Background

ITC Limited is one of India's leading diversified conglomerates. Traditionally a tobacco and cigarette producer, it has grown into a conglomerate dealing in hotels, packaging, agribusiness, information technology, and fast moving consumer goods (FMCGs). ITC initiated its e-Choupal project in 2000 to streamline its dealings with Indian farmers. This is a project on a massive scale that ultimately aims to cover every sixth Indian village. Each choupal covers around six villages and 36,000 villages have been covered to date in Madhya Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Karnataka, and Andhra Pradesh.

Objectives and Goals

e-Choupal aims to provide Indian farmers ready access to crop-specific real-time information and customized knowledge in their native language. By doing so, ITC wants to improves the farmers’ decision-making ability, thereby helping them to better align their farm output to the projected demand in Indian and international markets.

Planning

e-Choupal, the Web-based initiative of ITC's International Business Division, offers the farmers of India all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access the latest local and global information on weather, scientific farming practices and market prices at the village itself through the Web portal - all in Hindi. e-Choupal also facilitates the supply of high quality farm inputs as well as the purchase of soybeans at the farmers’ doorstep. ITC plans to operate such kiosks so that they can create an electronic stock exchange for the marketing of agricultural commodities through the use of ICTs.

Services Provided

e-Choupals help farmers realize larger harvests by providing them with the latest weather reports and best farming practices. The information is retrieved from the Internet or caches on hard disks, and is made available in the relevant local languages. Static content is installed on hard disk while setting up the Choupals or is made available on CDs. The e-Choupals also offer other critical services such as soil- and water-testing, which can further help the farmers to enhance their yields. Apart from providing information on soya, the kiosks also have information about FMCGs and help the villagers buy various products such as motorbikes, bicycles, tractors, etc. Importantly, insurance is one of the common products that is being sold across the network. e-Choupals have a facility for providing life insurance policies, goods insurance and other policies to the villagers. This service has added an extra benefit to the villagers in terms of minimizing their cost on travel. The e-Choupal portals are based on Indian languages: Hindi, Marathi, Kannada, and Telugu. Through the e-Choupal portals, farmers can access the latest local and global information on weather, scientific farming practices, and market prices at the village level. e-Choupals also facilitate the supply of high quality farm inputs as well as purchases of produce at the farmers’ doorstep.

Target Group and Intended Beneficiaries

The e-Choupal initiative strives to transform the Indian farmer into a knowledge-seeking producer. The farmer will have access to information, which will help them make the right choice about farm inputs and agricultural commodities. The major focus of e-Choupal is on small and marginalized farmers.

Institutional Arrangements

The management of the e-Choupal network is looked after by the International Business Division of ITC Limited. Sanchalaks, the trusted local farmers who run the individual Choupals, are not official employees of ITC but serve as extended parts of the ITC organization, and simultaneously as commodity brokers and consumer goods salesmen.

 ITC leverages the knowledge of the Sanyojaks who are grain merchants or wholesale dealers co-opted into the project. They are familiar with the land and have long-standing relationships with the villagers. They help manage the logistics of the e-Choupal network. Sanyojaks assist ITC teams in setting up new e-Choupals by conducting village surveys and helping identify the best Sanchalaks. They also help facilitate transactions by maintaining records, collecting price data from local mandis, and managing the physical flow of goods. In this manner, they still serve to compensate for infrastructure gaps along the supply chain, but no longer obstruct the flow of information and market signals. The Sanyojaks are paid commissions based on the services they render, and typically make more money as part of the e-Choupal network than they did independently.

Technologies

Typically, the Choupals use Pentium computers along with a dot matrix printer and a UPS (500VA). ITC had initially upgraded telephone exchanges by using RNS (RAX Network Synchronization) kits, but eventually in most of the e- Choupals, wireless VSAT links have been installed by bypassing the exchanges. Even with these improvements, the bandwidth often remains limited. Hence, e-Choupals have started compensating by caching static content locally. ITC also uses a specially designed template for managing data combined with new imaging techniques in order to speed up downloads and to optimize bandwidth use. To overcome the problem of sporadic electricity, several kiosk computers use back-up batteries recharged with solar panels

Primary Access Points

Primary access points for the farmers are the e-Choupals each located between six villages (42 such kiosks in Ujjain district). The kiosk has a website http://www.echoupal.com which contains all the information regarding agricultural products.

Capacity Building

ITC has been successful in building the capacity of the farmers by increasing their knowledge in cultivating various agricultural crops and related information. Kiosks also provide information on land and soil, weather forecast, news, e-mails, etc. The Sanyojaks are given basic training on using the computer, the Internet and the printer by the engineer deputed for each district.
S/H 1: Constraints and Implementation Challenges

The biggest challenge for the project has been to familiarize the first-time users in remote areas of rural India with computers and the Internet. When the e-Choupal concept was first proposed, there was some initial hesitation on the part of  the farmers. Imparting training to the Sanchalaks  on the use of the computer has also posed some problems and hence it takes a minimum of two months for them to learn how to use the computers. The other major challenge for this project is to recruit a suitable person from each village who has leadership qualities and minimum education.

The project also has to surmount regulatory barriers. The Agricultural Produce Marketing Committee (APMC)  Act prohibits the purchase of specified commodities (including several that ITC deals in) from any source other than at government-designated mandis. ITC has overcome this challenge by convincing the political and bureaucratic leadership of various state governments that the ‘spirit’ of the Act (to benefit the farmers) is better served through e-Choupals. As a result, some states have amended the Act, while others have allowed specific exemptions for such new business models.

Project Outcomes

• Enhanced relationship with the farming community across 36,000 villages so far. 
• Reduced transaction cost for its agri-commodity purchases.
• Information on inventory retained by the farmers that can improve the quality of trading decisions.
• Provided means to expand the reach to the rural markets through the cross-selling of the company's products and services. 
• Capacity building of the farmers.
• Increase of knowledge due to the use of computers, the Internet.

Key Lessons Learnt

e-Choupals deliver relevant technology in the hands of the farmers, which can improve the economic condition of the entire village. e-Choupal is one of the very few ICT projects in India that has effectively utilized e-commerce transactions for poverty alleviation. One of the key lessons is that ICT can reduce the number of middlemen involved between agriculture commodity producers and final consumers. Another key factor is that very simple technology solutions are available to create networks in rural areas, which can function as virtual agricultural commodity market places.

Sustainability

The project is financially sound and sustainable as the cost incurred on the establishment of the kiosk was recovered by the company in less than two years from profit generationed by avoiding numerous tiers in agricultural commodity transitions. The recurring costs are born by the kiosk operators who receive commission on each transaction. The project is vibrant and sustainable, and has a bright future.

Replication and Scaling Up

There is ample scope to scale up this project due to the wide range of services provided at the doorsteps of the villagers. This project has been successfully replicated in states like Uttar Pradesh, Rajasthan, Karnataka, Maharashtra and Andhra Pradesh.

Recommendations

It is recommended that e-Choupals be converted into one-stop shops wherein the villagers can also get other relevant and essential services from the kiosk. It is recommended new e-governance, e-education and e-health services be added on along with entertainment and computer education at these kiosks. It is also recommended that the commission agent recognized by ITC for each region be eliminated and replaced by a cooperative society or a cooperative bank. Other recommendations include linking up to various agricultural prices prevalent in major market places in India so that the farmers have access to all the markets; and that GoI should facilitate similar kiosks wherein farmers can make transactions and these kiosks become small electronic exchanges with each other. Information regarding the kiosks among the villagers is not widespread. There is a need to conduct proper Gram Sabhas before installing e-Choupals in the villages. Importantly, more emphasis should be placed on the involvement of women due to their active participation in the fields. Better planned course curricula for learning computers should be implemented for the Sanyojaks to further training to the villagers.

Human Interest Stories

International Market Intelligence can Lead to Profits

Bhavarlal, a soyabean grower in the Devgadh village of Ujjain district, earned a good profit due to the e-Choupal. He learnt from the Internet that Indonesia had produced a lot of palm oil that year and hence would be selling it in the Indian markets. Knowing this, he assumed that the rates in the local mandis would fall and therefore he sold his soyabeans in good time to make his profit. This shows that timely information can help farmers, not only in improving their yields but also in getting better prices.

Contact Information

Mr S. Sivakumar, Chief Executive -Agri Businesses, ITC Limited
E-mail : shiv@itc.in