ITC e-ChoupalWeakness of e-choupal
Although e-choupal helps eliminate the middleman and therefore allows farmers to get a better price for what they grow, it does nothing to solve the more fundamental problem of the inherent inefficienciescreated by so many tiny farms.In addition, it relies on infrastructure, which is often lacking in rural communities. Electricity andtelecommunication services can sometimes be less than 100 percent reliable in some of the places where e-choupal has been implemented. Finally, although there is no longer a middleman, e-choupal can be no moreeffective than the sanchalak (coordinator) in each community.
ITC in conjunction with local farmers created the e-choupal system that is acting asa catalyst in rural transformation by providing access to latest information of theagro sector, developing local leadership and creating a profitable distribution. It helps in alleviating rural isolation, improves productivity and income, createtransparency for farmers - which improves the economic condition of rural areas.This paper tries to identify the problem of mandi, need of e-choupal and challengesin development of e-choupal and derives with various conclusion and suggestions in‘future strategy’ from initial finding and discusses direction for further investigation.
Agriculture is the backbone of Indian economy producing 23 percentof GDP, and employs 66 percent of workforce. Because of the greenrevolution, India’s agricultural productivity has improves to the pointthat it is both self-sufficient and a net exporter of a variety of food grains, yet mostIndian farmers have remained poor. The causes include remnants of scarcity-eraregulation and an agricultural system based on small, inefficient land holdings. Theother constraints are weak infrastructure, numerous intermediaries, excessivedependence on the monsoon variation between different agro-climate zones, andmany others. The unfortunate result is inconsistent quality and uncompetitive prices,making it difficult for the farmers to sell his produce in the world market. ITC’s trail-blazing answer to these problem is the - e-choupal initiative; the single largestinformation technology-based intervention by a corporate entity in rural India that istransforming the Indian farmer into progressive knowledge-seeking netizens.Enriching the knowledge of farmers & elevating them to a new order of empowerment. ITC aims to confer the power of expert knowledge on even thesmallest individual farmer enhancing its competitiveness in the global market.
The traditional model
Indian farmers rely on Department of Agriculture, govt. universities, insurancecompanies etc. for various inputs such as weather, modern and scientific farmingpractices and insurance cover. Farmers approach input retailers who source themfrom wholesalers who are in direct contact with manufacturers. After harvest,farmers bring these produce to mandis; in small multiple lots throughout the year,where beans are auctioned to the traders and agents of the processing companies inan open outcry method. The government facilitate fair price discovery and enableaggregation of goods, regulate these market yards. Successful bidders then bed thebeans, weigh them, pay part cash to the farmers, and transport the cargo to theprocessing units.
ITC is a leading Indian company with revenues close to USD 7 Billion (2010). Its International Business Division was created in 1990 for trading in agricultural commodities. The concept of eChoupal was introduced in June 2000 as an initiative to improve the supply chain by linking directly with farmers for procurement. It was also designed to play the role of a social gathering place, for the exchange of information as well as a place for e-commerce transactions. What started initially as a way to modify the procurement process for crops like soy, and wheat, has now turned into a lucrative distribution and product development channel for ITC. The e-Choupals are operated by a sanchalak (operator), who also doubles up as an ITC salesman. A farmer can visit the kiosk and show a sample of his produce to the sanchalak, who gives him a quote. If the farmer finds the quote attractive, he can take the produce to an ITC collection centre and receive payment within two hours. The e-Choupal also provides other information to the farmer, including crop-prices, weather and knowledge on scientific farming techniques.
Why is it Innovative
- The eChoupal provided several economics benefits to ITC as well as the customer. Web-enabled real time data on crop prices provide the farmer with the market prices for their produce. ITC gains as intermediaries are removed, and transportation costs decrease.
- The intermediaries were not removed from the value-chain, instead they were made as samyojaks (coordinators) who assist ITC in setting up new e-choupals. They also handle the physical transportation of the goods and earn a commission on it.
- By providing information on weather and scientific farming methods, and the supply of high quality farm inputs, ITC enabled the farmers to improve their efficiency and quality of their output. This also provided indirect benefits to the company reducing the risk in several areas of the supply chain
- eChoupal also provided ITC with an effective marketing vehicle. ITC gives “Bonus points” for produce which are much higher than quality norm. This can be exchanged for other ITC products. ITC also uses e-Choupal as a medium to advertise consumer products.
Details and Stats
- Launched in 2000, e-Choupal’s services now reach four million villagers growing a range of crops including soybean, coffee, maize, wheat, rice, pulses and shrimp in over 40,000 villages across 10 states in india.
- Farmers using e-Choupal on an average receive 2.5% higher prices than the traditional mandi system.
- Who could create more value with our customer base than we can? Why?
- How do we know when we achieve our goals?
- How do we know it is effective?