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ITC e-Choupal

iksaanaaMo ko iht
maMo ¸iksaanaaoM ka

Agriculture Scenario in India
• India has second largest arable land in the
• One of the largest domestic consumption
• Attractive emerging export market
• Diverse climatic zones allow growing of a
variety of crops through the year
• Growing demand for processed food

• Necessity to go beyond Rural markets

• Government doubling it rural spending
• New tax incentives for food exports

About ITC …..
• ITC is one of the largest corporation with its
presence in Tobacco, Hotels, Paper Boards,
Foods, Fashion Retailing And Commodity
• ITC international business division was created in
1990 as an Agri Trading Company engaged in
exports of a range of agriculture commodities
• They believe in using a business model that does
good to society and helps in improving the
standard of living of Stake Holders

e-Choupal Concept
• E-Choupal is a virtual market place where
farmers can transact directly with the
processor and can realize the better price for
the produce.
• Provides for transparent transactions by free
flow of information
• Elimination of some levels of intermediaries
• Connects large / small crop producers and
small/ large users
Mandi Distribution system
Money Lenders
Dept. of Agriculture Seed Companies
(Weather, Insurance) stockiest & retailers

Village Trader Farmer Ghani

Wholesaler Regulated Markets

(20-80%) Or Mandis (15-75%)

Commission Agent Trader Producer Co-ops

(Kachha Adtiya) (pakka Adtiya) (3 – 5 %)

Producers, Private Oil Miller Cooperative Mill
Mandi Operation Process

Inbound Display & Bagging & Outbound

Auction Payment
Logistics Inspection Weighing Logistics

Limitations of Mandi System
• It is inefficient as there are no resources
to analyze price trends
• The timing of the sale may not result in the
optimal price for the crop
• Also the delayed sale time at the auction
makes it more difficult for the farmer to sell
his product at some other Mandi
• Farmers also bear the cost of bagging
and weighing
• The inspection process does not provide
incentive to the farmer to invest in better
seeds and better practices (water project)
• The key problem is the agents control the
market asymmetrical information flow
(price, quality)
• Mandi system Doesn’t Give the assurance
of Sale of Crop on a Particular day, that
Increases the Transportation cost.
The desired necessities for e-Choupal

• Re-engineer, Not Reconstruct

• Caters to the entire community needs
and not focusing on just one necessity
• Fusion of agriculture and IT
• Risk assessment and mitigation
• Moving away from government shadow

e-Choupal Distribution System


Dept. of Agriculture
Money Lenders Seed Companies
(Weather, Insurance) stockiest & retailers

e - Choupal

Producers, Private Oil Miller Cooperative Mill


Inbound Inspection Weighing Hub

Logistics & Grading & Payment Logistics

Sources for scaling the model

• Crop Specific Intervention

• Low-Cost Last Mile

• Intelligent first-mile

The e-Choupal Services
• Relevant & Real-time Information
– Commodity prices, Local Weather, News
• Customised Knowledge
– Farm Management, Risk Management
• Supply Chain for Farm Inputs
– Screened for Quality, Demand Aggregation for
Competitive Prices & Efficient Logistics
• Direct Marketing Channel for Farm Produce
– Lower Transaction Costs, Better Value through
Traceability 15
• Marketing Services
– Market Research
– Brand Building
– Product Demonstration
• Governance services
– Bhoomi
• Health with Private Health Service Providers
– Apollo
• Education
– ILFS 16
Choupal Sagar level Services
 Soil Testing
 Medical facilities
 Bank & Insurance
 Entertainment
 Cafeteria
 Petrol/ Diesel
Station 17
Operating Environment
• Power Constraints
• Transportation
• Telecom Infrastructure
• Customer Base
• Technical Architecture
• Application Architecture
• Information Architecture

What’s in it for ITC
• Better supply chain for ITC’s Food & Agri Businesses
– Costs, Quality, Traceability
• Access to the Underserved Rural Markets
– Through a Virtuous Cycle created by “Larger Incomes”, and
founded on “Trust” that is built
• New ITES Business Opportunities
– Health, Education, Entertainment, eGovernance
• Shareholder Value through Serving Society
– Also, the infrastructure serves as a reliable delivery
mechanism for resource development initiatives (e.g. water
management) 19
Social Impact of e-Choupal
• Educating Rural Masses
• Weather Forecasting
• Best Agricultural Practices
• Spoon Feeding Quality Solution
• Intelligent product Development
• Educating the farmers regarding seeds
and fertilizers and providing the required

• Commission Agents
• Mandi Laborers
• Bazaars Near the Mandi
• Some Mandi operations
• Competing Processors

The Impact …
• ITC procures 80% of its procurement via
Web Channels
• In 9 months ended Dec 2006 ITC-IBD
clocked revenues of Rs2762.63 Cr as per
the turnover of 9137.17Cr
• It covers over 31000 villages, reaching out
to 3 million farmers through 5200 kiosks
• Adding Six New Choupals Every Day
Intend Scaling up to 100,000 Villages in 15
States by 2010.
Current Network Size

State Choupals Hubs

Madhya Pradesh 1750 43
Uttar Pradesh 1750 42
Maharashtra 900 22
Rajasthan 500 15
Karnataka 100 2
Andhra Pradesh 150 3
Success Factors
• Cost effective model
• Contraction of supply chain
• Own storage facilities
• Reduction in transportation cost and time
• Lower but more specialized skill labor
• Higher equipment utilization
• Easier production planning and control
A Glimpse You!!!
into ITC e-Choupal…

Nitin Sehgal 62
Pranav Arora 67
Uzma Qumar 70
Shitiz Wadhawa 93
Sumit Agrawal 107
Sumit Rawal 108