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Presentation scm itc e-choupal final (1)


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Presentation scm itc e-choupal final (1)

  1. 1. Group 16 1
  2. 2.  India is second most populated country in the world. Agriculture is the backbone of Indian economy. It contributes around 26% of the total GDP. Agriculture provides livelihood to about 65% of the labour force and accounts for 8.56% of Indias exports. The fragmented farms are constraining the risk taking ability. Large arable land, Rich & diverse agroclimatic zones Heavily dependent on Monsoon Strong institutional base in R&D Large domestic consumption base Poor extension work at farm level Numerous intermediaries Weak infrastructure & inconsistent quality 2
  3. 3.  Hindi word meaning- Village meeting Virtual market place where farmers can transact directly with a processor and can realize better price for their produce developed by ITC agri-business division Brainchild of S Sivakumar Promoted by Y.C.Deveshwar, Chairman, ITC Launched in June 2000 Largest Internet-based initiative in rural India Benefits 4million farmers in 40000 villages Target Area so far 38,000 villages, 6500 kiosks, 9 states 3
  4. 4. Why it became a success? Only initiative that attempted to combine Services and an Effective Business Model successfully Designed to address the issues such as:1. Fragmented farms2. Weak institutions3. Involvement of intermediaries4. Information Asymmetry 4
  5. 5. Pakka Adtiya (Registered Dealer)Agri-Input Dealer/ RetailerCompanies Stockiest Trader Money Farmer Processor Lender Broker ITC-IBD Agril University, VLW (of Dept of Met Dept, Agriculture) Insurance Co. Kaccha Adtiya (Un-Registered Dealer) 5
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  8. 8. The Tactical The Strategic The Social Imperative Imperative ImperativeITC’s distance from Farmer Horizontal spread Farmers profitDaily price inflation Vertical presenceCapture of Intra-day Price shifts Information Seasonal price Asymmetry Risk management Inflation 8
  9. 9. To enhance farm productivity by Disseminating latest information on district level weather forecasts for short & medium terms Best practices in farming Supply of quality inputs (seed, herbicide, fertilizer, pesticides etc) in the village itself 9
  10. 10. To improve price realization for farm produce by Making available live data on markets viz. Location / Buyer wise prices offered. International market prices of relevant agri-commodities. Historical & Up-to-date information on supply & demand. Expert opinion on expected future price movements. 10
  11. 11. Helps minimize transaction costs in marketing farm produce by Buying output directly from the farmers Through transparent pricing & weight management practices 11
  12. 12.  ITC accumulates information regarding weather, modern farming practices, and market prices from sources like Meteorological Department, Agri-universities, mandis (regional market) etc., and uploads all information on to e- Choupal web site. It is an interlocking network of partnerships (ITC + Met Dept + Universities + Input COs + Samyojaks, the erstwhile Commission Agents) bringing the “best-inclass” information, knowledge and inputs. 12
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  14. 14.  Customer centric Used for many commodities & multiple transaction Easily scalable Uses local talent & local people & develops local leaders Extended to local as well as global procurers Nurtures local entrepreneurs. Uses all the existing institutions & legal frameworks 14
  15. 15. o Crop-specific interventiono Low-cost last mile Ties with ITCs larger goal of transforming the e-Choupal network into a distribution superhighwayo Intelligent first mile Transforming farmers from being consumers to participants in the process of product design
  16. 16. o Social impact with increase in ITCs mileage: Social impact of e- Choupals ranges from short-term provision of internet access to the long-term development of rural India as a competitive supplier or buyer of a range of goods and serviceso Reengineer, not reconstruct Keeping efficient providers while creating roles for some inefficient providers from the existing systemo Address the whole, not just a part Created an alternative to village trader services by addressing the entire gamut of needs by creating access to agriculture extension serviceso Selection & maintaining credibility of Sanchalaks
  17. 17.  ITC communicates with Sanchalaks through the e-choupal portal  Price benchmark made wrt mandi’s closing price  Sanchalak inspects produce for quality, make appropriate deductions to benchmark price and generates a note for the farmer  This note is produced to the nearest ITC procurement hub  Farmer bears the risk of transportation for the produce delivered that is reimbursed by ITCInspection Weighing Inbound Weighing Hub& Grading & Pricing Logistics & Payment Logistics
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  19. 19. Better information Access to price at several nearby outlets Better priceBetter use of time Access to price choice prior to visiting mandiTransportation cost ITC compensates its Lower sellers logisticTransportation duration ITC no more than few cost hours in the entire processWeighing accuracy ITC electronic scales are accurate and impartialGranularity of weighing Single weighing concept eliminates the risk of pilferingProfessionalism and Dignity accorded todignity farmers by a professional process 19
  20. 20. Disintermediation saving Commission paid to agents replaced for only a half percent of commission to the SanchalakFreight cost Only half the cost paid to farmers as compared with agents initiallyRisk management Long term supplier relationship with its farmers. The information yielded allows ITC to better plan future operations 20
  21. 21.  Non familiarity with internet usage for first –time users ITC also had to surmount regulatory barriers. The Agricultural Produce Marketing Committee Act (APMC Act) prohibits the purchase of specified commodities (including several that ITC deals in) from any source other than government-designated mandis. ITC had to convince political systems of state government Rural India faces the problems of infrastructure bottlenecks such as outdated telephone exchanges, frequent electricity outage, and unreliable Internet connectivity. 21
  22. 22.  Commission agents- even after compensating for lost income, they had lower income after the e-Choupal Mandi laborers- severely impacted. ITC’s long term vision to employ them in the hubs Bazaars near the mandi-farmers diverted to shops near the ITC hubs, diversion of revenue 22
  23. 23.  It is a low cost/multi business model operated by the farmer representative. E-choupal has been one of the best ICT application platforms that has been scaled replicated and sustained The Sanchalaks are selected carefully and they have been able to induce the feeling of involvement E-choupal has provided economic benefits even for the small farmers. Every beneficiary gets benefit and the equitable benefits make the adoption very rapid 23