ITC launched its e-Choupal initiative in 2000 to address inefficiencies in the Indian agricultural supply chain and empower farmers. The initiative set up internet kiosks in rural villages, operated by local farmers, to provide farmers with information on weather, prices and best farming practices. This helped farmers increase yields and sell directly to ITC, eliminating middlemen. The e-Choupal initiative has been highly successful in improving farmers' incomes, agricultural productivity and rural development.

1. ITCe-Choupalobjectivesand achievements
Aim:-
Aim of this document is to list out the achievements of ITC’s initiative e-Choupal
and their achievements both in terms of economic development and Social
reforms (CSR). Herein this document we are not going to talk much about the
work flow of e-choupal.
Introduction:-
To be precise the objective of ITCis to make India a strong competitor in
agricultural products exports. But the scenario before 2000 is completely different
(which will be explained clearly in the later sections). ITCthoughtthat the change
can be broughtonly be reorganizing the supply chain. This is the way in which ITC
came out with win-win-win policy (I.e. by reorganizing the supply chain).
ITC Limited:-
Before explaining about ITC’s new initiative it’s important to explain about ITC’s
background. Indian Tobacco Company Limited (ITC) incorporated in August1910,
now ITC was/is one of the largest private companies in India with a market
capitalization of US $45 billion and turnover of US $ 7 million dollar1
by December
2013. ITCis rated among the world’s BestBig companies and Asia’s Fab 50
according to Forbes magazine. Today ITCranks among India’s thetop 10 Most
valuable Brands in a study conducted by Brand Finance and Published by
Economic Times2
.
ITC has extended its presence in different sectors like FMCG’s, Hotels, Paper
boards and special papers, packing, Agri-business and Information Technology.
1. http://www.itcportal.com/about-itc/profile/index.aspx
2. ITC’s Profile http://www.itcportal.com/about-itc/profile/index.aspx

2. ITC’s IBD:-
ITC’s IBD was formed in 1990 to export the best of India’s produceand become
the mostpreferred chain supply of aqua and agricultural products in International
markets3
. IBD contributed to more than 60% of the company’s total foreign
exchange earnings4
. The main commodities exported werefeed ingredients, food
grains, coffee, edible nuts and processed fruits5
.
Though the figures here seems to be amazing the bitter truth is that, until 1998
IBD contribution to ITC’s annualturnover of US $1.9 billion is justUS $ 112
million5
. In spite of high demand in Internationaland domestic market for Indian
agricultural producethey wereunable to cash this opportunity.
External effects on IBD:-
Adding to the existing situations the Indian government regulation of Agriculture
ProduceMarketing Committee (APMC) over supply chain acted as barriers for the
growth of ITC’s IBD. According to this APMCact which was enacted in 1960 any
private agriculturalcompanies could only buy agricultural products only through
mandis and registered commission agents6
.
Operating in this kind of cycle benefited none apartfrom middleman who are
acting as intermediaries between farmers and Industries. Lack of infrastructure,
inefficient ways to determine price of Agriculturalproduce, Lack of storage
facilities, Procurementproblems were the add-on’s to the middleman who are
constantly abusing their position.
3. For detailed description visit http://www.itcibd.com/faq.asp
4. For more details refer THE E-CHOUPAL INITIATIVE CASE by Darden Business Publishing,
University of Virginia.
5. Upton, David M. and Fuller, Virginia A. (2004) “The ITC E-CHOUPAL Initiative”, Harvard
Business School, Case No. 9-604-016.
6. “ITC E-CHOUPAL CSR IN RURAL INDIA Asia Case Research Center” The University Of Hong
Kong, Case No. 617.783.7860.

3. This is the situation of Indian agribusiness and Industries likeITC, and backbone
of Indian economy farmer werecaught in this vicious cycle. These actions by
middleman gave no motivation to the farmers to producemore quantity and
increase quality in their produces.
Indian Agriculture background:-
“Agriculture is the backbone of India” This statement looks to be true as it
contributes to 23% of the Indian GDP (Gross Domestic Product) with 65% of
the population employing in this field7
. Though the contribution of
agriculture to the Indian economy is constantly decreasing, still it has the
highest contribution.
Fromthe moment India got independence, governmentis trying to increase
the Agriculture producein order to achieve the food self-sufficiency. During
1940-mid 1960’s they tried to achieve this by increasing the farm land. But
the major development occurred only during and after the introduction of
Green Revolution in 1960’s8
.
Though green revolutionis a successwithseveralpositiveresults,there were
several drawbacks with the working model of Green Revolution, as there is
increase in profitability the land values rose, leading poor farmers and
tenants to stay out of this. Also the new introduced technologies were
expensive which forced poor farmers to continue old farming methods
leading to the less profits. With an increase in mechanization there was an
increase in unemployment which made unemployed people to migrate to
cities causing rural problems9
.
Thought the employment is still high in agriculture sector there was steady
decline in the agricultures contribution to the Indian GDP. By 1990 rural
pollution grew up to 72%10
indicating lesser amount of land available per
individual. Also there is decrease in agricultures contribution to indian
economy at an alarming rate. In 1990-1991 agriculturerepresented 32% of
7. Kothari, 1992,1994; Sehgl et al..1992; Ramakrishnan. 1992.
8. “Green Revolution” was not specific to India, still it is considered as most successful in
India.
9. India’s green revolution: Success, Failures and second green revolution
http://rashidfaridi.com/2010/07/11/indias-green-revolutionsuccesses-and-failures/

4. 10. “Agriculture census,” Indian ministry of agriculture, http://agcensus.nic.in/
the Indian GDP, whereas in 2012-2013 ithas reached to 13.7%11
. Therewas a
boom in non-agriculturesector during 1990’s. Agriculturehas notresponded to
the accelerated growth of the national economy. During this time agricultureand
farmers wereexcluded fromthe country’s mainstream. The picture of Indian
farmers can be well explained by the fact that in 2003 alone17,107 farmers
committed sucide13
. There were severalother factors which added burden to the
Indian agricultures producelike poor irrigation facilities, involvement of
intermediaries in all the process, failureto get proper price to the produce of
farmer, marginalfarmers (87% of the marginal farmers in India owns less than 2
hectares and more than 70% of the Indian farmers haveno access to credit from
proper financial institute14
).
All the factors contributed to the low agriculture production in India. The stake-
holders like farmers and ITCwere caughtin this vicious cycle. There was an urgent
need to reformthe agriculture methods and rural India to engage with marginal
farmers and create a new cycle for farmto factory. Also there is a need to provide
new technical methods which farmers can follow and develop their agriculture
produce(Both in quality and quantity)
Birth of ITC e-Choupal:-
As mentioned earlier, both ITCand Indian farmers caughtin this vicious cycle.
ITC’s IBD is notable to compete in the international markets and unable to face
the challenges (in terms of exports fromthe countries like Brazilian and US
producers. ITCrealized that the key to increaseits value in international market is
11. Agriculure share in Indian GDP http://articles.economictimes.indiatimes.com/2013-08-
30/news/41618996_1_gdp-foodgrains-allied-sectors
12. India 1960-2010: Structural Change, the rural non-farm Sector and the prospects for
agriculture. By Hans P. Binswanger, University of California, Berkeley.
13. Somini Sengupta, “On India’s Farms, a plague of Suicide,” New york Times, September 19,
2006. http://www.nytimes.com/2006/09/19/world/asia/19india.html?pagewanted=all&_r=0
14. http://online.wsj.com/news/articles/SB119368022861275103

5. linked to the reforming the entire supply chain. Here is an opportunity to ITCto
come out with a win-win-win model which could supportfarmers and
motivatethem to producebetter products. So, by amending the barriers in APMC
act (mentioned in External effects onIBD)
ITC setup its firste-choupal in masord village Madhya Pradesh in June 2000. E-
Choupal is a business conceptembedded with social goals.
ITC started e-choupalwith objectives15
 To enhance the competitiveness of Indian agriculture.
 To decrease the information gap between the farmers and technical
methods which can be employed to increase productivity.
 To leverage the power of Information and Digital technology and the
internet to empower the small and marginal farmers.
 To make surethat farmers and up to date with the weather information,
best practices that can be followed tin farming, international marketprice
for the farmer products
Through this choupalinitiative Siva Kumar and his team is empowering the
farmers with transparentinformation there by increasing efficiency in farming
methods.
Brief introduction about e-choupal working model:-
The word “Choupal” in Hindi means “The meeting place in villages.” ITCwantto
continue that traditional system. Initially e-choupal started with an Internet kiosk
installed at farmer house. This farmer’s houseacts as an information sourceto all
the nearby farmers (approximately 600). This internet kiosk provides information
about the weather forecasts, seed and fertilizers information and best farming
methods. Each village is equipped with this facility at sanchalak (Sanchalak is the
person who is acting as bridebetween ITCand farmers) house. Sanchalak house
is equipped with Computer, Printer, dial-up modem or VSATmodem and solar
battery charger(To ensurethat the computer is available consistently)
15. http://www.itcportal.com/sustainability/embedding-sustainability-in-business.aspx

6. After harvesting the crop if farmer approaches
sanchalak, the later will give the farmer updates about the current and future
price for the farmers produce(based on the international marketprices). If the
farmer chooses to sell his grain at ITChub, he gets his payment immediately for
his grain and transportation/procurement16
.
Though ITCinitially started with soybean procurementchain, later e-choupal
widened itself into other agriproducts like wheat. Observing themore production
of quantity in Horticulture and marine products compared to the wheat and soya,
e-choupal themselves widened into these sectors also17
.
Advantages/Achievements of ITC:-
(Both economic and social)
Eliminationof Middleman:-
With the elimination non-value-added middleman ITChas completely changed
the farm-factory chain (Exhibit-1). By eliminating the intermediaries ITC
succeeded in leaving profits in farmer’s hands. Directinteraction of ITCwith
farmers enabled them to controlthe quality of agriculturalproduces. With the
help of e-choupal farmers areable to save50% of the transportcharges18
(Exhibit-
2). Now e-choupalgave farmers a choice to choosein between mandi and e-
choupal. The paying of premium motivated farmers to producehigh quality
produces. As a resultof e-choupal they were able to know the price of their
produces inside and outside India.
16. “Internet brings prosperity to farmers” IBN live http://ibnlive.in.com/news//internet-brings-
prosperity-for-farmers/34299-7.html.
17. “ITC e-choupal project to focus on food and retail” Economic Times
http://articles.economictimes.indiatimes.com/2007-10-05/news/27690410_1_itc-e-chaupal-
project-sourcing.
18. http://articles.economictimes.indiatimes.com/2007-10-05/news/27690410_1_itc-e-
chaupal-project-sourcing.

7. Better farm practices:-
Using the technology provided by ITCat sanchalak in
every village helped farmers to know the best practices that could be adopted by
themselves to improvethe farmproduce. Also the choupal (Traditional meetings
in villages) helped villagers to shareknowledgeabout the best farming methods
that could be followed. They were able to raise awareness abouthow things were
done in other parts of world.