E-CHOUPAL: ITC’S RURAL NETWORKING PROJECT* I. Abstract
In Hindi (an Indian language spoken in most parts of Northern and Central India), a choupal is a village gathering place. The e-choupal initiative—whereby a choupal is equipped with a computer and Internet connectivity—is the brainchild of a large agricultural processing company in India, the Indian Tobacco Company (ITC). The initiative was conceived to tackle the challenges posed by certain features of Indian agriculture, such as fragmented farms, a weak infrastructure, and the involvement of numerous intermediaries. Although the primary objective of the project was to bring efficiency to ITC’s procurement process, an important byproduct is the increased empowerment of rural farmers where e-choupals have been established. The e-choupal initiative directly links the rural farmers with the company for the procurement of agriculture and aquaculture products, such as soybeans, coffee, and prawns. Traditionally, these commodities were procured by such companies as ITC from mandis (major agricultural marketing centers in rural areas of India), and a long chain of intermediaries was involved in buying the produce from farmers and moving it to the mandis. Through e-choupals, these farmers can directly negotiate the sale of their produce with ITC. The PCs and Internet access at these centers enable the farmers to obtain information on mandi prices and good farming practices, and to place orders for agricultural inputs, such as seeds and fertilizers. This access to information helps farmers in improving the quality of produce and obtaining better prices. Elected from the village itself, a literate farmer acts as the interface between the illiterate farmers and the computer. The e-choupal model has been effective in the short term. However, because of multiple variables that affect productivity, a long-term assessment of the system’s productivity and efficiency levels needs to be undertaken. II. Background
The ITC group of companies has a yearly turnover of Rs 7.5 billion (US$162 million), and its activities span tobacco and cigarettes, paper and packaging, paperboard, hotels and tourism, information technology, and agricultural exports. For its agri-export division, ITC procures various agricultural commodities such as soybeans, coffee, and oil seeds. Typically, a farmer sells his produce to a small trader called a kaccha adat, who sells the produce to a larger trader called the pakka adat, who in turn takes the produce to a local mandi, where a larger trader buys the produce. The mandi traders then operate through brokers to negotiate sales to companies such as ITC. This long supply chain results in high procurement costs for ITC and in lost profit opportunities for the farmers. Because this long supply chain is a very time-consuming system, it also results in deterioration in the quality of the products. *
This case study was prepared by a team comprising Prof. Subhash Bhatnagar and Ankita Dewan at the Indian Institute of Management (Ahmedabad) and Magüi Moreno Torres and Parameeta Kanungo at the World Bank (Washington DC).
Empowerment Case Studies: e-Choupal: ITC’s Rural Networking Project
The e-choupal system was introduced by ITC in June 2000. A choupal was converted into an e-choupal by setting up a computer and Internet connectivity. An investment of Rs 40,000 is needed to establish an e-choupal with dial-up connectivity. If a VSAT (Very Small Aperture Terminal) has to be mounted, the investment moves up to Rs 100,000.1 E-choupals are operated by a sanchalak (operator), a literate person who is elected from among the farmers of the village. He acts as an interface between the computer and the illiterate farmers, and retrieves information on their behalf. While ITC covers the cost of equipment, the sanchalak pays for day-to-day operational costs, such as electricity and Internet charges. These costs vary from Rs 3,000 to Rs 8,000 (US$60 to US$160) per...
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