MMK: BMS PROF.

KALE

ITC eCHOUPAL
eChoupal is an initiative of ITC Limited (a large multi business
conglomerate in India) to link directly with rural farmers for procurement
of agricultural / aquaculture produce like soybeans, wheat, coffee, and
prawns. eChoupal was conceived to tackle the challenges posed by the
unique features of Indian agriculture, characterized by fragmented farms,
weak infrastructure and the involvement of numerous intermediaries. The
great idea of e-Choupal was to invent a new business model, farmer
centric, co-build with it clients, without avoiding the intermediaries, and
using existing infrastructures.

Problems faced by Farmers-

Traditionally, these commodities were procured in "mandis" (major

agricultural marketing centers in rural areas of India), where the
middleman used to make most of the profit. These middlemen used
unscientific and sometimes outright unfair means to judge the quality of
the product to set the price. Difference in price for good quality and
inferior quality was less, and hence there was no incentive for the farmers
to invest and produce good quality output. With eChoupal, the farmers
have a choice and the exploitative power of the middleman is neutralized.

Effects of E choupal-

ITC Limited has now established computers and Internet access in rural
areas across several agricultural regions of the country, where the farmers
can directly negotiate the sale of their produce with ITC Limited. The PCs
and Internet access at these centers enable the farmers to obtain
information on mandi prices, good farming practices and place orders for
agricultural inputs like seeds and fertilizers. This helps farmers in
improving the quality of produce, and also helps in realizing a better price.
Each ITC Limited kiosk having an access to Internet is run by a sanchalak
— a trained farmer. The computer housed in the sanchalak’s house is
linked to the Internet via phone lines or by a VSAT connection and serves
an average of 600 farmers in the surrounding ten villages within about a
5 km radius. The sanchalak bears some operating cost but in return earns
service fee for the e-transactions done through his eChoupal. The
warehouse hub is managed by the same traditional middle-men, now
called samyojaks, but with no exploitative power due to the reorganized
role. Indeed these middlemen make up for the lack of infrastructure and
fulfill critical jobs like cash disbursement, quantity aggregation and
transportation.

Due to the eChoupal services, farmers have seen a rise in their income
levels because of rise in yields, improvement in quality of output and a fall
in transaction costs. Even small farmers have gained from the initiative.
Customized and relevant knowledge is offered to the farmers despite

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heterogeneous cultures, climates and scales of production. Farmers can

get real-time information despite their physical distance from the
"mandis". The system saves procurement costs for ITC Limited. The model
is quite different from the other models, as the farmers do not pay for the
information and knowledge they get from eChoupals. The principle of the
eChoupals is to inform, empower and compete.

There are 6,500 eChoupals today. ITC Limited plans to scale up to 20,000
eChoupals by 2012 covering 100,000 villages in 15 states, servicing 15
million farmers.

Strategies that ITC can use to influence the farmers to be a part of E-

Choupal:

• Rope in influencers- As it is believed that the sarpanch, teachers,

doctors etc play a very important role in influencing the villagers,
ITC could rope in such influencing people to be a part of E-Choupal
and these people could thereby influence the villagers to be a part
of ITC’S echoupal. ITC can use these influencing people in their
promotion efforts as well.

• Corporate social responsibility-The villagers believe that the big

companies can do no good to them. They believe that all these
companies can do is exploit them.ITC could conduct some social
activities such as educating children, conducting health camps etc
in the villages in order to convince the people that ITC is working
towards their betterment and it does not want to exploit them.

• Creating awareness about E choupal and its advantages- ITC can

educate the farmers about the benefits of E-Choupal and try to
convince them that by joining E-Chopal they could get better prices
than what they are receiving at present for their products.

• Use existing farmers- ITC can also use its existing farmers (those
farmers who are a part of E-Choupal) to convince others (farmers) to
join in. They (existing farmers) can do so by telling the people how
their life has improved after working with ITC.

• ITC can educate the farmers how to use and benefit from
technology- E-Choupal basically involves the use of computers, in
order to promote its strategy ITC needs to first conduct workshops
and seminars in order to train the farmer to use and to benefit from
technology.

• Convince farmers that get can get better price for better quality
products- Traditionally difference in price for good quality and

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inferior quality goods was less, and hence there was no incentive for
the farmers to invest and produce good quality output. With
eChoupal, the farmers can now get appropriate price for their
products.

GINA JOGESHWAR

TYBMS A ROLL NO.25