empowering farmers through magriculture- a case of iffco-airtel alliance- sapna a narula

8/3/2019 Empowering Farmers through mAgriculture- A Case of IFFCo-Airtel Alliance- Sapna A Narula

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Empowering Farmers through mAgriculture: A Case of IFFCo-Airtel Alliance

Sapna A.Narula*

Asstt. Professor, Deptt. of Policy Studies, Faculty of Policy and Planning, TERI

University, New Delhi

Mail: [email protected]; Ph. 91-11-9910255027,

Abstract

The use of ICTs has come a long way in Indian agriculture. India has experimented with public

sector, private sector and civil society initiatives. Today, many state run portals are assisting the

farmers in their decision-making with respect to pre-harvest as well as post-harvest needs.

However, it has been found in many studies that the benefits of these initiatives are only

accessible to a small section of the farmers and most of the small and regional farmers are

unaware about these and hence are unable to make use of the information which is available.

(Narula, 2009, Narula & Chopra, 2010) Quite recently, many mobile-based models have made a

start in delivering information based services to farmers, such as Nokia Life Tools, Iffco-Airtel,

Handygo, Reuters Market Light. Mobiles offer a lot of potential especially for a vast farming

population as this is a cost-effective and user-friendly communication medium, is accessible to

even small and marginal farmers, involves less technological infrastructure. ( Narula, 2010)

The purpose of this paper is to explore the role of mobile based services in assisting the

farmers for their information related needs and find out what impact these services can have onprofitability of farmers in India, who otherwise suffer in the agricultural supply chain due to lack

of information related to supply chain. The study also discusses the constraints in

implementation of these services at field level. The case study deals with the alliance of a leading

agri-input supplier with a mobile service provider namely IFFCO-Airtel and investigates how

This paper was submitted for eINDIA 2010 conference Page 1
mailto:[email protected]:[email protected]


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this alliance is working for the benefit of all the stakeholders such as farmers, extension officials,

the agri-input company and the mobile service provider. The study further explores the

challenges being faced by the alliance and the potential it offers for future in light of thechanging Government policies and interventions.

Keywords: India, Mobile telephony, farmers, agribusiness, ICT enabled supply chain

Introduction

The rural market in India, constituting over seven hundred million people, is by far the largest

potential market in the world. The annual rural household income coupled with changing rural

aspirations in consumption patterns and lifestyles unfolds tremendous opportunities for rural

marketing. The foreign companies are making a beeline to enter in Indian market but providing

services to the majority of the Indian population which lives in the rural areas, scattered over a

wide dissection of geographical, socio-cultural and linguistic landscape is a major challenge for

both public and private institutions Rural market offers tremendous growth opportunities for

companies including mobile companies, but demands a need to understand requirements of

Indias villagers, their daily lives, occupation and insurance needs to properly harness it. The

government initiatives in form of policy implications and infrastructural development are further

paving the way for making this sector lucrative. Though the opportunities are vast, the major

challenges faced by the rural marketing in order to win the rural race are related to dispersed

nature of the rural population, seasonal demand, and price sensitivity, social and behavioral

influences. All these constraints could be overcome, if the communication needs of the

information-devoid rural customer are satisfied with the help of targeted products and services

Agriculture, being the major business of rural population in India, is also suffering much

inefficiency due to improper flow of information across the agricultural supply chain. The

limiting factors for these farmers in maximizing their farm incomes are poor market linkages,

poor access to quality farm-inputs, services and technology and lack of information about

Government resources, institutions and services. The farmers are also lacking in the real time

information about consumers, market demand and prices and hence are prone to more

exploitation by stakeholders in value chain. This has resulted in inefficiencies across the supply



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chains rendering them uncompetitive in global market. With growth in organized retailing in the

country and global trade, the farming is becoming highly knowledge intensive, commercialized,

competitive and globalised against traditional resource based approach. This demands a need tobuild competitive agri-supply chains benefitting all stakeholders for which the information flow

across the chain is a prerequisite. To accomplish this goal, communication has been considered

as the first and foremost need. Hence, Government of India, through its various schemes is

giving special emphasis on building rural communication infrastructure.

Mobile companies are also targeting rural areas with their specific products and services. Nokia

life tools projects is one such example along with the Airtel and Reuters market Light, which are

marketing commodity- specific information packages to these farmers. As many public sector

and private sector models are being tried in an effort to link the farmers to markets, it becomes

important to study these communication packages as a bundle of benefits to the farmers and

other stakeholders. The success of these models, however depend on how effectively and

efficiently farmers are able to make use of these technology initiatives.

The Study

This paper is aimed to highlight the ICT revolution in rural India by studying case of IFFCO

Kisan Sanchar ltd., which is a joint venture between Airtel and IFFCO, the largest mobile

network company and largest farmers co-operative in India respectively. The objective of this

case is to discuss how farmers are being empowered through mobile revolution by taking the

above mentioned case. The case discusses the concept and business model adopted, the

operational viability, business process flow, critical success factors and the constraints and

challenges for its implementation. The data for the same has been collected by both the

secondary as well as primary sources. The companys media reports, websites and otherdocuments have proved useful for this case study. The study has been supplemented with the

interviews of the stakeholders concerned with the initiative. Ten company officials including

vice-president of IFFCO Kisaan Sanchar, Content Managers, Sales managers, representatives

from Airtel were interviewed during the course of the study. They were asked questions about



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their strategic stakes, objectives and strategy behind the initiative? During the interviews, efforts

were also made to explore answers to some of the questions like What is the current status of the

company in terms of targets achieved and strategy? What are the future plans of the companywith regards to sustainability and collaborations? How both the partners in the alliance are

benefitted?

The Case of IFFCO Kisaan- Saachaar Ltd.

IFFCO KISAN SANCHAR Ltd. (IKSL) is subsidiary promoted by IFFCO to foray into low cost

telecom expansion in rural India. All telecom companies today, are exploring expansion plans inthe rural market. IFFCO explored the possibility of tying up with telecom services providers to

provide such infrastructure facilities in the villages making co-operative societies a vehicle for

economic development of the rural areas. Amongst the various means of communications

available, IFFCO narrowed down on mobile telephony given the ease with which

communication through mobile phones could be made available in far flung areas of the country

and the impact mobile telephony has had (and it has now been well demonstrated and accepted)

on the economic well being of the community and the nation.

IFFCO has been one of the finest examples of cooperative business model and is committed to

promote cooperatives. It is a marketing co-operative engaged in marketing of agri-inputs and

services to the farmers across India.Cooperative Societies in the country had been a rural

mainstay but of late, this structure is crumbling and societies have been struggling hard to remain

profitable. It is likely to become increasingly more difficult for the societies to compete with the

multi-national and other corporate entities who have prepared a blue print to enter rural India

through their own network. Govt. of India including all other state governments has been

contemplating to create cooperative societies as sustainable business entities. The States based

on Vaidya Nathan committee report are all set to give autonomy and in turn govt. of India have

committed huge financial support for revival of a vibrant and sustainable cooperative society

framework.



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The Concept

The concept leverages IFFCOs 40 years of deep understanding of rural issues. The idea is to

make use of IFFCOs deep extensive reach and establish a low cost telecom distribution channel

through the network of cooperative societies. To accomplish the task IFFCO tied up with Airtel

to build and offer a platform for the farmers through the cooperative society network. The unique

venture provides the farmer the much desired inputs on real time basis which is going to help

him on agri-related issues and would guide him for his day to day chores. Besides, as per

IFFCOs tradition the model is a self sustainable business proposition and provides a business

opportunity to society with a handsome guaranteed return on investment.

The current venture of IFFCO in the form of IKSL is most appropriate and synergic to meet the

above objective. The business model derives its strength which has the economies of scale, most

competitive, completely risk averse and at the same time involves least cost. IFFCO as apex

cooperative society plays a stellar role in this pursuit and the network of societies in the country

is going to reap the benefits. Moreover, the concept does not end at business and has equally

powerful signature of empowerment of the most important stakeholders of IFFCO i.e. Farmers.

The beauty of concept lies in making most of the mobile telephony, which is bringing paradigm

shift in the lifestyle, be it rural or urban, rich or poor. In short the IKSL has a vision of

empowering the farmer, strengthening the cooperative society and creating a most visible impact

of communication and information technology on rural landscape.

Empowerment of Farmers

The model has been developed as a low cost high profit model considering the known constraints

of operating in rural territories. IFFCO has tied up with a Airtel which has the vast network and

largest customer base. Airtel has prepared a unique sim card IFFCO- Airtel Green Card. This

Green Card is like any other normal sim card with an added advantage of a voice message



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platform. A customer using the Green card receives upto five voice messages per day of a

maximum duration of one minute each, free of cost. The content which is delivered to the farmer

is created by IFFCO using the vast resources available at its disposal. An integrated approach hasbeen adopted to create content which is most timely. The messages to be delivered to the farmer

would be in the local language, as per crop and area specific. A specially designed software has

been hosted that would enable recording of these voice messages and their dissemination among

the local Green Card users in a short interval. IKSL and the Cooperative Societies assess the

local information need of the farmers and this information is accrued from various authentic and

credible sources. IKSL would also create a help line to seek assistance for answering any query.

IKSL intends to engage adequate number of consultant to reply to any doubts, any questions or

any clarifications. The emphasis of the content to be disseminated to farmers is that it is local

specific, dynamic and demand driven so that it would be of local relevance. Some of the subjects

on which farmers have indicated a need for timely information are:

Table 1.Informational Needs of Farmers

1. Mandi prices and arrivals

2. Availability of fertilizer at Society

3. Canal roster

4. Electricity timings

5. Information relating to any adverse weather conditions

6. Farming practices

7. Onset of diseases



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8. Veterinary practices, etc.

Besides these, the information disseminated includes recommendations, regarding specific local

crops, of Agricultural Experts, Universities, KVKs etc. , information about any camps, field

seminars, soil testing campaigns etc. being conducted locally, timely advice on prevailing plant

and veterinary diseases and any precautionary measures to be taken etc. Farmers would also be

updated about the best agricultural practices, prevailing bank interest rates, loans, crop insurance,

and other agriculture, social and village related schemes announced by the government.

4. The Business Model Strengthening of Societies

As explained earlier IKSL has tied up nationally to act as rural distributor for Telecom Products

of Airtel. It has also tied up nationally and internationally with Mobile telephone manufacturers

for distribution of these telecom products and services in rural India through the network of

societies. IKSL leverages the economies of scale, financial muscle of IFFCO, its expertise insetting up stems of logistics etc. so as to get the most competitive and best business deal. IKSL

in turn appoints Societies as its retailers. IKSL trains the societies in carrying out this business

and set up systems at its cost. The society assesses demand for various products and accordingly

places order with IKSL marketing channel. All the products are delivered to Society at its

premises. The society retails these products to any desiring customer. At the outset, Society is

trained to retail Green sim card, activate new connections, recharge coupons, phone handsets and

transfer airtime. Besides, Societies would also retail other products which are the most in

demand by rural masses which have been tied up by IKSL. All the products carry a warranty

from IKSL making the society completely hassles free. Society is able to initiate this business

with a very low investment of 20,000 to 25,000 yet enjoying the power of a distributor. IKSL has

also helped the society in creating other sources of revenue, such as a telecom tower if required



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may be erected in the premise of society giving it fixed revenue from lease of land. Similarly,

willing societies may be given the task of security and maintenance of tower/generator.

Business Process Flow

IKSL has appointed marketing associate who are visiting the society weekly. Airtel and IKSL

train the society officials for activation, airtime distribution and on handset features. society

pays cash as per its capacity and business potential and IKSL Marketing Associate would deliver

products. The society retails Green Card, Air time, handsets and any other products. IKSL and

Airtel carry out all the publicity, promotion and also provide all the necessary support. At the

end of each month IKSL work out commission/incentives on number of activations, sale of

airtime and settle the accounts. Margins on handsets, Green Card, Recharge Vouchers etc. are

provided upfront. The society is provided details of monthly scheme of incentives etc. at the

beginning of the month.

Table 2: Assessment of Income of the Society

Component I: Sale of Airtime

No. of persons purchasing Air Time per day 20

Av. Sale of Airtime at each person per day Rs.150

Total Sale of Air time per day Rs. 3000

Total Sale of Air time for 30 days Rs. 90,000



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Total Commission of Society @ 3% Rs. 2700

Component II: Sale of Green Card

Av. Monthly sale of Green Card of Rs. 99 Rs. 20

Av. Commission per Green Card Rs. 70

Total Monthly income form Green Card Rs. 1400

Component III: Sale of Mobile Phones

Av. Monthly sale of Phones 30

Av. Commission per Phone Rs. 100

Total Monthly income from Green Card Rs. 3000

Component IV: Sale of Other Products

Farmers Torch/ Lantern 20

Av. Commission per Phone Rs. 70

Total Monthly income form Other Products Rs. 1400

Total income Component I, II, III and IV per month Rs. 9500



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Comparison of Scheme for various Stakeholders

Farmers

Tariff: IKSL would create a special CUG for all the user of Green Sim Card. The call rates

within the CUG would be just 50 paisa.

Handsets: The farmers would be provided quality assured handsets at the most competitive price

with a comfort of IFFCO warranty and service.

Messages: Number of companies are targeting to provide the farmers information but all at cost.

Reuter recently launched a scheme that sends text message to farmers charging Rs. 50 per

month. IKSL would be providing not all this information but many more such information all at

free of cost.

Direct/Indirect benefits :The aim of IKSL is to create value out of this scheme to

the farmer so that return on investment in mobile is productive. Guiding the farmer soil testing,

fertilizer application techniques, insecticides, pesticides and forewarning him on pest/ insect

attack, problem solving through the use of help line, getting him the optimum value on produce

through Mandi rates would certainly fetch him more return then his investment on mobile

telephony.

Society

Investment: Society would earn handsome return on very low investment.



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New Business Opportunities : IKSL would train the society at its own cost to train them to

learn new business opportunities

Augmentation of Income: The current margin in fertilizer is dwindling because

regulation in sectors, the expanding business potential would enable society to substantially

augment its income.

Retainership Model of Income: The Business model is such that once the society is able to

activate connections life long sale of Air time would get it all time increasing income source,

which would grow as the teledensity in rural India grow.

Competitiveness: IKSL would leverage its economies of Scale and Society would get most

competitive commission and products at its doorstep.

Stronger relationship with its members: The new business would create a better bondage and

more membership for the society.

IFFCO has conceptualised this venture in keeping with its tradition of farmer service, desire to

develop stronger co-operative societies with handsome returns and with an aim to create a

sustainable business model that creates a win-win situation for all the stakeholders. It gives an

additional business opportunity, with reasonably assured returns to the Society and a platform to

strengthen ties with its members by creating value for them.

The way ahead for IKSLThere are numerable studies and trends that indicate that there exists huge potential to increase

mobile penetration in rural areas. At the beginning of this year the tele-density (number of

telephone users per hundred) in urban areas was 33%. and the rural tele-density for mobile

phones was only 1.94%. By the end of year urban tele-density has increased to 50% while rural



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tele-density has gone up to 8%. The Government of India has identified mobile telephony as the

easiest way to reach the masses in the rural areas. As per the available estimates the Rural tele-

density would increase to 20% by 2010-2011. Scheme for sharing of infrastructure for enhancingrural mobile penetration. Accordingly, 12 to 15 Cr new subscriber would buy new connections

and handsets in rural India in next 3-4 years. The trends of various developing economy

including China indicate the above business potential.

The first and foremost challenge before this model is the financial viability. The company

aims to make this model financially viable by earning revenues through selling information

related goods and services. The farmer, societies and the joint-venture company will all be

benefitted with increase in membership fees. This type of communication model using mobile

phones is having an advantage that it needs less infrastructures than the internet based models of

providing information. Moreover, the mobiles are easy to use; information can be delivered on

phone through voice or readable SMS. But for these models to be sustainable in long run, new

revenue generation sources should be explored so as to achieve the expected scale. The success

of these projects requires strong commitment of all stakeholders involved especially the

societies. For content generation, the state agricultural marketing boards, local district

authorities, extension officials need to work together in co-ordination with local agencies to

serve the farmer better. Further, this alliance is successful only when the objectives of both the

partners are met. i.e. Airtel has more business in terms of subscriptions and talktime and IFFCO

is able to serve its customers well and maintain good relations by giving The success of this

model depends upon the information sharing by market intermediaries, farmers and kiosk

operators and if implemented successfully, these can bring revolution to the Indian farming

system as well as improve the life of farmers.

References



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Narula,S.A. and Chopra, S.(2010)Identifying Stakeholders Needs and Constraints Adoption of

ICT Services in Rural Areas: The Case of India , forthcoming for Social Responsibility Journal (

Emerald Publishers)

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Mobile Net Services: A Case of IFFCO-Airtel Alliance in India presented at International

Conference on Agribusiness and Rural Development organized by BHU and Tennesse State

University at Varanasi, Dec. ,2009

Narula, S.A. (2009a):Empowering Farmers through ICT enabled Agricultural Supply Chains in

Uttarakhand, presented at Fourth Uttarakhand Science and Technology Congress held at G. B.Pant University of Agriculture and Technology, Pantnagar. November 11-12, 2009

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empowering farmers through magriculture- a case of iffco-airtel alliance- sapna a narula

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