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Procedia Economics and Finance 7 (2013) 140 – 149

International Conference on Economics and Business Research 2013 (ICEBR 2013)

Adoption of E-Commerce Practices among the Indian Farmers, A

Survey of Trichy District in the State of Tamilnadu, India

N. Jamaluddina*
Urumu Dhanalakshmi College, Trichy (Affiliated to Bharathidasan University), Trichy-Tanjore Express Highway, Kattur Po, Trichy-620
019, Tamil Nadu, South India

Abstract

During recent years e-commerce has found its way to the agricultural sector in India. The internet continues to become
more popular among people who deal with agricultural business of any type. While technology availability has increased
and its access has become easier, the demographic transition is also characterized by greater willingness to use technology
among farming community. In the last few years agriculture has shown steady progress for which technology has made a
visible contribution. This paper aims to present the existing pattern and level of adoption of e-commerce among the
farmers of Trichy District in the State of Tamil Nadu, India.

©2013
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by by Elsevier
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of ICEBR 20132013

Keywords: Tamilnadu, Trichy; Farmers; E-commerce; Technology Acceptance Model, Trichinopoly

1. Introduction

The world currently has 2 billion internet users, of whom 50 per cent live outside the developed world, the
global internet population is projected to climb to 26 – 29 billon by 2015 the study on the “impact of internet
on the Indian economy” by MC Kinsey projecting that the internet contribution to India’s GDP will explode
to $100million (Rs 5 Lakh crores) by 2015 from $30 billion (Rs1.5Lakh crore) at present, Shalini, 2012.
Agriculture, the backbone of India, is fast losing its hold, and quick adequate measures need to be
implemented. India is moving towards an agriculture emergency due to lack of attention, insufficient land

* Corresponding author.
Email address: jamal.phn@gmail.com

2212-5671 © 2013 The Authors. Published by Elsevier B.V. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of ICEBR 2013
doi:10.1016/S2212-5671(13)00228-1
 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149 141

reform, non-providing of fair prices to farmers for their crops, inadequate investment in irrigational and
agriculture infrastructure in India. Small farmers gain is not enough compared to the efforts put in and
agriculture cost inputs; this can affect the agricultural productivity and food security of the Indian nation. In
the agriculture sector, constant application of latest ideas and better technologies is essential to enhance the
economic well-being of the farmer. “Even though villagers still visit the temples they have stopped consulting
the oracles for weather forecasts” according to an apple grower in Ratnari village of SHIMLA, India. The
change has been brought about largely by mobile phones and technology. Weather updates that are easily
available on the internet and mobile phones it seems have made redundant the job of oracles in SHIMLA
villages Himachal Pradesh, India, Times of India, 2013. The bane of Indian agriculture is not lack of
technology, R&D effort; but the inadequacy and inefficiencies in the dissemination of relevant information to
the farming sector. ICT projects essentially provide linkages, enhance market access, and improve business
process, increase product diversity. The most effective ways of reaching farmers with timely agricultural
information and knowledge (indigenous and external): mechanisms for harnessing the potential of digital
telephony. Internet as technologies for communicating agricultural information; options for repackaging
agricultural information and knowledge for small scale farmers; and the potential role of an e-repository (of
local agricultural content) in India for purposes of disseminating local agricultural content, Qaisar et al., 2011.

2. Conceptual Frame work

The Internet plays a role in agribusiness both as a new market place and as an information resource.
Numerous applications have been developed by different interest groups. Applications in the market place
can be categorized from a farmer’s viewpoint, including services, outputs, factors of production and inputs.
Services, inputs, and production factors are generally purchased via the Internet at a fixed price, whereas
outputs are generally traded through on auction. This is perhaps because many of the outputs are perishable
and therefore the market price is more sensitive to supply and demand. In recent years, e-commerce has
found its way to agriculture. Participation in e-commerce requires that both buyers and sellers have access to
the Internet and that they are able to use the required hardware and software effectively. At the level of
business–to–business, common agribusiness, B2B transactions such as buying, selling, trading, delivering,
and contracting seem to be natural targets for conversion to e-commerce. In agriculture, the B2B and B2C
categories of transactions have used Internet in Agriculture, Remote service, and Maintenance referred to as
agribusiness –to–agribusiness (A2A) and agribusiness-to-grower (A2G). The development of e-commerce in
agriculture is of course strictly linked with the adoption of the Internet mainly by the farmers.

3. Trichy district demographics

Tiruchirappalli district is located along the Kaveri River in Tamil Nadu, India. The main town in
Tiruchirappalli District is the city of Tiruchirappalli, also known as Trichy. During the British Raj,
Tiruchirappalli was known as Trichinopoly, and was a district of the Madras presidency; it was renamed upon
India’s declaration of independence in 1947. Tiruchirappalli district lies at the heart of Tamil Nadu. The
district has an area of 4,404 square kilometers. Kaveri river flows through the length of the district and is the
principal source of irrigation and water supply. It lies between 10 º 10’ and 11º 20’ of the Northern latitudes
and 78 º 10’ and 79 º 0’ of Eastern longitudes in the centre part of the Tamil Nadu. The general slope of the
district is towards east. It has a number of detached hills, among which Pachamalai hill is an important one,
which has a peak up to 1015m, located at Sengattupatti Rain Forest. Tiruchirappalli district is one of the
important districts in Tamil Nadu which has a population of 2,713,858, District census, 2011. Tiruchirappalli
district comprises of eight Taluks (Division) viz., Thuraiyur, Lalgudi, Musri, Tirucirappalli, Thottiyam,
M.nallur, Srirengam and Manapparai, which included 14 blocks, 408 village Panchayats and 1590 villages.
This district consists of four municipalities viz. Ponmalai, Srirangam, Thuraiyur and Manapparai.
142 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149

Tiruchirappalli is the only Municipal Corporation which is also the Head Quarters of the District. Agriculture
sector provides the major source of income to the population of the district and the major crops in this district
are paddy, cotton, groundnut and maize. In addition, other complementary sectors like dairy, sheep/goat
rearing, sericulture and inland fishing are the major sectors contributing to the district’s economy which are
major source of providing livelihood for improving the income and standard of living of the people.

4. Statement of the Problem

Agriculture has been a prime source of employment in India since ancient times. Presently it contributes
to the 14.2 per cent of India’s GDP and provides employment to around 58 per cent of workforce of the
country. It is an important sector not only forms the part of economy but also meets the food demand of huge
population of the country. While agriculture was at its prime, another prominent sector stepped in, this was
the internet, since its inception in the country. The Internet and IT industry has become a major driver of
Indian economy. Agriculture, though a little late also tried to adopt internet in as functioning, the aim was
knowledge sharing between the agriculture research institutes, access to international best practices,
information sharing on public domain, online trading and import and export. Though this implementation
led to drastic improvements in the way of carrying out certain activities related to agriculture sector, the scope
of implementation and adoption of internet in the Indian agriculture is still a very small fraction of its overall
potential. The findings of the Mittal, 2006, have revealed that the potential of Information Technology is not
fully tapped in the Indian Agriculture sector. While IT opens up possibilities ranging from precision farming
at farm level to support for efficient decision marketing to the policy makers, unfortunately, the current levels
of induction of IT in the agriculture front is far from satisfactory. This paper makes and effort to survey the
adoption of e-commerce practices among the farmers in Trichy District in Tamil Nadu, India.

The objectives of this study are as follows:

1. To study the farmers profile in Trichy district.

2. To determine the reliability of the scale developed to capture the perception of farmers regarding the
benefits and constraints in usage of Internet information.
3. To measure the influence of e–commerce usage on farming practices.
4. To identify the impact of constraints in adoption on benefits of e – commerce application for farmers.

5. Literature review

Indian Tobacco Company’s (ITC) e-Chou pal program - run by ITC’s Agri business division - has set up
internet access kiosks in rural India to enable farmers to retrieve marketing and agricultural information. This
in turn helps them make more informed decisions and potentially increase their income by better aligning
farm output to market demands, Guardian, UK - 31 May 2012. The ITC case study is part of a forthcoming
issue brief by the World Business Council for Sustainable Development (WBCSD). Chandra Shekara, 2001,
in his article has argued that Agricultural information dissemination through IT is cost effective, time saving
and the speed of communication is very high, classified information is available and information storing
capacity is enormous. Thus, extension through it is getting popular nowadays. Few experiences are
encouraging and open a great scope for IT applications in agricultural extension. Helen Barton, 2003,
describes the experiences, perceptions and attitudes of farmers in Canterbury, New Zealand, towards the use
of the Internet for farming purposes. Seven major themes emerged from the data and have been labelled as
the following: why farmers have started using the internet; how farmers were introduced to the Internet;
current uses of the internet; advantages of using the Internet; problems associated with using the internet;
attitude towards the internet and future outlook. Many farmers experienced poor phone lines that inhibited
 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149 143

the quality of internet service. Consequently, the interviews uncovered a widespread feeling of disgust and
intolerance of the lack of regard for rural people, especially considering that agriculture is an important
industry for New Zealand, Martyn Warren, 2004. Farm businesses appear to have much to gain from the use
of Internet technology, particularly given their spatial dispersion and typically small scale (in terms of
employment and turnover), but available statistics show a lower rate of adoption than small to medium-sized
enterprises(SMEs) in general, with less than one- third of UK farmers using the Internet for business
purposes. The article on an investigation by the University of Plymouth of Internet adoption by farmers, Edda
Tandi Lwoga, 2011, to assess the application of knowledge management (KM) models in managing and
integrating indigenous and exogenous knowledge for improved farming activities in Tanzania, by examining
the management of indigenous knowledge (IK), access and use of exogenous knowledge, the relevancy of
policies, legal framework, information and communication technologies (ICTs), and culture in KM practices
in the communities. The proposed KM model provides a deep understanding on the management and
integration of agricultural indigenous and exogenous knowledge in the rural areas of developing countries.
What are the main constraints to farmers adopting and using ICT? The results of the Bonn and Montpellier
questionnaires and the Indian study, compares the responses of Indian scientists and extension, Gelb, 2001.
There is unanimity in India (17.1 per cent) and Europe (17.9 per cent) on “lack of training” as an impediment
in using ICTs. Under the assumption that ICT is indeed a positive contributing factor to farmers’ economic
benefits and rural welfare, the study solicited responses and suggestions to promote the use of ICT in
agricultural production. ICT adoption is really a problem according to the replies (100 per cent). Poor
connectivity, lack of relevant content, lack of ICT infrastructure & Skills, high cost, inefficient and poor
quality service, are the major impediments for ICT adoption in India according to the majority of the
respondents of Asian Federation for Information Technology in Agriculture (AFITA) 2006 conference, Patil
et al, 2006.

6. Research Methodology

Descriptive method has been followed in the process of research; Survey, sampling, data collection and
analysis are done with the help of this method as applicable for the present study. A pilot study was
undertaken by contacting 50 farmers to test the quality of the items in questionnaire. Convenient random
sampling method is applied.
The sample chosen for the study covers the farmers of different segments of Trichy. A total of 640 farmers
were selected on convenient sampling method from the randomly selected 32 villages of Trichy District. The
list of villages was collected from District Statistics Office in Trichy. Primary data for the purpose of this
research study were collected for a period of one year. Out of the sample size of 640, only 518 of the
questionnaire forms are returned in a completed form and found usable. One hundred and twenty two
questionnaire forms were incomplete and found unusable. The response rate is calculated in the following
manner.

7. Results and discussion

The following objectives set for the study is presented below based on the empirical analysis and
implications of results

7.1 To study the farmers profile in Trichy District.

This objective is analyzed by using the frequency analysis. In order to precisely capture the profile of the
respondents the respondent’s educational qualifications with none is coded as 1; School level coded 2; Degree
coded 3; Master coded 4 and Research coded as 5. The tabulations using frequency analysis are presented as
144 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149

follows: a) The major profile of respondents belong to the category that of school level (57.3 per cent), b) A
majority of the respondents, that is, 30.1 per cent have above 20 years farming experience. c) The status of the
farmers concerning the ownership of computers, alarmingly a large proportion of the respondents, that is, 74.3
per cent of them do not own any computer, whereas comparatively only a meager portion, say 25.7 per cent of
them only have computers. d) The telephone density among the sample, which can be deciphered that a fair
amount of farmers (62.5 per cent) in the chosen region are in possession of telephones, a vital link in e-
commerce adoption. e) Around half the sample population (51.2 per cent) has access to wireless technology.
This underscores the fact that the e-commerce penetration has still a long way to go in establishing its
dominance presence in the region chosen for the study. f) The size of the farms owned by farmers fall into
three categories of equal share, that is, 33 per cent or small farmers having less than 2.5 acres, 34.2 per cent
are marginal farmers having 2.5 to 5 acres and 32.8 per cent are big farmers having more than 5 acres. g) The
crop (69.7 per cent) being the main farming activity is clearly evident, followed by livestock (21.6 per cent)
and forestry (8.7 per cent) is the third form of activity. Thus the profile of the entire set of farmers under
study is lucidly captured through the above results obtained from frequency analysis.

7.2. To determine the reliability of the scale developed to capture the perception of farmers regarding the
benefits and constraints in usage of Internet information.

To study this objective and determine the reliability of the scale developed to capture the perception of
farmers regarding the benefits and constraints in usage of Internet Information the researcher has deployed
Exploratory Factor Analysis (EFA). The results of the table 1 reveal the following. The reliability statistics,
that is, Cronbach Alpha score of 0.824 ensures the model fitness and the significant results of KMO and
Bartlett’s Test vindicates the accuracy of results obtained through this Exploratory Factor Analysis. The
results of Factor Loading using Rotated Component Matrix depicted in table 2 annexed reinforces the
reliability of the scale used to capture the perception of farmers regarding the benefits and constraints in usage
of Internet information through the high scores of loading happened in component 1, which is named as
’Perception’ and the other component 2, is named as ‘Constraints’. This is shown in Table 3.

Table 1: Results of Reliability Statistics

Cronbach’s Alpha N of Items
.824 16

Table 2: Results of KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .917*
Approx. Chi -Square 4227.458
Bartlett’s Test of Sphericity
Df 120
Sig. .000
*The Kaiser – Meyer – Olkin Measure is 0.917 which confirms that we can proceed for factor analysis.
 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149 145

Table 3: Results of factor loading using rotated Component Matrix

Factors
1 2
Perception Constraints
Decision making .791
Improve collaboration with farmer .787
Coordination .786
Logistics .783
Improve collaboration with supplier .778
Buying and selling .766
Provide information .761
Improve recruitment .739
Customer support .724
Advertising .718
Labour training .697
Cost implementation .796
Obstacles .769
Lack of trust .761
Benefits .752
Infrastructure .735

7.3 To measure the influence of e-commerce usage on farming practices.

To analyse the above said objective the researcher has performed Multiple Regression Analysis. Based on
this objective the following is hypothesized:

HO : There is no significant influence of e-commerce usage on farming practices

HI : There is a significant influence of e-commerce usage on farming practices

The results of this analysis are portrayed in the Table 4. The results of these tables show that regression
predicting the impact of e-commerce usage on farming practices. The results show that the adjusted R²=.37
which means 37 per cent of the variance in the dependent variable is accounted for, by benefits of e-
commerce application. F value (= 7.868) is significant indicating that the regression model is fit. On
examination of the coefficients, it is seen that the item ‘ Labour training’ (ß=.162) is significant at 0.05 level.
Accordingly, H1 is accepted for the above mentioned item and H0 is accepted for the other items.

Table 4: Model Fit of Multiple Regression on predicting the influence of e-commerce usage on
farming practices.
Model R Square Adjusted R Square Std. Error of the
Estimate
1 .46 .37 1.094
146 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149

Table 5: ‘F’ value

Model df F Sig.
Regression 11 7.868 .000a
1 Residual 506
Total 517
a →Significant level is fixed at 0.05

Table 6 : Results of Coefficient of variable

Model Unstandardized Coefficients Standardized Collinearity Statistics
Coefficients

B Std. Error Beta T Sig. Tolerance VIF

(Constant) 2.261 .162 13.950 .000
Buying and -.027 .066 -.025 -.409 .683 .450 2.225
selling
Provide .059 .065 .055 .900 .368 .449 2.227
information
Decision .118 .070 .109 1.671 .095 .398 2.510
making
Improve .039 .062 .037 .629 .530 .479 2.089
recruitment
Labor training .164 .056 .162 2.895 .004 .537 1.861
Customer .079 .062 .072 1.275 .203 .534 1.871
support
Improve .125 .069 .113 1.806 .072 .431 2.321
collaboration
with supplier
Improve -.068 .070 -.062 -.976 .329 .416 2.405
collaboration
with farmer
Coordination .037 .071 .034 .520 .603 .388 2.578
Advertising .049 .063 .043 .771 .441 .539 1.855
Logistics -.072 .068 -.065 -1.067 .286 .450 2.220

7.4 To identify the impact of constraints in adoption on benefits of e-commerce application for farmers.

To analyze the above said objective the researcher has performed multiple regression Analysis. Based on
this objective the following is hypothesized:

H0: There is no significant impact of constraints in adoption on benefits of e-commerce application for
farmers.
H1: There is a significant impact of constraints in adoption on benefits of e-commerce application for farmers.

The results of this analysis are displayed in the Table 4. The results of these tables show that regression
predicting the impact of constraints in adoption on benefits of e-commerce application for farmers. The
results show that the adjusted R² = 0.35 which means 35 per cent of the variance in the dependent variable is
accounted for, by benefits of e-commerce application. F value (= 4.716) is significant indicating that the
regression model is fit. On examination of the coefficients, it is seen that the item’ Obstacles’ (ß = -.119) is
significant at 0.05 level. Accordingly, H1 is accepted for the above mentioned item and H0 is accepted for the
other items. It is evident that because of the obstacles, the farmers are not able to focus on the E-commerce
farming practices. Hence the authorities can focus more on removing the obstacles.
 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149 147

Table 7: Results of R Square

Model R Square Adjusted R Square Std. Error of the Estimate
.44 .35 .80843

Table 8 : Model Fit of Multiple Regression on Predicting the impact of constraints in adoption on benefits of e-commerce
application for farmers.
Model Sum of Squares Df Mean Square F Sig.
Regression 15.412 5 3.082 4.716 .000 ͣ
Residual 334.619 512 .654
Total 350.031 517
a →Significant level is fixed at 0.05

Table 9: Results of co efficient of variables

Variables Standardized Co linearity statistics
Coefficients T Sig
Beta Tolerance VIF
Cost of -.021 -.359 .720 .535 1.870
implementation
Obstacles -.119 -2.048 .041 .557 1.795
Benefits .067 1.251 .212 .641 1.559
Lack of trust -.072 -1.308 .191 .621 1.611

Table 10: Summary of Hypothesis Testing Results

Objectives Hypothesis Testing Methods Results
To measure the influence of Influences of e-commerce Multiple regression analysis Partially supported
e-commerce usage on farming Vs farming practices
practices

To identify the impact of Constraints in e-commerce vs. Multiple regression analysis Supported
constraints in adoption of e- farming practices
commerce application for
farmers

7.5 Implication of the Study

The results obtained through these analyses have thrown intriguing insights in several fronts out of which
a few key insights are presented in this section:
This study discloses that e-commerce practices of farmers in the study area of Trichy district are still at
infant stage. It has been widely used for training purposes of farming practices and periodically hundreds of
farmers are trained. However there is wide gap between knowledge gathered and practicing. The obstacles
and constrains are poor internet connectivity , heavy charges by private internet players , lack of organizations
like Indian Tobacco Company’s e-Choupal program – run by ITC’s Agri business division in North India.
The intention to adopt and use new technology in farming practices will become more popular through
computer education program such as awareness camp, short term courses, and farmers internet club. The
expectation and current level of adoption of internet usage among the respondents create an interesting
linkage with the construct, namely, Technology Acceptance Model (TAM), which has been continuously
148 N. Jamaluddin / Procedia Economics and Finance 7 (2013) 140 – 149

proved right and extendable by many researchers around the globe could be used in this context as well.
Indians rich and poor educated and uneducated have all discovered the magic of mobile and of internet
enabled services. Indians have no problem with technology adoption. They learn very quick. “In India, in
addition to personal or house hold ‘ownership’, there is “regular access though I do not own it” – my cousin
has it / he created my e-mail Id and manages it for me - and there is an amazing amount of access when it is
needed. The myth is that voice is for the poor and data for the rich is demolished”, Rama, 2012. While it is
difficult to directly measure IT contribution because of its hidden and intangible benefits, En Mao & Palvia,
2001, researchers have developed other measures, such as technology acceptance, which directly relates to IT
usage. It is therefore important for the implementers to fully understand the determinants of IT acceptance as
they need to plan effectively for it.
Technology Acceptance Model (TAM), Davis et al., 1989, derived from the Theory of Reasoned Action
(TRA), Fishbein & Ajzen, 1975, offers a powerful explanation for user acceptance and usage behavior of
information technology. Subsequent research by Venkatesh, 1996, refined the TAM suggesting that the
mediating effect of attitude could be excluded as empirical evidence found that the attitude element did not
fully mediate the effect of perceived usefulness on intention to use. The technology acceptance model, Davis,
1989; Davis et al., 1989, provides the conceptual framework for this study. TAM, proposed by Davis in 1989,
has become a widely cited model for predicting and explaining user behavior and IT usage. The origins of
TAM can be traced back to the theory of reasoned action (TRA). The TRA requires that salient beliefs about
attitudes towards a particular behavior can be elicited every time the behavior being studied is displayed. As a
simplification of TRA, the TAM suggests that users' decisions to accept a new information technology are
based on two rational assessments of its expected outcomes: (i) perceived usefulness (PU), defined as user
expectation that using a new information technology could result in improved job performance and (ii)
perceived ease of use (PEOU), defined as the degree to which a person believes that using a particular system
would be effortless, Davis, 1993. In the past decades, PEOU and PU constructs have been considered
important in determining an individual’s acceptance and use of information technology (IT). Information
system (IS) researchers have investigated and replicated these two factors and agreed that they are valid in
predicting individual acceptance of various corporate information technologies.

8. Conclusions

This study has contributions and managerial implications to the information system knowledge base as
well as agricultural sector in India. The rate at which technology innovations like the internet information is
adopted by consumers constitutes an important part of the technology change or integration. There are a
number of studies on adoption of new technology, but only a handful of studies focus on the agricultural
services industry. An understanding of the factors affecting this choice of technology for farming practices is
essential both for the creators and producers of such technology. This study suggests that the Technology
Acceptance Model, which is the basis of much of the research in Information Technology (IT) diffusion, will
be more useful if it is integrated with specific issues like infrastructure, perception and trust on the customer
side and more basic elements of the security aspects of technology and service on the side of the information
providers in respect of Agriculture sector in India.

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