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The KisanBandhu: Creating a Globally Competitive Rural Growth Engine N. Viswanadham Executive Director, Global Logistics and Manufacturing Strategies Indian School of Business n_viswanadham@isb.edu Feb20, 2007 Contents State of Indian Economy Food supply Chain in India

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the kisanbandhu creating a globally competitive rural growth engine

The KisanBandhu:Creating a Globally Competitive Rural Growth Engine

N. Viswanadham

Executive Director,

Global Logistics and Manufacturing Strategies

Indian School of Business

n_viswanadham@isb.edu

Feb20, 2007

contents
Contents
  • State of Indian Economy
  • Food supply Chain in India
  • Rural Business TransformationKisanBandhu
  • Retail supply Chain
  • Conclusions

N.Viswanadham

slide5

State of Indian Food Sector

Strengths

1.Vast natural resources (cultivable land, water, seasons)

2.Established farming system

3.Growing economy

4.Supporting government policies (FDI, SEZ, subsidies)

5. Vital outsourcing hub

Weaknesses

1.Small scale conventional farming

2.Primitive post-harvest methods

3.No channel master & many intermediaries farmers to consumers

4. Hardly any Food processing industry

5. Inadequate Cold chain infrastructure

Potential to become a leading food supplier for the whole world

Consequences

1.Surplus food wasted away

2.Low incomes to farmers

3.Inefficient supply chain

4.Not meeting the changing consumer preferences (processed hygienic food)

Opportunities for

1.Cold chain infrastructure builders

2.Processed food manufacturers

3.Food packaging & logistics providers

4.Food retailers and exporters

5.IT and data analysts

6.Research Institutions

benchmarking food chain

Economic Integration

Packaging Duties High

Protectionist

Trade Tariffs

Economic Policies

Logistics

Resources

No Cold Chain

Abundant

FOOD SUPPLY CHAIN

Connecting Technologies

Resources & Management

Information Technology

Resources Management

Inefficient and Fragmented Planning

No Supply Chain Visibility

Product Offering

Supply Chain

Few Processed Products/Labs

Too many intermediaries

Product & Value Chain Innovation

Benchmarking Food Chain

N.Viswanadham

background for kisanbandhu
Background for KisanBandhu
  • Existing scenario is supply driven
  • The farmer is unaware of the market, produces something and sells in a mandi or to an agent and wants to get a fair price & immediate payment.
  • This must change. Need to create a system, where the farmer is made aware of the market demand and encouraged to produce to the requirements of the buyer
  • The farmer should get right inputs ,Grow the right grade of produce (most optimal grade), trade it (double auction mechanism), and sell it to get maximum Net income
  • The idea is to transform the way agriculture works, create a business orientation among the farming community
  • Thus we propose – “Corporatization of Villages”

N.Viswanadham

slide9

Resource Management

Marketing Skills

Financial Services

Logistics

Policies

Village as a Business System

Agriculture & Industry

Farm labor

Farm-inputs – Fertilizers, seeds etc.

Value added Products

Non-farm Community

Processing Industries

Technology

N.Viswanadham

slide10

adding value

Production

Procurement

Processing

Farm-inputs – raw materials

Retailing

Villages

Core Business Processes

N.Viswanadham

isb kisan bandhu

Banks

Farmers

Buyers

Commodity

Exchange

Kisanbandhu

Reliance Fresh

HLL

ITC

Logistics Provider

ISB-Kisan-Bandhu

N.Viswanadham

aggregator model for implementation
Aggregator model For implementation

ISB (Knowledge partner)

Regional Call Centres (RCC)

Knowledge sharing

MCX

Aggregator at

Village and Higher

Levels

Forward contract

Farmers

Input credit

NSEL

Market players

Fund transfer

WR financing

NBHC

Bank

N.Viswanadham

retail the indian advantage
Retail: The Indian advantage
  • There is a huge opportunity in this space
  • 12 M retail outlets employing 21 M ( 7% of total work force) people
  • 100% FDI is not allowed for foreign companies.
  • Least saturated of global markets with small organized retail.
  • The least competitive of all global markets studied
    • Lower barriers of entry for big players
    • Tremendous market size in both Urban, and Rural areas,
    • Growth potential of 20-40% as in China
  • Retail is going turbulent with entry of big players

N.Viswanadham

rural retail flow chart
Rural Retail Flow Chart

The Indian postal service can take advantage of its vast network and logistical capabilities to transform itself into a profitable business and to bring a host of services to rural populations.

N.Viswanadham

conclusions
Conclusions
  • India provides huge opportunities for Food supply chain stakeholders
  • Retail, Food manufacturing are the Growth areas
    • Halal hub (Export to South-East Asia, Middle East), Vegetarian hub (20% of Indian population + overseas), Organic food hub (Europe and USA), Sea food hub

N.Viswanadham

kisanbandhu pilot model
Kisanbandhu Pilot model

Logistics Service

3P Grading

3P Warehousing

Commodity Exchanges

Cyber-Intermediary

Farmers

Buyers

Big Retailers

Local buyers/

Other significant buyers

Banks

N.Viswanadham