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As a 60-something tobacco farmer, Deven Rao is a contended man. For the first time in many years his tobacco produce has fetched a good price in the market; thanks to the automation of the auction process resulting in transparent bidding. However, this was not the situation in the past, when farmers had to face stiff resistance from hostile trader cartels resulting in price manipulation and low-price bidding, leading to farmers losing money. And if this was not enough, errors in recording bidding details on the part of board officials added to the misery of the farmer.

However, the key driver for introducing e-auction as a pilot project was the sheer volume of transactions which each platform had to undertake. For the uninformed, in an average trading season around 25 lakh tobacco bales are auctioned with approximately 1,200-1,400 bales being auctioned each day. Since each bale is auctioned individually, the amount of time consumed in the auction of each bale along with the cumbersome pre-and post-auction processes involved resulted in inordinate delays in payments to the farmers, says Dr J Suresh Babu, chairman, Tobacco Board.

To address the issues, the Tobacco Board went a step further and replaced its manual auction process with the e-auction system for marketing of FCV tobacco. In the first phase, the board launched it as a pilot project at Jangareddygudem town in the West Godavari district of Andhra Pradesh. However, the pilot project at Jangareddygudem could not reach completion as the tobacco auction season got over before the project could be completed, says Babu. The project was implemented in the Andhra district from May 2008 till July 2008. The board has launched the second phase of the pilot project at the Hunsur II auction platform in Karnataka.

There are thirty auction platforms in Andhra Pradesh and Karnataka (twenty in Andhra and ten in Karnataka) with each platform having its own jurisdiction. The tobacco produce first goes through a curing process (wherein green tobacco leaves are stored in a barn at controlled temperatures till the leaves turn yellow). After this, the farmer packs them in 100 kg bales. Significantly, no farmer can sell his produce outside.

Auction Process
The e-auction project was awarded to Bangalore-based Cranes Software that developed the e-auction application on Windows Mobile platform. The solution includes hand-held devices for all buyers; these terminals during the auction can store the data generated including the lot number, weight of bale, etc. The hand-held devices work in a wireless environment, says Babu. Giving his side of the issues faced during the development of the e-auction application, Arvind Bhat, project manager, Cranes Software says, Firstly we had little time to develop the application, we developed the application in three weeks itself. Another issue was that it took time for us to arrive at a development platform; whether we would go the Java way or Microsoft. In the end, however, we went for Microsoft. What distinguishes e-auction from the manual auction process is that once the farmers bring their produce to the auction site and submit the bales for auction, they can see the auction process live on a television screen, which results in farmers getting live price updates without hagglling with the buyers to know the price fetched once the auction is over.

Once the produce is brought to the platform, a bale ticket is generated,which includes information like farmers registration number, auction platform number and the weight and grade of the produce. The produce is either graded by the auctioneers on parameters like quality, color and length of leaves or by the farmers who can do a self-grading.

The classifier, auction superintendent and buyers are all provided hand-held terminals which work in a wireless networking environment. The buyers can go around the tobacco bales being auctioned and record their remarks, grade, and indicative prices, with the hand-held device

After the inspection of the tobacco bales for its physical and chemical characteristics, color of the leaf, aroma and texture, etc, the boards auction inspector fixes a minimum price for the tobacco after which the buyers can begin bidding. The starting price is reflected in the buyers hand- held devices and the bidding is done in multiples of 25 paise, which means that each time the buyer presses the button, it will show a 25 paise jump in the price. And in case you need to quote a higher price you can simply punch in the requisite amount, says Babu. Complete secrecy is maintained in the bidding process as the buyers punch in their bids wherein the amount can be seen by all on the screen, but the buyer identity is not disclosed.

This results in prevention of formation of trader cartelization which leads to manipulation in prices. Also, the system prevents further bidding by a buyer if his bank guarantee is exhausted. As the hand-held terminal keeps a records of all data, complete automated MIS reports can be generated. Data mining and analytics can also be done easily to identify price trends and facilitate any further analysis. Further there is no discrepancy in allotment of bales in case of ceiling price.

The buyer has to be physically present at the auction platform and examine the tobacco bales before placing his bid on the hand-held terminal.

Hurdles in Adoption
Not all however seems to be going well for the e-auction pilot project. While technology typically reduces the time to market in the case of most enterprises, the situation here is the exact opposite. Babu says that the automation process has only increased the length of the bidding process. While earlier under the manual auction, the bidding process used to take only 2-3 seconds, the duration has gone up to 18-20 seconds. In the peak season when around 1,400 bales come for auctioning, using e-auction we can only manage around 800 bales, says Babu.

Moreover, the auction platforms which were designed around 20 years ago, are not equipped to handle the load, considering that auctions happen all year round.

Besides the project is also facing stiff resistance from the trading community who now have to buy hand-held terminals. The buyers need to hold these terminals for a minimum of 6-8 hours daily in one hand ,which is not feasible considering that they also have to inspect the bales.

However one cannot simply dismiss the benefits of e-auction. The buyers now have comprehensive information in their hand-helds, and can also download this data on their smart cards. Moreover, it encourages complete transparency apart from facilitating growers registration, speeding up payments, and improving overall efficiency of the auction system.

Stuti Das
stutid@cybermedia.co.in

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