An introduction to eFarm - background of India's Agri crisis, supply chain issues, eFarm solution and FAQ

1. eFarm : A Farmer To Consumer Agri Supply Chain Network
Part 1 : Introduction
Presented By : Venkat and Valli
Founders , eFarm

2.  The Agri-Supply Chain Crisis : Background
 The eFarm Solution
 Operations Overview
 USP and Key differentiators
 Technology Strategy
 Current Status
 FAQ

3. Harvesting of • Unorganized, unregulated, unprofessional Terminal markets to
Vegetables
• Lack of demand/supply data neighborhood wholesalers
• Poor logistics and storage
• No reliable sales , distribution , marketing channels
1 • Black marketing, adulteration, wastage
• Prices fixed by agents , crude and unscientific methods
of determining operating margin
• It is neither a „buyer‟ nor a „seller‟s market !
5
Middlemen‟s strong hold is predominant
•No IT usage , No transactional data
Regional mandi to Wholesalers to Retailers
4 Terminal markets near
A local mandi large cities
auctioning
2
Local to Regional mandis
for Auction
6
Loss in transit
40%
Retailers to Dining Table
Price hike
3
End to end
> 4 times 7

4.  Contract farming : Pepsico , HLL etc.,
 One stop solutions – Mahindra Shubhlabh, Tata KK
 Third party logistics & sourcing – Radhakrishna foodlands/Sodekho
 Retail chains – Reliance fresh, More, Subhiksha
 ICT kiosks– e-Chaupal
 Regulated markets- Government mandis, Commodity exchanges
 Unorganized Rural markets (mandis) and agents
 Issues / Gaps
 Most organised players focused only on ‘top of pyramid’ markets and hence very low
volumes (less than 1%)
 Non-payment of bills, not keeping up commitments . Farmers unable to fight the
giants
 Heavy initial investments required, with very long gestation period for results
 Retail shops no longer focussed only on veggies- diversifying into other higher margin
items/FMCG goods
 ICTs have failed owing to illiteracy, lack of proper business model . Also Mobile usage
more than PC usage

5.  The Farmer :
 Need professional, reliable sales /marketing /distribution channels . No
alternative to the ‘mandi’ system
 Need advanced demand/supply data to plan cultivation . Currenty,
very adhoc and whimsical.
 The Seller :
 The ‘sabjeewallah’ (vegetable vendor) is the missing link and unsung
hero of the supply chain.
 No proper benefits / finance / support to run his shop.
 Pressure in urban areas from branded retailers undercutting on rates
 But they represent over 90% of volume sales!!
 RESULT : Both farmers and sellers of agri produce
are quitting trade.

6. 1. Perishable produce demand and supply data is
not available/accurate/reliable , leading to over
production and wrong crop selection.
2. Agri Sales primarily through unorganised sector
– high fluctuations in price, availability and
quality
3. No efficient marketing and distribution
alternative to current ‘mandi’ system . Too
many middlemen, too little value addition
4. Poor post harvest management results in high
wastage (~50%)
5. There is little or no IT usage/MIS/Technology

7. eFarm : The Big Picture
A shared platform connecting all stakeholders
Value added resellers
Sorting , Grading , Processing, Packing
Storage
Warehouses
Bulk buyers
Exporters
Farmers eFarm
Cooperatives
Collection centers
Kiranas
Self Help
Groups
Hawkers
Village ICT kiosks
Phone booths Logistics Fleet Small Independent transporters
Mobile operators operators Intra-city small tempos

8. Create a network of farmers, intermediaries, logistics providers, distributors and retailers
‘Organize’ the ‘un-organized’ rural to urban supply chain to create sustainable prices for
the rural members of the chain
Create a shared and streamlined sourcing/marketing/distribution /retailing platform
which is :
A IT based B2B order matching/fulfillment system (e.g. Amazon, eBay)
+
A low cost-efficient, ‘Indianised’ logistics & delivery mechanism (e.g. AMUL,Dubbawallahs)
+
A people driven Direct To Consumer Marketing/Retailing channel (e.g. HLL’s Shakti,Amway)
+
Bottom Up Entrepreneur driven model to reach all customer segments (Self help groups, Micro
finance)
Our goal
• To build a nationwide agri-supply chain network platform , and enable fair, efficient, reliable business
across the community.
• Make agriculture self sustaining and Curtail erratic fluctuations in perishables & commodities
• Generate job opportunities in BOP socio-economic strata in rural and urban areas

9. eFarm Registers the farmers,
1
transporters and other intermediaries
with basic details such as produce
type, volume, expected price range
etc., Advance amounts are collected from buyers
4 .Payments are made to farmers and
-
2 eFarm Retail co-coordinators (ie.,NGO intermediaries upon delivery.
/small retailers) consolidate the Orders
from buyers received through phone,
email and walk-in to make one
consolidated demand list 5 The vegetables are sorted and graded at the
eFarm Distribution centers across the city by
members of women‟s self help groups of the
area..
-
3 eFarm sourcing managers track prices
across different areas and feed in the
data. The central order matching
system determines best
source, location and logistics channel The orders are delivered immediately through
6 delivery vans,push carts etc to end
for fulfillment.
customers
Lessons learnt, feed back and data analysis conducted on the order received is shared with
7 the members in the chain. This helps to optimize the operation continuously and increase the
value creation across the chain.

10. BOP Self help groups, Highly price conscious
segment Neighborhood markets , segment Low
High Street vendors Low margins/High Volume
Middle Mom and Pop stores, Price + Quality conscious
segment hotels , Canteens , High volume / Good margins
Caterers
Margins
Volume
High End Branded stores, High end Highly quality conscious
segment restaurants , Hospitals , Timeliness , professionalism
Organic stores, Food Low volume/High margins
processors
Premium Export Very high quality , customer
segment specifications
Low
High volume / Very High High
premium
High investments

11. Catering/Hotels
Cooperatives
Hub and Spoke Model
Exporters
Rural Urban
Collection Logistics Distribution
Centres Centers
Food Processors
Bulk buyers
Small & mid sized farmers
Retailers /
Mom & Pop stores
… organic growth and
expansion

12. Order quantity ‘Aggegating’ the demand from multiple buyers , ‘wholesale’ volumes broken down
into retail lots.
Better Demand and supply prediction , more realistic, long term pricing avoids erratic daily
Predictability
swings.
Price Multiple buyers AND sellers ,hence better price discovery ,transparent and
competitive. Users can set their own price , rather than being driven by market
conditions.
Location A ‘click and mortar operation. 24 x 7 access to system , day time deliveries
Decentralized, organic growth of system
Freshness As the buyer can set his own schedule and routes , fresh goods can be shipped with
minimal halts or delays.
Availability Multiple choice of sources, wide variety of choice
Delivery Hub and spoke delivery model (much like how dubbawallahs operate)
Low cost transport (push carts, cycles) in combination with vehicles for widest reach
Branding A common brand called ‘efarm’, which adds value and quality to seller . new to agri
field
Job creation Agri-sector employs over 70% of our population directly. Several more are involved
indirectly through the supply chain. Through SHG women, we hope to create new jobs
at various nodes of the chain.
Social change ‘Organise the unorganised’ , Create sustainable ventures across the chain ,Job creation
, Promote underprivileged

13. Open source
Tools &
technologies
AgriXML
As a dataXchange
format

14. •Collaboration and B2B trading
platform
•Content : Daily pricelists,
Schedules, Trends , Buyers
guides
•Order management
•Search / Track items
•Delivery tracking
•Customer relationship
management
•Supply chain management
•Mobile/SMS gateway interface
•Voice based interface
•Agri specific social networking
•MIS & Data mart

15. eFarm won’t ‘OWN’ any of the assets / independent
elements of the chain – we would „CONNECT‟ existing
elements which would all be independently owned and
operated – Low cost of ownership
eFarm doesn’t threaten the livelihood of existing
people in this trade. We help to ‘re-train’, ‘re-group’
and ‘re-vitalize’ them to become more professional and
successful in their CURRENT activities
Technologies and processes are built to be simple, low
cost and with widest reach across customer base
Entrepreneur driven model , riding on top of existing
networks

16.  Growth through innovation and research
 Standardised weights , counts, bagging/packaging units
 Simple tagging/tracking system for traceability
 0% wastage target
 Daily produce waste converted to manure which can be
sold back
 Separate focused unit for Organic produce
 Assistance in certification & cultivation, separate logistics
,creating awareness to promote demand etc.,

17. Market Size
 Quick calculation : (Taking Chennai metro as an example)
 Chennai population : 8 million
 Avg. consumption : 250 gms
 Volume : 2000 tonnes (400 lorries inflow Koyambedu)
 Value : 3 crores per day
 Even a 1% penetration
 = 3 lakhs Turnover per day = 9 crores per annum

18. Revenue Stream
 Income from sale of produce (~15%
Income Distribution
of turnover) 10%
Website registrations
1% 16%
 User Registration fees and database Income from produce
sale
Advertisements
listing in portal 19%
44% Franchisee fees
 Franchisee fees for retailers (Based Consulting
7%
3%
on typical daily order volume) , Contest wins
 Training
 Systems integration /consulting
 Advertisements in retail vans/push
carts/web portal

19. May’08- Jun’08 : Website launched, Initial prototype system
June 07 – May 08 : Information gathering , discussions, solution proposals to focus groups
development
Aug’08- Oct’08 : Concept pitching to pilot customer base/SHGs. Pilot launched with weekly deliveries. Different retailing options such as push carts, stores, mobile trucks
tried out. User feedback has been positive from all strata. Avg. weekly delivery = 2 tonnes
Oct’08 – till date : Distribution centre and retail outlets. established . Daily operations launched to cater to wider customer base . Promotional events, publicity drive. Core
Concept and processes constantly being upgraded and evolved based on trial run results.

20. Current Status : Summary
Pilot completed . Growth mode
 Farmers in network : Direct 25 , Indirect 1500 (through associations)
 Truckers : 10
 Vehicle capacity : (all individually owned but operating for efarm)
 Push carts : 2
 Mobile trucks : 2
 Long haul trucks : 2
 Organizations who are liasioning with eFarm for marketing support:
 NGOs : 3 , Agri Food parks : 3
 Distribution centre setup and functioning in Chennai. Capacity : 4
tonnes per day
 Customers (Pilot phase)
 Restaurants : 3 , Canteens : 2 , SHGs : 25 , Hospitals : 2, Shops : 4
 Walkin individuals / door deliveries : 150
 Current run rate : 4 tonnes per week , Rs 2 lakhs per month
 10 member core team , 10+ advisors

21. Growth Plan
Phase I : Pilot Thiruvanmiyur, Valmiki Nagar (Chennai)
(Status – Volume : 2 tonnes per week , Turnover = Rs 30000/week
Completed) Goal : Road test of the concept in immediate vicinity, capture
Aug 15 to Oct 15 detailed lessons learnt and feedback, achieve break even
Phase II : Across 5 sample neighbourhoods
Stabilisation Volume target : 4 tonnes per day , per locality
(Status – In Turnover target : Rs 75000 per day, per locality
progress) Goal : Regularise operations, Identify and fix gaps,
Oct 15 2008 to May Demonstration-cum-training centre in base of all
15 2009 wholesale/retail activities, Data analysis and systems
enhancements.
Phase III : Growth– Goal : Metro wide growth (Chennai), Deeper sourcing
May 15 channels, hub and spoke operation in Tier II cities
2009 to Dec 15 2010
Phase IV : Expansion Goal : Expand to other metros/regions , Cross region
(2011 – 2013) sourcing & delivery

22. Our Vision
•Bring people together through creative use of technology platforms ('connecting the dots' ) to form socio-economic-webs
•Create successful entrepreneurial, social enterprises which are profitable and sustainable
•Make corporate social responsibility our core business model and differentiator
•Measure success not just in financial growth , but also in the social growth in the areas we serve
Management
• Venkata Subramanian Founder & Managing Director:
MS (Computer Science), University at Albany, NY , B.Arch , IIT Kharagpur (1995) , India
12 years of experience in IT industry , lead key accounts in BFSI for Wipro, Satyam in USA. Very strong expertise in
analysis & design of complex systems , portal development , back office operations.
Responsible for overall strategy , technology and public relations
• Srivalli , Co-Founder, CEO
MBA , B.Com Taxation
8 years experience in Sales, Marketing, & Operations. Has run two start-ups and organised fund raising for NGOs as
part of CSR programs.
Responsible for operations, business development, finance, administration
• Yamuna , Manager , Customer Relations
M.Phil , M.A , B.Ed, B.Sc
Retired head from Doordarshan Kendra, Chennai
Over 35 years experience in media , public relations, heading public sector organization
• Consultants and advisors from leading agricultural universities, management schools, government and industry
Combination of different background ,skills and experience to provide creative perspectives to solving key
problems in the supply chain area

24. Why the government or Private sector
not been able to solve this problem ?
 Farmer‟s Market : A utopian concept but impractical
 Farmers selling direct to buyers through special markets has failed as
„Selling‟ is a separate specialized activity which requires time , energy
and additional investment
 Loan waivers and subsidies come with caveats and vested interests
 Corruption, bureacracy and vested interest to push certain schemes
have added insult to injury to farmers
 Frequent changes in administrators & bureacrats derail most
projects

25. Why the government or Private sector
not been able to solve this ? - Continued
 There is no „single‟ entity owning responsibility of entire chain
 The systems are usually closed, vendor specific or too complex
that predominantly it‟s reach and volume is limited
 They cater only to the top 5% of the income/social bracket , and that
too in metros. Hence the effects aren‟t felt at the „bottom of the
pyramid‟.
 In some cases, it has resulted in a David v/s Goliath fight where the
large retailers are trying to completely by-pass existing traders and
small time vendors, leading to stiff resistance and negativity
 Big investments made . But Recession has hit retail

26.  Prices are arrived at based on fair negotiations and in advance
 All grades (High/Medium/Low) produce is picked at different rates and
matched with suitable end customer preferences
 By reducing wastage across the chain , farmer gets price from more
quantity sold
 Pick-up is done from farm or from local collection centers , reducing
transportation costs to farmer
 Payments are made in full upon delivery , through transparent means with
proper paper bills
 Data about current demand, price levels, buyer preferences, projected
volumes available for aiding in planning phase

27. Frequently Asked Questions
 Your biggest customers are branded retail chains like Reliance ?
 NO . Organised retail penetration less than 2%. Food processing and exports players are also very low
(less than 1% each)
 Unorganised sector does over 95% of volume in Agri perishables business. They are our biggest end
target segment
 How does eFarm benefit end customers ?
 For bulk buyers :
▪ Collapsing multiple middlemen improves efficiency and accountability
▪ Assured availability, quality, less price fluctuations
▪ Less wastage owing to pre-sorting
 For retail buyers :
▪ Farm fresh quality at reasonable prices (about 20% cheaper on avg)
▪ A trust worthy, safe , honest place to shop
 So you are also a middleman ?
▪ YES ! But with BIG PLUS points
▪ Examples of “System” as a middleman
▪ Marriage market : broker v/s Bharathmatrimony
▪ Travel booking : Agents v/s Yatra.com,IRCTC

28. Frequently Asked Questions
 So what happens to current middle men ?
 Value added resellers
 Intermediaries – Sorting, Grading, Packing, Transporting
 Storage – Dry / Cold
 Processing – juices, extracts, powders
 Distributors
 Retailers – many formats
 Doesn’t eFarm face any resistance from people/mafia ?
“Gabbar singh kehkar gaya , Jo dar gayaa , Who Mar Gayaa” –(From a
Hindi movie – One who is Afraid, is already Dead “
 Only brokers/agents make money
 Highly unceratin trade across entire chain , hence even brokers
impacted as commissions fluctuate
 Value addition and predictability brings stable revenue and assuarnce
for everyone

29. Frequently Asked Questions
So how is eFarm different from a typical trader or agent ?
Agent eFarm
Operates on commision basis on volume transacted. Rates Has worked out long term price plans with farmers /suppliers
vary daily as sourcing is from auction mandis and wholesale /transporters based on ‘cost price’ model. Prices are more stable
markets.
Has a few sources , usually from a certain radius of his eFarm is a network of networks. Sourcing is across regions. We
operation. Handles only a few items . Hence need to have offer wider variety in items, grade. This provides alternatives and
different agents to map out entire order requirement. choices to manage any scale and any risks.
Predominantly limited education , professional background eFarm is founded by an IIT alumni with over 12 years of experience
and trust worthiness. in serving Fortune 500 customers worldwide. It is a collaboration of
professionals across various industries/disciplines – agriculture,
technology, SCM , Sales & Marketing, Finance, Government and
Non-profit organizations.
Agents being mostly individuals, have limited exposure. eFarm is backed by social investors and leading banks and is
Cannot handle financial risks and uncertainties in market. financially in better position to handle the scale of growth.

30. Frequently Asked Questions
 But how can someone buy vegetables online ? Thats impossible !
 Its not mandatory to use our web ordering feature. What we advocate is
„advanced planning and ordering‟ reduces wastage and ensures availability.
Customers can order through phone .
 All Orders get collated at our backoffice each day.
 Demand Supply prediction – Use statistical tools to „predict‟ demand from
walkin and adhoc customers
 Current examples – Train, bus, movie tickets
 Gradual change in mindset – From walkin , to phone-in, to paper, to email
to online forms
Why a social enterprise and not a regular corporate firm ?
• Pure corporates – Failing on greed and personal egos
• Pure govt. initiatives – Failing on corruption & bureaCRAZY
• Pure NGO/NPO – Driven by passion, but lack sustainability and governance
• Working for a social cause DOES NOT MEAN we need to be making LOSS
The middle path : Social + Business goals

31. Frequently Asked Questions
What are the risk factors ?
People issues :
 Agri industry has been on a slow/negative growth .
 Both farmers and end retailers want to quit
 Initial adoption and understanding amongst the buyer community
may be slow
Finance issues :
 Payments and Collections.
Environmental issues :
• Weather, calamities affect sourcing

32. Venky
venky@matchboxsolutions.in
98847 61354
Valli
srivalli@matchboxsolutions.in