Problems in E Choupal Itc

Topics: Echoupal, Transaction cost, ITC Limited Pages: 11 (3865 words) Published: December 22, 2010
ITC e-Choupal Weakness 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 inefficiencies created by so many tiny farms. In addition, it relies on infrastructure, which is often lacking in rural communities. Electricity and telecommunication services can sometimes be less than 100 percent reliable in some of the places where echoupal has been implemented. Finally, although there is no longer a middleman, e-choupal can be no more effective than the sanchalak (coordinator) in each community.

ITC in conjunction with local farmers created the e-choupal system that is acting as a catalyst in rural transformation by providing access to latest information of the agro sector, developing local leadership and creating a profitable distribution. It helps in alleviating rural isolation, improves productivity and income, create transparency for farmers - which improves the economic condition of rural areas. This paper tries to identify the problem of mandi, need of e-choupal and challenges in 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 percent of GDP, and employs 66 percent of workforce. Because of the green revolution, India’s agricultural productivity has improves to the point that it is both self-sufficient and a net exporter of a variety of food grains, yet most Indian farmers have remained poor. The causes include remnants of scarcity-era regulation and an agricultural system based on small, inefficient land holdings. The other constraints are weak infrastructure, numerous intermediaries, excessive dependence on the monsoon variation between different agro-climate zones, and many 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 trailblazing answer to these problem is the - e-choupal initiative; the single largest information technology-based intervention by a corporate entity in rural India that is transforming 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 the smallest individual farmer enhancing its competitiveness in the global market. The traditional model Indian farmers rely on Department of Agriculture, govt. universities, insurance companies etc. for various inputs such as weather, modern and scientific farming practices and insurance cover. Farmers approach input retailers who source them from 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 in an open outcry method. The government facilitate fair price discovery and enable aggregation of goods, regulate these market yards. Successful bidders then bed the beans, weigh them, pay part cash to the farmers, and transport the cargo to the processing units.

But with every intermediary the cost of produce increases to the processor as intermediary adds his profit margin to the cost although the farmers get the lowest price and margin in the whole chain. e-choupal e-choupal is a Hindi word which means – “Village meeting place”. e-choupal is a virtual market place where farmers can transact directly with a processor and can realize better price for their produce. e-choupal makes use of the; physical transmission capabilities of current intermediaries & aggregation, logistics, counterparty risk and bridge financing. In June 2000, ITC Limited launched e-choupal in India and now e-choupal has become...
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