ?  NO . Organised retail penetration less than 2%. Food processing and exports players are also very low (less than 1% each)  Unorganised sector does over 95% of volume in Agri perishables business. They are our biggest end target segment  How does eFarm benefit end customers ?  For bulk buyers : ▪ Collapsing multiple middlemen improves efficiency and accountability ▪ Assured availability, quality, less price fluctuations ▪ Less wastage owing to pre-sorting  For retail buyers : ▪ Farm fresh quality at reasonable prices (about 20% cheaper on avg) ▪ A trust worthy, safe , honest place to shop  So you are also a middleman ? ▪ YES ! But with BIG PLUS points ▪ Examples of “System” as a middleman ▪ Marriage market : broker v/s Bharathmatrimony ▪ Travel booking : Agents v/s Yatra.com,IRCTC
  27. 27. Frequently Asked Questions  So what happens to current middle men ?  Value added resellers  Intermediaries – Sorting, Grading, Packing, Transporting  Storage – Dry / Cold  Processing – juices, extracts, powders  Distributors  Retailers – many formats  Doesn’t eFarm face any resistance from people/mafia ? “Gabbar singh kehkar gaya , Jo dar gayaa , Who Mar Gayaa” –(From a Hindi movie – One who is Afraid, is already Dead “  Only brokers/agents make money  Highly unceratin trade across entire chain , hence even brokers impacted as commissions fluctuate  Value addition and predictability brings stable revenue and assuarnce for everyone
  28. 28. Frequently Asked Questions So how is eFarm different from a typical trader or agent ? Agent eFarm Operates on commision basis on volume transacted. Rates Has worked out long term price plans with farmers /suppliers vary daily as sourcing is from auction mandis and wholesale /transporters based on ‘cost price’ model. Prices are more stable markets. Has a few sources , usually from a certain radius of his eFarm is a network of networks. Sourcing is across regions. We operation. Handles only a few items . Hence need to have offer wider variety in items, grade. This provides alternatives and different agents to map out entire order requirement. choices to manage any scale and any risks. Predominantly limited education , professional background eFarm is founded by an IIT alumni with over 12 years of experience and trust worthiness. in serving Fortune 500 customers worldwide. It is a collaboration of professionals across various industries/disciplines – agriculture, technology, SCM , Sales & Marketing, Finance, Government and Non-profit organizations. Agents being mostly individuals, have limited exposure. eFarm is backed by social investors and leading banks and is Cannot handle financial risks and uncertainties in market. financially in better position to handle the scale of growth.
  29. 29. Frequently Asked Questions  But how can someone buy vegetables online ? Thats impossible !  Its not mandatory to use our web ordering feature. What we advocate is „advanced planning and ordering‟ reduces wastage and ensures availability. Customers can order through phone .  All Orders get collated at our backoffice each day.  Demand Supply prediction – Use statistical tools to „predict‟ demand from walkin and adhoc customers  Current examples – Train, bus, movie tickets  Gradual change in mindset – From walkin , to phone-in, to paper, to email to online forms Why a social enterprise and not a regular corporate firm ? • Pure corporates – Failing on greed and personal egos • Pure govt. initiatives – Failing on corruption & bureaCRAZY • Pure NGO/NPO – Driven by passion, but lack sustainability and governance • Working for a social cause DOES NOT MEAN we need to be making LOSS The middle path : Social + Business goals
  30. 30. Frequently Asked Questions What are the risk factors ? People issues :  Agri industry has been on a slow/negative growth .  Both farmers and end retailers want to quit  Initial adoption and understanding amongst the buyer community may be slow Finance issues :  Payments and Collections. Environmental issues : • Weather, calamities affect sourcing
  31. 31. Venky venky@matchboxsolutions.in 98847 61354 Valli srivalli@matchboxsolutions.in