Case study on

e-choupal

By
Group 4
Introduction
India is the second most populated country in the world.

Agriculture is the backbone of Indian economy.

It contributes around 17.1% of total GDP (2017-18)

Agriculture provides livelihood to about 58% of India’s population

and accounts for 13% of India’s export.(July 2019)
E- choupal Versions
Version 1.0
• The Start
• IDEA: To give power of scale to small farmers by aggregating them as
sellers (of produce) and as buyers (of farm inputs)
• FARMERS' GAIN: They get bargain and choice - the two key virtues of
competition
• ITC'S GAIN: Access to inputs for its agri business; offer the use of
network to other companies
Version 2.0
• The Scale-up
• REACH: By 2006, 40,000 villages covering 4 million farmers
• OFFERING: Network now offered five services
oInformation: weather, price, etc.
oKnowledge: farming methods, soil testing, etc.
oPurchase: Seed, fertiliser...to insurance
oSales: Farmers sell crops to ITC centres
oOther: Cattle care, water harvesting, women employment etc
Version 3.0
• The Deepening
• NEW BUSINESSES: Add two new anchor businesses:
1) Rural jobs and employability and 2) Personalised agri services. Plus
strengthen existing commodity sourcing
• MORE INTERACTION: Through Choupal Saagars and Haats and via
mobile phones
• NEW TECHNOLOGY: Use of especially enabled mobile phones, in
addition to PCs, for two-way interaction with farmers; use of
analytics; new partners
Version 4.0
• a new model for expansion of the e-Choupal network with lower
bandwidth costs and increasing smartphone penetration.
• The desktop-based e-Choupal will become mobile assisted
services with a very different cost structure.(Plug and Play
services)
• In its fourth generation, the e-Choupal will assume the role of an
‘Aggregator of Agricultural Services’ and offer a bouquet of farm
focused services in areas including crop management,
farm mechanisation, healthcare, banking and insurance.
ITC’s 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 relate better market price for their
produce.
• It is referred to the business model that deliberately target the
poorest socio-economic group constituting large part of community,
using new technology
• Launched by the Agri Business division of ITC in June 2000.
• One of the largest initiative among all Internet based interventions in rural
India.
• E-choupal services today reach to over 4million farmers growing a range of
crops- soyabean, coffee, wheat, rice, pulses, shrimp.
• Over 40000 villages through 6500 kiosks across 10 states. Madhya Pradesh,
Haryana, Uttarakhand, Uttar Pradesh, Rajasthan, Karnataka, Kerala,
Maharashtra, Andhra Pradesh and Tamil Nadu.
• "Out of the 10 lakh aggregate beneficiaries, incomes of around 34,000
farmers have doubled (107 per cent growth) by adopting all the practices
and recommended inputs. Balance farmer's income has also shown an
income increase of 30 per cent to 75 per cent, depending on adoption of
various recommended practices. It was found that the farmers are happy
with the interventions by ITC as their yield and income has increased
considerably, post ITC's intervention", the company claims.
1. What is the innovative planning strategy
followed by E-choupal?
• An initiative by ITC to link directly with rural farmers via the internet
for procurement of agricultural & aqua cultural products.
• The program involves the installation of computers with internet
access in the rural areas of India to offer farmers up-to-date
marketing and agricultural information.
• ITC provides infrastructure and connectivity at the e-Choupal centres,
each of which services 4-5 villages.
• At the centre, farmers can access a web portal with current market
rates from a wide range of procurement centres, including mandis
and ITC procurement hubs. An ITC procurement hub is set up for
every 20-30 km radius, servicing about 30-40 centres
• Farmers use the services of the sanchalak (the centre operator) to
find the price their produce can fetch at different places, via the
computer.
• Using this information, they are ‘empowered’ to make an informed
decision on when and at which procurement centre to sell their
produce for maximum profit.
• Additionally, e-Choupal supports best practices in farming through
training sessions, provides information on weather conditions, and
supplies quality agricultural inputs like seeds and fertilisers.
• e-Choupal tackles the challenges posed by Indian agriculture,
characterized by fragmented farms, weak infrastructure and the
involvement of intermediaries.
• Comprehensive knowledge of rural market:- Rural markets are both economic and
social networks and there is a strong connection between the operation of social and
economic transactions
• Designing a Win-Win transaction model: The success of e-Choupal comes from the
condition in which both the farmer and the processor share the benefits coming out of
the elimination of middle men and hence due to timely information availability.
• Leveraging the logistics channels: The existing logistics of the rural markets are
leveraged but they are not able to exploit the information asymmetry
• Selection of Sanchalak : ITC used a trial and error method for developing the procedure
for selecting Sanchalaks . Sanchalak thus, acts as the coordinator of the knowledge
community, and a representative of farming community.
• Evolving an appropriate user interface: The Technology interface used in rural areas has
to be very simple.
• Bottom-up model for entrepreneurship: e-Choupal encourages enormous amount of
creativity at the local level along with local entrepreneurship stimulation. The farmer and
Sanchalak are free to use the e-choupal and develop new uses.
2.DECISION IN MARKETING BEFORE E-
CHOUPAL
• Traditionally, these commodities were procured in “mandis” (major
agricultural marketing centers in rural areas of India), where the
middleman used to make most of the profit.
• These middlemen used unscientific and sometimes outright unfair
means to judge the quality of the product to set the price.
• Difference in price for good quality and inferior quality was less, and
hence there was no incentive for the farmers to invest and produce
good quality output
3.Address the Whole, Not Just One Part
• The farmers various activities range from procuring inputs to selling
produce.
• Currently the village trader services the spectrum of farmers needs.
• village trader is a centralized provider of cash, seed, fertilizer,
pesticides and also the only marketing channel.
• The transaction link reduce the farmers overall cost in the short term,
but create a cycle of exploitative dependency in the long-term.
• Rural development efforts have focused only on individual pieces
rather than what the entire community needs.
Two competitive benefits;
1. First his intimate knowledge of the farmer and village dynamics
allow him to accurately assess and manage risk.
2. Second village trader reduces overall transaction costs by
aggregating services.
• To provide credit for a agricultural inputs in rural banks and mandis
create a better marketing channel. These efforts cannot compete
against the traders.
• Functioning as a viable procurement alternative therefore must
eventually address a range of needs not just the marketing channel.
Can other organization follow ITC’strategy?
E - choupal: Strategic Thrust
Procurement:
• cost & quality optimisation
• sourcing support to the Foods business
• cost-effective sourcing for exports/domestic external business .
Rural Distribution
• ‘last mile connectivity’
• diverse range of goods/services to the rural consumers
Financial Services
• insurance (focus: weather)
• credit (focus: Kisan credit card scheme)
Rural retail
• 23 Choupal Saagars operational.
Can other organizations follow itc strategy ?

NO
Drawbacks of e-choupal
• Power unavailability in Rural India.
• Poor Telecommunication Infrastructure.
• Lack of proper roads, limiting vehicle access.
• Aggressive influence of Mandi traders.
• Demand for Unwarranted additional payments by the Sanchalaks.
• Competitors attempt to divert produce from farmers.
• Political influence in villages.
• the model is not expanded throughout the country .
• Only few crops are involved in this model .
• why not fruits involved in this model .
• While pricing .
• technology , knowledge of using e-choupal
5.SOCIAL IMPACT OF E-CHOUPAL
Thank you