understanding the various hindrance existing in the agriculture produce procurement model before e-Choupals come into existence.

1. ITC’S E-CHOUPAL
Taking E- business to farmers

2. 1910
1971
1975
Incorporated under the
name Imperial Tobacco Company
of India Limited
Entered into the marine
products export business
• Name changed to ITC Ltd.
• Started diversifying into various
businesses

4. • Emerged as one of ITC’s star performer by 2002
• 4 Main categories :
Feed Ingredients-
Soyameal
Aqua Products-
Shrimps, Prawns
Edible Nuts- Sesame
seeds, Groundnuts
Foodgrains- Wheat,
Pulses, Rice, Coffee,
Pepper

6. PROBLEMS ASSOCIATED WITH
TRADITIONAL METHOD
Lack of control over supply chain of agricultural
produce
Lack of Infrastructure
Problem of Middlemen

7. Low
Investment
Low
Productivity
Weak
Market
Orientation
Low Value
Addition
Low Margin
Low Risk
Taking
Ability

8. EMERGENCE OF E-CHOUPAL
Choupal – Village meeting point e - Choupal
The purpose of the e-choupal is to empower farmers with real time information on weather and prices
so that they can insulate themselves from unpredictable climate conditions and price fluctuations.
- Y C Deveshwar , Chairman, ITC, in Dec 2002

9. 1. DISCUSS THE ROLE OF I.T. IN BUILDING A FAST AND EFFICIENT
PROCUREMENT MODEL IN THE LIGHT OF E-CHOUPAL INITIATIVE
AND THE BUSINESS RATIONALE BEHIND THE IDEA
• Elimination of hitches in the information flow
• Get information to the farmers
• Business Model
- Cost effective
- Scalable
- Penetrative
- Reduced dependencies on intermediaries
• ‘Click and Mortar model’

10. • Introduced I.T. tools in the Traditional Model
• Diffusion of Information
• Use of internet for procurement
• Best farming practices
• Transparency
1. DISCUSS THE ROLE OF I.T. IN BUILDING A FAST AND EFFICIENT
PROCUREMENT MODEL IN THE LIGHT OF E-CHOUPAL INITIATIVE
AND THE BUSINESS RATIONALE BEHIND THE IDEA

11. • 2.a. Discuss how ITC went about the implementation
of E – choupal in the villages of INDIA. What were
the difficulties that the company had to face in the
process and how did it overcome them ?

12. VALUE CHAIN ( AGRIBUSINESS )
• Farmers
• Small Traders
• Large Traders
• Commission Agents
• Processors
• Retailers
• Consumers

13. DIFFICULTIES AND SOLUTIONS
2. Flow of Information
• Collecting the produce
• Taking care of logistics
• Providing transportation
1. Intermediaries
“Intermediaries has greater information and thus extract higher margin”
• Weather Report
• Mandi Prices

14. IMPLEMENTATION OF E-CHOUPAL
• E-choupal • PC
• Internet connectivity
• Soya Processing centers
• Collection centers

15. IMPLEMENTATION OF E-CHOUPAL
• “Sanchalak” ( Convener) Roles of “Sanchalak”
• Dynamic information
• Mandi prices
• Weather reports
• Global prices
• PCR testing
• Static information
• Best farming practices
• Soil information

16. DIFFICULTIES AND SOLUTIONS
3. Selection of “Sanchalak” • Big Farmers
• Small Farmer
• Person of Reasonable stature
• Appointment by public oath
ceremony
• Operating cost:
• Electricity
• Internet charges
• Rs. 2900 to Rs. 7600 p.a./ unit
• Fixed cost:
• Cost of equipment
• Miscellaeous travelling
expences
• Maintenance equipment
• Training cost
• Rs. 4800 p.a./ unit
0.5% of procurement price for
each ton of soya procured

17. DIFFICULTIES AND SOLUTIONS
4. Commission agents
DIFFICULTIES AND SOLUTIONS
Role of “Sanyojak” (Coordinators)
• Documentations of relevant information from mandis.
• Collecting produces from villages that were located far from
Processing centers & collection center.
• Arranging transportation.
• Helped in selection of “Sanchalak”.
1% of procurement price for
each ton of soya sold to ITC

18. DIFFICULTIES AND SOLUTIONS
5. Outdated Telephone Exchange
DIFFICULTIES AND SOLUTIONS
• Upgraded the telephone lines
• RNS kits ( Rural Automatic exchange – RAX Synchronization )
• VSAT bypassing the telephone lines

19. DIFFICULTIES AND SOLUTIONS
6. Sporadic Electricity Supply
DIFFICULTIES AND SOLUTIONS
• Use of backup batteries
• Which could be charged with solar panels.
7. Bandwidth Problem
• Specially devised Technical solutions to manage
• Data with
• New imaging Technique.

20. DIFFICULTIES AND SOLUTIONS
8. Problem of Illiteracy and Unfamiliarity with Computers & internet
DIFFICULTIES AND SOLUTIONS
• Training given to sanchalaks and sanyojaks
• Information were made available in local languages
• Help by Sanchalaks
• Use of videos

21. DIFFICULTIES AND SOLUTIONS
9. Government Regulatory Problems
DIFFICULTIES AND SOLUTIONS
• Explaining Benefits of the project to the farmers
• Explaining how the act was impeding the growth of a free
market system, direct marketing and competition.
Agricultural produce Marketing committee Act(APMC Act)

22. RESULTS
• Farmers could deliver Directly to Collection center.
• Reduction in Transaction Time.
• Reduction in total cost of procurement by Rs. 500 per ton
(to Rs. 200)

23. RESULTS
• Procurement transaction costs reduced from the industry
standard of 8%
• Farmers incurred 3% and
• The processor incurred 5%
• To 2%
• Farmers saved all his 3% and
• The processors (ITC) – saved 3%

24. RESULTS
•Higher margin to farmers.
•More number of farmers started coming to the
center.

25. • By the end of 2002
• 976-E-choupals spread in 7000 villages in Madhya
Pradesh
• Covered 0.6 million farmers
• ITC traded Soyabean worth Rs. 1.6 Billion
RESULTS

26. EXPANSION
• ITC implemented the same concept in Karnataka, Andhra
Pradesh, Uttar Pradesh.
• Launched a website “Plantersnet” to deal with coffee
farmers in Karnataka.
• Positioned the website as single source of knowledge.
• Company also developed E-Trading platform with special
features.
• ITC setup 75 kiosks to cover 6000 coffee farmers in 125
villages.

27. EXPANSION
• Launching of “Aquachoupal” in Andhra Pradesh in 2001.
• ITC launched 55 kiosks covering 10000 shrimp farmers in
more than 300 villages.
• In November 2001, ITC started its E-Choupal in Uttar Pradesh.
• ITC opened 180 kiosks covering 3,75,000 farmers in more
than 1500 villages.
• Made use of its Cigarette Distribution channel.

28. •2b. In your opinion what were the factors that
contributed to the success of E – choupal ?

29. FACTORS CONTRIBUTING TO THE
SUCCESS OF E-CHOUPALS
• Designing marketing plan for all stakeholders
• Designing a Win-Win transaction model
• Avoiding channel conflicts by finding space for the intermediaries
• Selection of intermediaries
ITC
E-
COUPAL
Farmers
Intermediaries
GovernmentCommunity
Customers

30. •3a. Discuss how e-choupals can be used
as distribution superhighways for products
other than agricultural commodities?
Critically comment on ITC’s decision to
limit the e-choupals to India for the time
being.

31. • Kiosks were used for reverse trading by companies like BASF
and Monsanto
• In late 2002 ITC leveraged choupals distribution system to
sell FMCG goods
• They also started selling life insurance policies through e-
choupal network
• The e-choupal network serves as back end source for raw
materials that go into ITC’s personal care products and
packaged foods

32. • Today ITC internally evaluates its e-Choupal capabilities
before foraying into any new category with a differentiated
offering.
• Today, more than 160 companies ride on the e-Choupal
network including Bayer, BASF, State Bank of India,Bharat
Petroleum, Nokia, TVS Motors, Maruti Suzuki India, Tata
Motors and Monster.com.
• Use of E-choupal as medium for advertising.

33. • Q3.b. What do you think the future has in store for the
E-Choupals considering the failure of initiatives
undertaken by companies such as Mahindra &
Mahindra, Rallis?

34. • One stop shop for agricultural products like seeds,
Fertilizers and extension services for farmers
• Shubhlabh venture - M&M

35. REASONS FOR FAILURE
• No trust between farmers & intermediaries
• High Fixed Cost & variable cost
• Not enough knowledge on procurement
• Lack of information & knowledge among workforce

36. FUTURE OF E-CHOUPALS
• Plans to expand at rate of 3-4 choupals a day & establish choupals covering
100000 villages in 11 more states (approximately 1/6th of rural India)
• Expansion into other crops (like spices) besides the ones covered till now
• Expansion in other developing countries