E-choupals: Taking agribusiness into the new millennium
ITC's 1,200 Internet kioks in villages across 18 states allow this
agri-business company to procure soya and other produce directly from
farmers, eliminating the middleman and saving producers time and money.
Traditionally, choupals are community gathering places in the village
where locals meet to discuss issues and iron out their problems. In the
digital age, e-choupals are gradually revolutionising the way Indian
farmers do business.
The concept was pioneered by one of India's largest exporters of
agricultural commodities, Indian Tobacco Company's International
Business Division (ITC- IBD).
Dubbed a click-and-mortar business model, the system constitutes an
Internet-enabled kiosk in a village, which is manned by a prominent
local farmer who is familiar with computers, known as the 'choupal
sanchalak'. The setting up of each e-choupal entails an investment of
between Rs 1-3 lakh.
The sanchalak mans the kiosk, is in touch with company representatives
and guides farmers on the use of the technology. Given the levels of
literacy and infrastructure limitations the sanchalak acts as the
interface between the computer and the farmer. Farmers can use the
kiosks to check the current market prices of their commodities, access
market data, information on local and global weather and best farming
practices. The entire contents of the site are accessible to registered
choupal sanchalaks only.
Till 1999, soya was ITC's main export item but the import of cheaper
palm oil into the country prompted soya farmers to shift to other cash
crops. In search of alternative solutions, a chance comment from a
farmer at a choupal meeting led to the idea taking shape. ITC realised
that constant contact with the farmer was the key.
In June 2000, it launched the soya choupal to assist soya farmers in
2,500 villages across Madhya Pradesh. Starting with six e-choupals, by
the end of 2002, it had succeeded in linking 6,000 villages with over
1,200 choupals. All information based on the farmers' needs was gathered
and the content rewritten, in some cases by the farmers themselves, for
user-friendliness.
Having succeeded with soya, the company expanded the experiment to four
other states. Today ITC-IBD is buying agricultural products ranging from
soyabeans, coffee, shrimp, wheat, rice, pulses, all through e-choupals.
"IBD is aggressively expanding its network to 2,600 choupals by June
2003," says S Sivakumar, Chief Executive Officer of ITC-IBD. Upto 2002,
ITC-IBD invested Rs 750 crore in setting up e-choupals across the
country.
Soil-testing services offered at the sanchalak's office also provided
ITC with a valuable database. Rather than leaving the middlemen
completely out of the loop, a role was created for some of them in the
logistics operations with the title of 'choupal samyojak'.
The oath-taking ceremony is public, to ensure transparency in the
appointment of the 'samyojak' and 'sanchalak'. The farmers have the
option of either bringing the produce to the ICT warehouse or factories
and getting reimbursed for transport costs, or giving their supplies to
one of the collection hubs or to the 'sanchalak'.
Initially apprehensive of the system, farmers are now accepting the
concept. Sohan, a farmer says, "A visit to the mandi means an endless
wait, which may often stretch into days, before a sale finalises. Often
the rates offered are very low but then where is the option? Each one of
us spends Rs 15 a tonne in bagging the produce and again Rs 18 a tonne
for transportation, loading, and unloading."
Shashank Joshi a soya farmer in Mendki village, Madhya Pradesh, has a
new status as a 'sanchalak' in ITC's soya e-choupal. A computer was
installed in his house and farmers often visit to access data and drop
their bags of soya off at his home-office. The days of hanging around
the 'mandi', waiting for the agents to examine their stock and dictate
prices, are over. Prices of major 'mandis' are transparently provided on
the computer screen, giving the farmer the option of selling his stock
to ITC or a 'mandi' of his choice.
ITC claims that a farmer is able to save between Rs 400-500 a tonne,
depending upon his proximity to the processing centre. Darshpreet K
Gill, Manger, ITC-IBD, says that the processing centres are designed so
that the farmers' waiting time is reduced by two hours. Efficient
procedures include a material handling system that ensures that the
tractors, trolleys, or trucks can directly unload the grain without much
spillage. A modern weigh-bridge weighs the produce precisely, and cash
is paid to all the farmers in under 10 minutes. ITC, on the other hand,
even after paying transport costs, saves about Rs 200 a tonne and gets
direct access to the farmers in addition.
The company has set up soya choupals in Madhya Pradesh, wheat choupals
in Andhra Pradesh, coffee choupals in Karnataka and aqua choupals in
Andhra Pradesh and Orissa.
The next step was converting the computer from a mere supply chain
mechanism to a one-stop shop for farmers, enabling them to not just sell
product but also source their inputs and daily items for household use.
For instance, ITC has tied up with Monsanto and Madhya Pradesh's Seeds
Corporation for seeds and BASF for fertilisers. ITC charges a 10%
commission on the percentage of sales accrued in the choupals, one half
of which is passed on to the 'choupal sanchalak' who executes the sale.
It also sells solar lanterns and cooking oil through the same chain.
However, the e-choupal story is not without its drawbacks and
detractors. ITC has to contend with poor rural infrastructure and
unreliable Web connectivity -- the prime requisites for the success of
this project. The situation is further complicated by the sheer
dispersion of the villages in the country.
Many food security and agricultural experts are anguished by the sums of
money being pumped in to make it feasible. "While farmers struggle to
procure one decent meal, millions are being spent in building new
synergies between industry and the farmers," they say.
And while company officials claim that the e-choupals have clearly
identified and addressed the needs of villagers, Devinder Sharma
journalist and chairperson of the NGO Forum for Biotechnology and Food
Security says, "First, it was the television, then telephones, and now
computers. What do you expect from a farmer having less than 2 hectares
of land holdings? These are only tactics to help the company grow."
The company's target is to eventually have 50,000 choupals to cover
200,000 Indian villages or one-fifth of the country.
Contact: Mr. S. Sivakumar
ITC-IBD
31, Sarojini Devi Road
Secunderabad 500 003
Office : 91-40-27800875
Fax : 91-40-27804476
Email : [EMAIL PROTECTED]
(Infochange News and Features, June 2003)
<http://www.infochangeindia.org/ItanddIstory.jsp?section_idv=9&storyofchange
v=ItanddIstory.jsp?newsletter>
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