23% of GDP from agriculture, 66% of workforce, feeding 1 billion people.

Green revolution India is a net exporter of food grains. Indian farmer remains poor. Agriculture system based on small inefficient land holding Primary producers have been traditionally paid much less - exploited by traders & intermediaries. Traders well positioned to exploit buyers and sellers in mandi system. Farmers bring the goods to mandi, sell in auction.

Choupal means gathering place in Hindi. The e-Choupals serve as both a social gathering place for exchange of information and an e-commerce hub. It has re-modelled the procurement process for soy, tobacco, wheat, shrimp. E-commerce and E-education platform focused on the needs of rural India.

Inbound Logistics

Display & Inspection

Auction

Bagging & Weighting

Payment

Outbound Logistics

Disadvantages: - Long distances between mandis - Monopolization of information by the trader communities - Fragmented payments by traders to framers

Farmers have access to prices and can make critical decisions of when and where to sell Saving on transportation costs from the field to the mandi ITCs electronic weighing scales and transparent checks ensure intentional spillage doesnt occur ITCs agricultural inputs cost substantially less than those offered at the mandi Farmers save almost 2.5% over the mandi system ( Rs.400 500 per ton of soy) thanks to a more efficient market system e.g. cultivation of soy has increased from 50 90% in e choupal areas They can take advantage of services provided by the echoupal to improve their crop output and farming practices Increased self respect as they are treated as co partners in a business relationship

Pricing

Inbound Logistics

Inspection & Grading

Weighting & Payment

Hub Logistics

Benefits:
- Able to differentiate between Risks in Farming and Financial risks in Trading
[ Possible by correcting the information asymmetry] - Also allows the farmer an enlarged choice set

whether he wants to sell to ITC or to the mandi

Lower transaction costs: ITC pays only a 0.5% commission to the Sanchalak as compared to the 2.5 3% paid to the agents under the mandi system (including true cost of inefficiency and intermediary costs) Has found it cheaper to reimburse farmers transportation costs that pay agents for transportation. (managed to save almost RS. 200 per ton) Direct virtual vertical integration through e -choupal allows ITC to communicate directly with the farmers It gets excellent bottom up information on pricing, product quality, soil conditions etc. from the Sanchalak Allows them to develop a long term supplier relationship with the farmers, ensuring supply security over time By providing quality agricultural inputs and buying quality crops, ITC can ensure a satisfied customer base

In absolute numbers, both the farmers and ITC save about Rs 270 per metric ton.

Rs p r MT Tr ll L K Fr i r t li L ss tt M i =1 0 = 0 =1 0 = 0 = 100 =7 =1 0 = 40 370

F rm r

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C mmissi t t C st f G B s( Fr i t t F t r li tM i

t)

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Rs p r MT Tr ll L K Fr i r t li L ss tt M i =1 0 = 0 =1 0 = 0 = 100 =7 =1 0 = 40 370 1 0

F rm r

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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

TRADITIONAL

e-CHOUPAL

TRADITIONAL

e-CHOUPAL

TRADITIONAL

e-CHOUPAL

Better supply chain for ITCs Food & Agri Businesses

Costs, Quality, Traceability

Access to the Underserved Rural New ITES Business Opportunities

arkets

Through a Virtuous Cycle created by Larger Incomes, and founded on Trust that is built

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)

Agricultural Best Practices Customized Quality Solutions Intelligent Product Deployment E.g.-In Khasrod, soy production declined from a high of 100% to 50%. After ITCs involvement, soy is seen that 90% of farmers are planting the crop. Link farmer and their families to the world Tracking of future prices from Chicago board of trade as well as from Mandi Children use computer for schoolwork, play games and obtaining print out of mark sheets Youngsters use computers to research the latest movies, cell-phone models, and cricket news etc.

  

Each e-Choupal costs between Rs 120,000 and Rs 200,000 to establish and about Rs 5000 per year to maintain. Using the system costs farmers nothing, but the sanchalaks incurs some operating costs( electricity and telephone charges) Farmers also use the computer to order seed, fertilizer, and other products (such as consumer goods) from ITC or its partners, at prices lower than those available from village traders. Farmers selling directly to ITC through an e-Choupal receive a higher price for their crops than they would if they sold them through the mandi system, where the intermediary makes all the money. ITC also benefits, saving about 2.5 percent in commission fees and transport costs that it would otherwise pay to buying agents at the mandis. The company reports that it recovers its equipment costs from an e-Choupal in the first year of operation.

The e-Choupal network reaches more than 3.5 million farmers in nearly 31,000 villages through 5,200 e-Choupals in six states (Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra, and Rajasthan). ITCs vision for the next decade is to expand from nine to 15 states, to reach 100,000 villages, and to benefit a total population of 10 million. e-Choupal is also expanding the range of its activities to support rural communities, using its network to deliver a broader range of services and working in partnership with government agencies and civil society organizations in watershed development, animal husbandry, human-capacity development, education, health care, and gender empowerment.

ITCs model identifies two sources of value that help scale the model Crop Specific Intervention: ITC recognized that agrarian systems vary by crop. For example, the systems, and consequently the e-Choupal models and payback streams, for coffee and shrimp are very different from those for soy. Low-Cost Last ile: The same system of physical and information exchange that brings produce from the village can be used to transfer goods to the villages. Products such as herbicides, seeds, fertilizers, and insurance policies, as well as soil testing services are sold through e-Choupal. E-Choupal as a distribution channel begins in agriculture but extends well into consumer goods and services.

ITC Past
Insights into the agricultural value chain, rural India,

Distribution Business to figure out the value addition of Information Technology

ITC Present
Managerial competence of ITC to execute

thecomplex business model and to manage scale

ITC Future
Strong Experimentation & Learning Culture Roll Out, Fix It, Scale Up

eChoupal Principles
Inform, Empower & Compete

Distribution of Products and Services to Rural Markets: Micro marketing Product/Services Demos Marketing and Brand Building activities Pilots

Bhoomi eHealth with Private Health Service Providers eEducation Rural BPO

Non-cash loans for farm inputs Insurance and Risk Management Services Loans to sanchalaks, create enterpreneurs Direct loans to farmers based on sanchalak recommendations