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Research Scholar, Department of Business Administration,

University of Lucknow, Lucknow

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Plenty of Arable landRich & diverse Agro-climatic zones

Strong Agricultural ResearchLarge & growing markets

Works very hardIs innovative

Fragmented farms, dispersion and heterogeneity

Weak institutions and infrastructure

Involvement of numerous intermediaries

Information Asymmetry

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Low RealisationsHigh costsIntermediaries take 65% of MRP

% of

MRP 15% 15% 10% 25% 10% 25% 100%

FarmerVillage

Commission

Agent

DistrictCommission

Agent

WholesalerSub

WholesalerRetailer Consumer

Source:Srivastava, R. (2006) Role of logistics in foods business; ISB, Hyderabad

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Incorporated in 1910 as Imperial Tobacco Companyof India Ltd.

1974 the companys name was changed to Indian

Tobacco Company (ITC)

1975 diversified into several businesses

ITC Limited

Hotels,

Paperboards & Specialty Papers,

Packaging,

Agri-Business,

Packaged Foods & Confectionery,

Information Technology,

Branded Apparel,

Personal Care,

Stationery,

Safety Matches,

FMCG products,

Textile,

Paper,

Cement

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1990 established as an agricultural trading company

Today generates annual revenues to the tune of

US$150 million

Opening up of Indian market in 1996

Rethink of its ITC-IBD strategy and use information

technology to change the rules of the game.

E-Choupal- empowering farmers through internet.

ITC Limited

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The e-Choupals were designed to address the

rural problems of:

Fragmented farms, dispersion and

heterogeneity

Weak institutions and infrastructure

Involvement of numerous intermediaries Information Asymmetry

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Inbound

Logistics

Display &

InspectionAuction

Bagging &

WeighingPayment

Outbound

Logistics

Pricing InboundLogistics Inspection& Grading Weighing &Payment HubLogistics

MANDI OPERATION PROCESS

E-CHOUPAL SUPPLY CHAIN

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Example

Soyabeans Trolley Freight to Mandi = 120

Labour = 50

Kacchha Adat = 150

Handling Loss = 50

Commission to Agent = 100

Cost of Gunny Bags (net) = 75

Freight to Factory = 120

Handling at Mandi = 40

Rs per MT

Farmer Incurs

ProcessorIncurs

370

335

Total Chain 705

ITC Hub

=120

Sanchalak 50

Cash disbursement costs = 50= 215

=315

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9/26Source: Sharma, S. (Head Agri-inputs, ITC-IBD). (2006), Use of ICT in Agri Business: Prospects and Challenges. Fai Workshop on importance of ICT in the Fertiliser and Agriculture Sectors.

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interface between farmerand ITC

-Knowledge and Information Dissemination (KID)

-Virtual aggregation of demand and supply

-Retailing opportunities for agri-inputs, other

products and services

central repository ofinformation

re-intermediated middleman

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Traditional Mandis

E-Choupal Sanchalak

Source: ITC eChoupal Experience By V V Rajasekhar ELITEX 2005

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Traditional Mandis

E-Choupal

Source: ITC eChoupal Experience By V V Rajasekhar ELITEX 2005

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Traditional Mandis

E-Choupal Warehouse/Hub

Source: ITC eChoupal Experience By V V Rajasekhar ELITEX 2005

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: The Web sitewww.soyachoupal.com is the gateway for thefarmer

Weather

Pricing

News

Best practices

Q & A

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information and transaction.

- easy and real time availability of accurate information- option of fixing prices at the village itself

- choice between selling to ITC or at the mandi

alue addition through information,knowledge and transaction

- aggregation of supply of inputs and outputs

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Successful application of technology

Customization, validation and then expansion to

operational phaseE-Choupalhas spread the economic benefits

Selection ofSanchalaks is a crucial step

Training facilitates acceptance of technologyMarket and information access - reduced dependence

on intermediaries

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No telecom reach

No Power; Erratic Voltage

where it exists

First Time Computer Users

Resistance from traditional middlemen

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Relevant & Real-time Information

Customised Knowledge

Supply Chain for Farm Inputs

Direct Marketing Channel for Farm Produce

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Better supply chain for ITCs Food & Agri

Businesses

Access to the under served Rural Markets

New Business Opportunities

Shareholder Value through Serving Society

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0

100

200

300

400

500

600

Farmer

(Mandi)

ITC

(Mandi)

Farmer

(e-Choupal)

ITC

(e-Choupal)

0

100

05050

10

0

050

70

0

85

70

75

0

0

100

250

0

100

Costs(Rs./MetricTon

Transaction Costs Under theMandi and E-Choupal

Systems

Transportation

Bagging and Weighing

Labour Costs

Handling and Transit losses

Commision

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Commission agents.

Mandilaborers.

Bazaars near the mandi.

Some mandioperations.

Competing processors.

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Choupal Sagar rural mall-cum-information

center

Generate value

Introduce concept of traceability

Leverage e-Choupalas a market-place

Bundle together knowledge Sourcing IT-enabled services from rural India

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Rapid changes in technology and computer access

Latent threat ofSanchalaks becoming dissatisfied

Danger of hierarchy of access forming around the e-Choupals

Raised expectations of farmers

Sections in villages still without access

Samyojaks are unwilling partners in ITCs venture

Rapidly expanding rural pie has several players eyeing it.

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