the-south-asian.com August 2003
Page 2 of 4
Government to citizen (G2C) SERVICE DELIVERY MODELS
- An Indian Experience
Selected Case Studies and Lessons for Future Developments
M J Xavier & MP Gupta
What was started by ITC as a cost-effective alternative supply chain system to deal directly with the farmer to buy products for exports is getting transformed into a meta market for rural India. The tobacco giant has already set up over 700 choupals covering 3,800 villages in four states — which include Madhya Pradesh, Uttar Pradesh, Karnataka and Andhra Pradesh — dealing with products ranging from soya bean, coffee, acquaculture and wheat. Last year it transacted business of over Rs 80 crore through the e-choupals all across the country.
Consider why a farmer would opt for the e-choupal over the regular mandi. Farmers who strike orders on the Internet kiosk with ITC have a choice. They can either bring their produce to the ITC warehouse or factory and get reimbursed for the transportation cost or they could give their supplies to one of the collection centres that have been set up by the company for a cluster of villages or even deliver it to the sanchalak who runs the Chaoupal. Both ITC and the farmers make a neat saving by bypassing the middleman in the mandi. For instance, the farmer saves as much as Rs 250 per tonne on soya bean because he does not incur costs such as bagging, transportation, loading and unloading, to haul his goods to the mandi. The company, on the other hand, saves over Rs 200 a tonne by avoiding transporting the produce from the mandi to the company outlet even after reimbursing the farmer for transport. And the sanchalak, the local-level entrepreneur, also makes money by getting a 0.5 per cent commission on the total transaction made through his kiosk.
But the kiosk can be used for reverse trading also — for companies to sell products and services needed by farmers directly. And ITC is already putting together a strategy to leverage the infrastructure to market and distribute goods and services that farmers require. The facility will be available for selling both ITC's products as well as those of other companies — of course, at a price. The company has taken some initial steps to get agricultural input companies to sell their products directly to farmers. It has already roped in US seeds giant Monsanto, fertiliser companies like BASF and Nagarjuna Fertilisers and state-owned MP State Seeds Corporation to take orders and market their products through the site. These companies can display their products on the Net, train farmers on how to use them, offer special prices, book orders from farmers and — through the sanchalak — deliver it at the village. Of course, ITC does not provide the service free. Companies have to pay a 10 per cent fee on the face value of the transaction and the tobacco company pays the sanchalak 5 per cent of the sales as commission for any product sold on his kiosk.
ITC is also experimenting with using the kiosk to sell fast moving consumer goods (FMCG) products. As the first step, it is selling gas lanterns and packaged vegetable oil. At the moment these are being manufactured by third parties on behalf of ITC. Orders by farmers are being booked by the sanchalak who also arranges to have them delivered to the farmer's doorstep. If the idea clicks, the platform would be available for other companies too, which could help ITC generate healthy revenues.
The third initiative is to leverage the e-choupal to sell services. Talks are already on with various insurance companies for using the e-choupal as a medium for both educating and selling insurance products to the farmer — in which the sanchalak becomes the insurance agent.
The ITC virtual mandi is emerging as a one-stop shop for selling and buying of all kinds of products and services including givernment services in the rural market.
Indiagriline by EID Parry
The Agri Portal of EID Parry, www.indiagriline.com, has been designed to address the specific needs of the rural farming community and is an attempt to catalyse e-commerce in agricultural and non-farm products by offering a network of partnerships.
This content has been developed by using in-house expertise (EID Parry's Sugar and Farm Inputs Division and Corporate R&D Lab) and working with the TN Agriculture University and its Research Stations, TN University for Veterinary and Animal Sciences, National Horticulture Board, AMM Foundation, Murugappa Chettiar Research Center, other players in agriculture related media and publishing houses. The content is in the local language (Tamil) for ease of use.
There is also a Web-based application for the registered sugarcane growers of EID Parry to access and maintain their transaction records with the Company. An application for the dealer channel and the sales force of the Company is also under development.
The first 16 Internet Kiosks ("Parrys Corners") have been set up using the franchisee scheme. These owner/operators have been trained to use PCs and surf the Portal and the Net and assist users coming to the kiosks. About 150 farmers have been trained on the use of the Net and the portal and especially the special application built for them to view their transaction record with the Company.
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