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AGRI-RETAILING: REVOLUTIONIZING INDIAN AGRICULTURE
Retailing is one of the traditional business operations, which has repercussions in all the sectors of the economy. No wonder that retailing has found its way in agriculture too, after a boost in this sector due to economic reforms in the last decade. Owing to increased derived demand of agro inputs and realizing the advantage of an integrated approach, input companies are trying to provide (in addition to conventional offerings) all possible solutions to farmers’ field related problems.
The Indian rural market size which includes FMCG, agri inputs and farm machinery is estimated to be about 1,25,000 crores (source : Fertilizer News), 50% of which is contributed by agri inputs. It is expected to increase to two lakh crores in 2005-2007. The companies entering this arena are lured by two factors viz. the vast untapped potential of the rural market and slowly increasing purchasing power of the rural population.
The huge potential of the rural market along with the benefit that can be accrued by organizing the existing fragmented market has led to the concept of organised agri input retailing or ‘one stop shops’. Companies like ITC, Rallis, Tata Chemicals, DSCL, and Mahindra & Mahindra have quietly spawned innovative business models to tap this big business opportunity. ‘Tata’ and ‘Mahindra & Mahindra’ have ventured into a similar proposition with hub and spoke model. The Tata Kisan Vikas Kendras by ‘Tata’ (Mahindra Krishi Vihar in case of Mahindra & Mahindra’s), act as a hub or resource center connected with the various Tata Kisan Kendras (TKKs) under them as spokes. Services offered by the TKKs include – agro input supplies, farm equipment leasing, agronomy services, information, training and other services like-crop insurance, buy-back facility, credit facility etc.
DCM Shriram Consolidated Ltd. (DSCL), has started utility shopping centers called “Hariyali Kisaan Bazaars”, which seek to cater to all needs of farmers, under one roof. Significantly, they do not only stock DSCL products but also provide farmers a choice from the entire range of quality products and prices are clearly displayed to ensure complete transparency in business dealing. ITC through its unique web based portal known as echoupal
is carrying out activities like – dissemination of Information (about scientific farm practices & risk management, weather forecast, prevailing market price in local and global market etc.), facilitating the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmer’s doorstep, thus facilitating decision making by farmers based on the latest information.
Taking a step further ITC opened its first rural mall known as Choupal Sagar, one of the first organized retail forays into a hinterland. It offers almost everything – from toothpastes to television, hair oils to motorcycles, mixers-grinders to water pumps, shirts to fertilizers.
Leveraging on their strength in procurement and the confidence they have built for the brand in the minds of farmers, the company has successfully forayed into agri business retailing.
Issues and challenges facing agri-retailing:
Indian Agri business sector has the potential to transform India into the leading agri economy of the world. But there are certain initial challenges that the sector has to win over such as
Opportunities ahead:
At the same time the retailing in Agri business sector has many opportunities via.
- Government’s impetus to private extension services
- ‘One stop – shops’ can act as facilitators of micro finance
- New channel evolved can be used by FMCG and consumer durables
- Can act as accreditation agency for certifying farmer’s produce
- Customer database can serve as a source of genuine and readily available information
Thus rising from their present status these ‘one stop shops’ have the potential to aid in the holistic development of rural areas by creating a win-win situation for both the private company venturing in agri-retailing and the rural consumer.
Source: http://www.manage.gov.in/pgpabm/spice/spiceaugust2005.pdf. |
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