Rural Changes

For years the
government was trying to corner middlemen in rural areas. Policies were framed,
one after another, but did not bring relief to the rural farming population. A
simple technology innovation has done it.

Babasaheb Kale, a resident of Ahmadnagar in Maharastra is
a small-time banana farmer. He was selling bananas to a middleman, who was
selling them in the local mandi. The middleman was duping farmers and buying on
relatively cheaper prices. Kale had to trust the middleman as he had no other
way out. But one day, he came to know about an SMS service, which provides mandi
bhav to the farmers. After subscribing to the service, Kale now sells his
produce as per the latest rates of the local mandi. He is now earning Rs 4 per
dozen more than what he used to get earlier.

Kale has subscribed to Reuters Market Light (RML), (an
agricultural information service, developed by Thomson Reuters, a $14 bn New
York headquartered group having expertise with innovative technology to deliver
critical information to decision-makers in the financial, legal, tax and
accounting, healthcare, science and media markets.

The entry of Thomson Reuters in the Indian rural market
shows the growing interest of MNCs in rural India. Rural India, having a huge
population, offers a better proposition for telecos and VAS.

"We have specialization in information selling. We started
RML after a research conducted in India and Africa. The research shows that
rural population is hungry for information, especially related to farming and
weather," says Amit Mehra, managing director, RML. The company has not started a
similar service in Africa.

Started in the year 2007, RML is customizing information
that is sent to farmers in an easy-to-use SMS format, three to five times a day
in local languages. This service is available across Maharashtra, Gujarat,
Madhya Pradesh, Uttar Pradesh, Punjab, Haryana, etc, and soon will be extended
across the country.

The Cost

RML, despite being the most expensive service in the segment, has a subscription
of 125,000. Of the total number of subscriber base, 70% comes from Maharashtra
only, as the service was first introduced in the state and now it's two years
old. RML services come at a price point of Rs 200 for three months, while other
telecom operators offer similar services from a price range starting from Rs 15.

Unlike its competitors, who rely on a secondary source of
Information, RML has hired a dedicated team for generating local content. This
team is based in every state where RML has a presence. The team collects the
information and generates content and sends it to the customer in local
language.

RML provides region-specific weather update within a
radius of 50 km from the farmer. It has tied up with around 1,800 weather
locations across the globe to get the specific localized weather information.
Crop advisory is also customized as per the farmer's current crop and sub
categories. RML caters to over 150 crops across ten states in India. Every
evening it provides crop prices of six closest mandis. The service covers more
than 800 markets across India.

Challenges & Opportunities

The rural market is a virgin territory and has unlimited potential with
numerous challenges. The biggest against them is price point. India is a
price-conscious market and offering expensive services could be tough.

"I agree that our services come for a premium price. But
people would not mind paying a little more as long as it is helping them to earn
more," says Mehra.

No doubt the rural population has huge potential. The
telecom operators are shifting focus from saturated urban areas, where
penetration level is very high, to rural area, where adoption is still low. At
present, the number of mobile phone subscribers in rural area have reached
around 125 mn. With the growing focus of telcos and huge demand, the number
could double in the next two years span.

The biggest challenge against RML and such service
providers would be the falling number of farmers. According to the latest data,
the number of rural population earning livelihood from farming is decreasing. A
recent data published by the National Sample Survey Organization (NSSO) says
that almost 50% of the income in rural areas is coming from non-agriculture
sources. This might pose a problem for the service providers since most of the
offerings by them for the rural segment revolve around agriculture. RML is
banking on a rural population, which will be bigger than total market size of
some European countries.

Road Ahead

RML's contribution to Thomson Reuters revenue is minuscule at present. In the
near future, the company aspires for an ambitious contribution in the overall
revenue. The company apires to take the current subscriber base to 40-50 mn.
Successful marketing and having a strong distribution network in rural market
are big challenges in the aim.

"To market our product, we are in talks with some of the
big telecom operators of the country having very strong rural presence. Besides,
we have tied up with Biostadt that has a strong presence in rural markets,"
informs Mehra.

As part of the agreement with Biostadt, the RML service
will be offered through multi divisions of the company including agrochemical,
seed and its newly created Ingene Organics, which overall cover 1,500
distributors and 20,000 retailers. Biostadt has significant presence in rural
markets across the country. The company provides a range of crop protection
chemicals and biologically derived concept products like Biozyme that improve
crop productivity.

RML is already in talks with some of the telecom operators
in India to market its product. RML, recently, has tied up with Idea Cellular to
launch 'Krishi Voucher' on its network, in Maharashtra and Goa circle.

The company is also testing voice SMS in rural areas of
Punjab. The service will be introduced by RML for the illiterate farmers.
However, voice SMS would be expensive in comparison with text SMS.

So far, RML is the market leader, as it was the only such
service provider. Reliance Communications and Tata Teleservices (TTSL) have also
launched similar services along with a few other VAS providers. It would be
interesting to see how RML takes them on.

Akhilesh Shukla

akhileshs@cybermedia.co.in