ITC is one of India’s leading private companies, with annual revenues of US$ 7 billion and 29,000 employees. It is active in fast moving consumer goods, hotels, paper and packaging, agribusiness, and information technology. In India, more than 50% of the population work in the agricultural sector, which accounts for 14% of the country’s Gross Domestic Product. The sector is relatively underperforming with fragmented farms, inefficient practices, and poor infrastructure undermining quality and keeping costs high.
ITC’s e-Choupal program – run by ITC’s Agri Business Division – has set up internet access kiosks in rural areas to enable farmers to retrieve marketing and agricultural information. This in turn helps them take better decisions and potentially increase their income by better aligning farm output to market demands.
ITC e-Choupal builds on three elements: an internet-enabled computer located at a “focal point farmer,” an internet connection via phone lines or a very-small aperture terminal (VSAT), and dedicated services through the echoupal.com portal. Each internet connection serves 10 villages in a 5km radius, reaching 600 farmers on average. The portal provides a secure platform using IDs and passwords. Farmers can access information on farming best practices, market prices home and abroad, weather forecasts, news, and a Q&A section which enables interaction with ITC’s agricultural experts. This digital network is backed by ITC’s large scale agri extension services in farm practices, watershed development as well as non-farm rural livelihood programs such as livestock development.
In addition to providing farmers with access to more accurate market information, the portal enables them to manage risks, such as soil contamination or salinity, through access to technical information. This creates a direct marketing channel for farmers, reducing their transaction costs and improving logistics. Finally, it provides the link to Choupal Saagars, integrated rural service centers serving 40 e-Choupals each, where farmers can bring their farm produce to sell, and buy seeds, fertilizer, farming supplies, and consumer goods.
Each ITC e-Choupal requires between US$ 3,000 and US$ 6,000 to be set up and approximately US$ 100 per year to be maintained. The system is free for farmers to use but the “focal point farmer” incurs operating costs and has an obligation to serve the entire community. In turn, the host farmer benefits from the prestige of the role and receives a commission for transactions through the ITC e-Choupal.
The ITC e-Choupals not only serve as a social gathering place facilitating information exchange, but also as an e-commerce hub collecting village orders, hence cutting down transaction fees from intermediaries when buying or selling goods and reducing logistics costs. Started as a project to re-engineer the procurement process for agricultural products and raise farmer incomes, the initiative has become a highly profitable distribution and product design channel tailored to the needs of rural India.
Over the last 12 years, ITC has set up about 6,500 access points, benefitting 4 million farmers. The continuing innovation in ITC e-Choupal in its version 3.0 is expected to benefit more than 10 million farmers through integrated use of mobile phones for more personalized services. ITC is also partnering with banks to offer farmers access to credit, insurance and other services. Furthermore, farmers are beginning to suggest – and in some cases, demand – that ITC supply new products or services or offer additional crops, such as onions and potatoes. Farmers are thus becoming a partner in product innovation for ITC.
WBCSD issue brief on “Information and Communication Technology – An enabler for inclusive business solutions
The above ITC case study is part of an issue brief published in August 2012 by the World Business Council for Sustainable Development (WBCSD). Titled Information and Communication Technology – An enabler for inclusive business solutions, the report looks at the opportunities for ICT to facilitate and scale the private sector’s contribution to development. It displays best practice cases, and highlights opportunities for and barriers to achieving further scale.
Videos on ITC’s e-Choupal program
Check out this video (part 1 and part 2) to see how ITC’s e-Choupal program works in practice.