eAgriculture: Perspective to Practice

Earlier today, I chaired a Panel Discussion on "eAgriculture: Perspective to Practice" at eIndia 2010. The Panel was quite diverse, consisting of the Knowledge & Information Management Officer of FAO Rome, the Director of Kerala IT Mission, the Dean of Bombay Veterinary College, Dean of Raichur Agri University, a Project Manager of C-DAC who is implementing the e-Village project in Arunachal Pradesh and a Director of a Farmers Organisation from Uttarakhand.

I opened the discussion, by saying that the role of 'e' across the whole agricultural value chain has been well visualised. Several models also have been successfully demonstrated. For over a decade now. 'e' played central a role in information generation, information processing and information exchange in those idea. 'e' filled the gaps in the crucial linkages across the value chain starting with research, and moving on to education, extension, crop management, supply chain management and post harvest management in those models. 'e' increased productivity, improved efficiency, reduced risk and delivered value through traceability in the pilot projects. Yet large scale operationalisation of these ideas is far from satisfactory, in the sense that the intended benefits haven't reached even a fraction of the needy farmers. So, the question to the Panel was "What does it take to translate the Perspective to Practice in eAgriculture?"

At the end of the session, I synthesised the experiences and case studies shared by the Panel into a model that I called "Pentagon", named after the five dimensions of what it takes to translate the perspective to practice in eAgri... The acronym of this model turned out to be C-ROSE, taking the first letter of each of the dimensions!

Collaborative Ecosystem of several stakeholders, that can stitch an integrated end-to-end solution for the farmer instead of each player targeting a sliver and increasing the costs of friction. An ecosystem that institutionalises a Knowledge sharing network for collaborative learning to hasten evolution of the practice.

Relevant Technology that is easy to use, in local language; may be a speech interface in addition to the text. A technology that is robust to withstand the challenging physical conditions and make up for the infrastructural deficiencies.

Orientation that doesn't view outreach to the farmer just as a last mile challenge, but more importantly, sees it as a first mile challenge to appreciate the individual needs of all the farmers. This can help in delivering personalised solutions. Given the heterogeneity of farmers' circumstances, such an approach is vital.

Sustainable business models that can be scaled to reach out to "all" the farmers, not just a prototype here or a pilot there. Scale doesn't necessarily mean that one initiative needs to reach "all" the farmers; multiple local enterprises can replicate a proven model and scale out to saturation.

Enabling Environment, most critically the Policy environment that fosters competition and that does not distort markets. The reversal of reforms in APMC Act, Essential Commodities Act or Forward Markets Regulation halted the roll out of 'e' solutions more than, possibly, any other dimension mentioned in the model.

Happy to incorporate any other dimension that any of you would like to add, and change the shape of this model. A Hexagon or even a Septagon? The end goal is to be Bang-on :)

Evolving Landscape of Rural India: Role of Mobile Devices

Mobility will play a central role and significantly influence the very evolution of rural India hereafter. Therefore, rather than suggesting a plain list of ‘many ways in which mobile devices can be used in rural areas’, I would like to start with a quick look at the underlying drivers of rural India and then propose a framework to visualize the consequent strategic role that mobile devices can play.

My presentation is set in four parts:

1. Aspirations of rural people
2. Fundamental characteristics of rural India and how they come in the way of fulfilling those aspirations
3. Components of value in general, and their relevance to rural India vis-à-vis the aspirations and characteristics
4. The role mobile devices can play in this backdrop

Over the thirty years I have been working in rural India, the most remarkable facet I observed is the transformation of rural mind-set from one of ‘resignation due to deprivation’ to ‘aspiration arising out of empowerment’!

• This transformation occurred as the rural infrastructure improved (especially roads and telecom) and their incomes rose. And the sources of income expanded too - within agriculture diversification helped, while the non-farm activities multiplied (livestock, sales & services in rural markets). Several Government schemes as well as remittances from the kin who migrated to towns brought in more money into rural hands.
• The aspiration is primarily for better basic services (education and health), and superior quality of life (access to consumer goods used in urban India, financial services and entertainment). People, naturally, are also looking for opportunities to step up their incomes further (new livelihood sources and appropriate production inputs are the needs here) to be able to afford such products & services.

However, three characteristics of rural India come in the way of realizing these aspirations…

• The wide geographic dispersion of our villages constrains access to products & services mentioned earlier, in terms of timeliness, quality and cost - if they access at all. Because villages are a long way away from the centres of action (urban areas) where specialists reside or these products & services originate.
• Extreme fragmentation in terms of the size of rural production units reduces their bargaining power when they buy their inputs or sell their output. This is true even for financial services and consumer goods as well, as the ticket size of their purchases is very small. Aggregation can empower them, be it in the form of cooperatives, or self help groups; whether physically or virtually
• Wide heterogeneity in circumstances of the people across rural India requires products and solutions that are personalised to their unique needs. Delivering such solutions is expensive as is, and is further unattractive when the unit volumes and paying capacities are small.

Value has three components. Value Creation, Value Delivery and Value Capture

• By a logical extension of the three characteristics already described, it is obvious that value can be created in rural India by delivering services remotely (overcoming dispersion), by personalizing solutions (that address heterogeneity) and by democratizing access (neutralizing scale / class disadvantage, eg. for poor people & women).
• What is not commonly appreciated is the fact, that the same three characteristics constrain rural people from taking advantage of even the available products & services unless they are delivered as a complete end-to-end solution. For example farm productivity won’t rise unless relevant agri advisory, real-time weather / market information, credit, seed, nutrients, crop protection chemicals etc are all available in a coordinated fashion. So, a well-orchestrated ecosystem is needed for actually delivering the value created by using the ideas mentioned in the first bullet.
• For any enterprise to scale and sustain over time, some of the value created & delivered must be captured for its financial investors. All of you know the famous examples of many dotcom companies that created value for their customers, yet went bust as their business models could not capture enough value for themselves! In case of rural markets, plain vanilla business models that try to capture more share of the small wallets find it difficult to sustain. Innovative models leverage aggregate volumes of these markets and get interested third parties to cross-subsidise (much like the media business), besides capturing some value from the rising incomes (having facilitated such rise in the first instance)

Interestingly, with their wide-ranging capabilities, mobile devices can play a central role in all the three components of value in rural India

• Remote delivery of certain virtual elements in areas like education, health, entertainment; both information & transactions in income generating areas like agriculture, financial services, governance & citizen services; exchanges for employment and matrimonial; social networking platforms etc are all already happening at some basic level using mobile devices by extending the applications designed for Web.
• Additionally, by integrating features like unique identification, crowd sourcing, GPS, GIS, visual mapping, text-to-voice, multi-player collaboration etc., several other value creating applications can be developed which wouldn’t be operationally feasible without mobile devices.
• Finally, with targeted delivery of content & advertisements mobile devices will facilitate the value capture process.
• Remote delivery at door-step, personalized solutions for relevance, virtual aggregation for economies of scale, collaboration for putting end-to-end solutions together, unconstrained access even for the disadvantaged – all so necessary for development of rural India, are now possible due to mobile devices

Let me now illustrate these propositions with some specific uses of mobile devices along these lines

• In education, e-learning will morph into m-learning; further moving to potentially deliver books over mobile devices as the screen sizes expand; with the ability to stay in touch on an ongoing basis, life-long delivery of continuing education is possible
• Last mile access in health services, drawing upon experiences from web based tele-medicine services. Mobile device itself as a medical instrument (eg pulse reader) is not a distant dream.
• Entertainment applications do not need much elaboration; will have instant demand
• Location based information services like Yellow Pages (eg doctors, agri input stores) can morph into mini meta markets
• In agriculture and other livelihood activities, starting with elementary services like information provision - delivered as text or voice - (eg. weather forecasts, market prices) to transactions (eg e-procurement through auctions, negotiations) to sophisticated applications like precision farming through personalized crop management advice (with the ability to click and transmit photographs on one hand, and integration with GIS on the other hand)
• Banking transactions
• m-commerce transactions like railway ticket booking
• Calendar integrated notifications and alerts
• Remote monitoring and activation of farm automation systems (eg irrigation, fertigation), some of which is already happening as a grassroots innovation
• Supply chain management applications in rural marketing (for FMCG, medicines etc) like order taking, promotions, information uploading, remote stock management in rural outlets
• Governance applications like voice / text alerts of Government Scheme; or operational activities like uploading of local data by Village Accountants, Anganwadi Workers, Warehouse Keepers etc
• Citizen reporters generated news and other local information, or even poll based market research, visually mapped by integrating with GPS for reading patterns & movements and re-casting for local action

In short, a mobile device can become a hand held transaction platform, a personalized bank branch, a retail store, a cinema screen, a teacher, a doctor and many such, besides being the good old communication tool. Thereby, playing the role of a key enabler in taking rural people forward with rest of India; delivering the much desired inclusive growth :)

PS:

1. This blog is a summary of my talk at the Nokia Strategy Summit in Amby Valley (Lonavala) on 29th April 2010.
2. I am thankful to so many friends (a record fifty four in all) who shared their thoughts via Twitter, Facebook and LinkedIn as valuable inputs for this talk.

Marketing to the Bottom of the Pyramid

Earlier this week (7 Dec), I spoke to the members of the six winning teams of ISB’s iDiya initiative (http://www.isb.edu/iDiya/). My topic was “Marketing to the Bottom of the Pyramid”. Actually, I conducted the session much like an MBA class. I just asked the questions, got the participants to respond based on their experiences, and I put it all together as a synthesized output. Here it is:

A. Why is marketing to the consumers at the BoP different from marketing to the consumers at the ToP or MoP?

• What is different about these consumers?

1. By definition, income of these consumers is low
a. Incomes are seasonal for farmers. There is also variation in incomes across seasons
b. Most of the money is spent on Food. Purchasing power for discretionary products is low
c. People prefer single serve products. Low unit cost products.

2. Awareness levels of these consumers about most products / services is low (primary focus is on subsistence)

3. Acceptance of new products is low.
a. There was also a counterpoint that acceptance of new products is actually high, if the product is relevant and the value is communicated effectively)
b. New products are accepted when opinion leaders in the community use them and demonstrate value
c. Word of Mouth is a better communication channel among the BoP consumers

4. Urban BoP is more homogenous than their rural counterparts
a. Urban BoP has lower disposal income as their cost of living is higher than that of their rural counterparts
b. A number of urban BoP consumers may not have a permanent address, as they keep migrating for jobs and / or change addresses when they come back to towns seasonally

• What are the challenges in marketing to these consumers?

1. Reaching products to them is a challenge. Supply chain costs are high and unviable, compared to product margins, as they are scattered (especially rural consumers)

2. Communicating with them is also a challenge, due to low media penetration. Difficult to reach consumers other than top socio-economic segment in the village

3. Competition from the local middleman is a problem. Because he lends, he has a grip on the consumers. He pushes high margin products, not necessarily products that are relevant to the consumers. Alternative channels (eg Banks) have the risk of defaults, as they don’t know the consumers as well as the local money lender does. Their documentation processes are rigid, and borrowers prefer easy access from the money lenders.

B. In light of these differences and challenges, how should we approach marketing to these consumers? (Answers largely revolved around rural consumers)

1. We must offer Products relevant to these consumers. These are (a) those that raise their incomes and reduce their risk (b) low cost products
i. Reach R&D to people at grass roots to increase their productivity and improve quality
ii. Reach finance. Actually complete range of financial services credit, savings, remittances, insurance
iii. Bring Crop Insurance, Health Insurance, Commodity futures
iv. Information about new investment & employment opportunities is an important service that can be provided
v. Reduce dependence on agriculture, through allied activities like livestock or even BPO. Facilitate some primary processing activities in the villages.
vi. Build capacity for these other activities

2. We must leverage technology to create such products and also to overcome the infrastructure barriers
i. Technologies include mobile phones, radio, internet
ii. Apply basic & appropriate technology to solve problems, many times learn from the BoP people themselves

3. Organise people at BoP into groups to reduce transaction costs in dealing with them
i. Thereby build scales of economy in farm inputs sourcing
ii. Collective farming or cooperative farming also examples
iii. Reduce role of traditional middlemen, by bringing educated rural youth back to villages
iv. Leverage the discipline characteristic among women to be the new intermediaries, as demonstrated by SHGs

4. Multiple organizations must come together in a collaborative way to deliver complete solution to these consumers
i. PPP is a good way. Government financial support is crucial to many projects, especially in agriculture & employment
ii. Partnerships with Not-for-Profits are useful in establishing relationships with the community, and in communication

C. What are some of the challenges you visualize while executing these strategies?

1. Many execution challenges are cannot be anticipated; so be adaptable

2. Customising products and services to the local needs; understanding the local needs itself is a challenge
i. Delivering after sales services is expensive
ii. Acceptability of new products / technology / ideas will take time to build awareness and educate people about the benefits

3. Competition with middlemen and other local players isn’t easy.
i. If the products / services improve market transparency, there may be resistance too from these people
ii. Competing with counterfeit and look alike products at substantially lower prices will be a challenge too

4. Identification of right leaders within the village will be a challenge in itself

5. Retaining talent is also challenge, as most people would like to work in urban areas
6. We need a pipeline / platform to connect companies with BoP consumers (right from consumer understanding to distribution of products)
i. Such a pipeline could be built in a collaborative mode (Government could pitch in with some subsidy, especially for services like agri extension and other capacity building activities)

Here is a picture of a part of the White Board I scribbled on; this helped in putting this note together :-)

Twinterview on Franchising

Avishek Gupta, a member of the Dairy Network Enterprises team interviewed me on Twitter about franchising. Here is a transcript

If you would like to comment on the subject, please visit
http://www.facebook.com/topic.php?uid=185594549445&topic=11066

Avishek_Gupta: What if I want to #franchise my business? What would a #franchisee look for?

S_Sivakumar: Actually just three things! RaRoI (to take home), Brand (to pull customers), SOP (to idiot proof execution)...

Avishek_Gupta: Thanks, that's precise!But, what if I don't have a brand? Will ONLY the other two work? My Query specific to small rural enterprises.
(Comment added later by Avishek to this transcript - assumption behind the question was that it will take some time to create a franchisable "brand" across different remote rural locations and hence the "lack" of brand for a relative newcomer like DNE)

S_Sivakumar: If not brand, something else to "pull" customers. Say, a unique product or service. Otherwise it's partnership, not franchising!

Avishek_Gupta: Partnership v/s Franchising!!...Thanks a LOT for the insight! :)

S_Sivakumar: When you franchise, you bring everything to the table except last mile. In partnership, you combine complementary strengths

Avishek_Gupta: How to get a rural entrepreneur set up a franchisee? How does he get to know about it? What can convince him, it works? Local NGO?

S_Sivakumar: As to who can convince your prospect depends on the profile of your prospect. Local NGO, Bank Manager, School Teacher.. Best would be to conduct a village meeting (aided by an AV showing Franchisee at Work) and create "pull" for applications

Avishek_Gupta: Is minimum revenue guarantee for start-up period an intelligent way to go to convince entrepreneur? Or is it absolutely foolish?

S_Sivakumar: Minimum Guarantee is a useful tool. Ideally you should link the guarantee to efforts on part of franchisee, not a free ride!

Avishek_Gupta: So true! And our job would be to be clear about how we would "measure" the efforts of the entrepreneur in initial periods of little revenue.

S_Sivakumar: The inputs that drive the desired outcomes will define the efforts...

S_Sivakumar: Yes, in any case you can't design reliable SOPs before running the business for a while

Avishek_Gupta: So, Franchise Package = SOP + min guarantee (proxy indicator 4 ROI) tied 2 efforts + a great service /product! Awareness thru AV of franchisee at work!