By Heneage Mitchell
ITC is one of India’s largest and most respected companies. It’s Agri-Business Division’s involvement and commitment to India’s agricultural sector has always been a corner stone of its success and its experience and reputation remains unrivalled. The company currently purchases around 30,000 tons of coffee annually, split about 50/50 between export and domestic markets.
ITC has always believed in the potential of Indian coffee, which is why it is deeply imbedded in the supply chain, supplying product most of the instant coffee manufacturers, exporters, traders and even to small roasters in India. The focus has always been to understand the needs, specific grade requirements and quality aspects of each and every customer and then offer a customized solution..
Currently, export efforts are focused on the Middle East with green beans in 10kgs to 50kg packaging, and ITC has captured the market’s attention with good packaging, traceability and consistent quality. Smaller European trading houses also buy coffee from ITC.
India FirstEnvisioning a larger societal purpose has always been a hallmark of ITC. The company sees no conflict between the twin goals of shareholder value enhancement and societal value creation.
Agri-specialists help farmers develop and employ best practices on the field. But ITC’s commitment reaches beyond getting a little mud on their hands. One good example of this is the e-Choupal initiative.
"The e-Choupal project was initiated in 2000," Mayank Shah, manager responsible for coffee operations, explained. "The project now enables internet access to four million farmers through 6,500 kiosks conveniently situated in agricultural communities, allowing growers to become familiar with best practices, market information, weather information and so on, thus empowering the farmer with knowledge. Most coffee farmers are well educated and have the capacity to benefit from exposure to such things. The e-Choupal program allows cultivators see the actual reality of world demand, it introduces transparency into the equation, so they can plan their crops and strategies accordingly."
Similarly, ITC has introduced community development initiatives in Orissa and also in Andhra Pradesh, a non-traditional coffee-growing state. Much of the coffee produced here is pesticide-free. ITC assists farmers to acquire organic certification. Best practices are taught under the guidance of the Coffee Board of India, with ITC bearing the certification costs.
"The problem with organic coffee in India is the lack of consistent supply despite the number of farmers, growers and exporters," Shah told Tea & Coffee Asia. "The question is: how to get consistent supply and volume? The strategy is to coordinate and work with the relevant NGOs, assist tribal farmers with organic certification and enable them with better marketing efforts. ITC fills the gaps between the farmer, the grower and the exporter by helping to acquire certification and marketing the end product effectively."
Certainly, ITC sees a lot of scope for consumer education in the process.
"The organic coffee segment grows with information and awareness of its advantages", Shah revealed. "That awareness has not dawned in the Middle East and India. North Europe and the US are the primary markets. As Asian consumers become more affluent and educated, organic coffee can hope to see more prospects in the region, but this could take as long as 10-15 years to manifest. ITC is trying to educate consumers in these markets, but changing consumer patterns can take a long time and it requires a large investment."
ITC has a lot of experience developing social initiatives in commodity farming. It is applying the lessons learned to organic coffee too.
"In the coffee sector, organic coffee is typically sold at a premium, so the farmer should get the benefit of that premium," said Shah. "In some instances, organic coffee fetches same price as conventional coffee. Unless the farmer is aware of the premium he can earn, he is unlikely to continue following best practices."
Going orwardITC’s involvement in the coffee industry witnessed a major boost when a working relationship was established in 2000 with SLN Kushalnagar, in Coorg, Karnataka.
"This was a logical extension," said Shah. "ITC is one of the largest exporters of green beans, while SLN has a tremendous local knowledge of coffee crops and milling capacity. ITC’s relationship with SLN is based primarily on understanding and sharing of knowledge."
This strategic partnership led to the installation of a state-of-the-art coffee processing facility by SLN specializing in instant coffee powder and agglomerated coffee for the domestic and export markets. The export side is a new operation that is expected to see ITC develop into a major supplier of processed soluble Indian coffee to a wide range of international buyers from around the world.
Why ITC?Why buy from ITC? What particular benefits accrue from doing business with the company?
"ITC has the enviable reputation of being the most reliable Indian supply chain partner for select global buyers. The organization which completes 100 years in 2010, is backed by trustworthiness, traceability, honesty and integrity," Shah told us. "ITC puts suppliers and consumers first. The organization rarely gets into disputes, pays suppliers quickly and supplies quality products through transparent processes and supply chains, and focuses on zero quality claims. All the environment, health and safety (EHS) management systems and sustainability Reporting in ITC conform to the best international standards."
Sounds like any one of these reasons would form a good basis for establishing a fruitful relationship with one of India’s largest and most trusted coffee traders.