INDIAN TOBACCO COMPANY Founded in 1910 Turnover - Rs 7.5 billion (US$162 million) Market capitalization - US$4 billion Annual revenues - US$2 billion Its activities span tobacco and cigarettes, paper and packaging, paperboard, hotels and tourism, information technology, and agricultural exports. For its agri-export division, ITC procures various agricultural commodities such as soybeans, coffee, and oil seeds.
CHALLENGES Intermediaries – mandi High procurement costs for ITC and in lost profit opportunities for the farmers. Long supply chain - very time-consuming system, results in deterioration in the quality of the products.
E-Choupal June 2000 Investment – 40000 to 100000 rupees (1000 – 3000 $) Cost Split Training and commission to the Sanchalak Largest internet based initiative - 1,300 choupals, linking 7,500 villages, and serving almost 1 million farmers – MP, UP, AP, Karnataka Info provided crop prices weather, scientific farming practices farmer peer groups soil-testing services. This online information is made available in Hindi. How the system works? – Transportation cost reimbursed
Other Parties Involved Meteorological departments Fertilizer companies Seed companies Insurance companies ITC, which exports US$140 million worth of agricultural commodities, sourced US$15 million worth of commodities from e-choupals in 2001. The substantial quantity (120,000 metric tons of various commodities) already procured through this channel has resulted in overall savings of more than US$1 million. These savings are shared between ITC and the farmers. . Their savings have been estimated at Rs 400 to Rs 500 (US$8 to US$10) per ton of soybeans.
Advantages ITC’ssupply chain efficiency Supply security Farmers’ empowerment – lower costs, better prices, less wastage Brokers also taken into fold in the e- choupal system Effective in short term
Challenges to E-Choupal Training costs Legal Issues -The Agricultural Produce Marketing Committee Act (APMC Act), The Essential Commodities Act, Infrastructure Content and regular updates Unionization Because of multiple variables that affect productivity, a long-term assessment of the system’s productivity and efficiency levels needs to be undertaken
KEY TAKEAWAYS Efficiency and transparency Real time data – no time lag Trusting and empowering your suppliers Reduction in number of intermediaries – better profits Mutual benefit to all Information Inclusion/participation Accountability Local organizational capability
REFERNCESFigures Courtesy:Support for this digital dividend “What works” casestudy provided by: the microenterprisedevelopment division of the United States Agencyfor International Development (USAID), through theseep networks practitioner learning program