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 on profitability 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
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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 the changing 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 to build 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 other documents 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 company with 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 in the 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 has been 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 in setting 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 Av. Sale of Airtime at each person per day Total Sale of Air time per day Total Sale of Air time for 30 days 20 Rs.150 Rs. 3000 Rs. 90,000
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Total Commission of Society @ 3% Component II: Sale of Green Card Av. Monthly sale of Green Card of Rs. 99 Av. Commission per Green Card Total Monthly income form Green Card Component III: Sale of Mobile Phones Av. Monthly sale of Phones Av. Commission per Phone Total Monthly income from Green Card Component IV: Sale of Other Products Farmers Torch/ Lantern Av. Commission per Phone Total Monthly income form Other Products Total income Component I, II, III and IV per month

Rs. 2700

Rs. 20 Rs. 70 Rs. 1400

30 Rs. 100 Rs. 3000

20 Rs. 70 Rs. 1400 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 IKSL There 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 teledensity would increase to 20% by 2010-2011. Scheme for sharing of infrastructure for enhancing rural 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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