Articles

e-Choupal Stimulates Agricultural Growth With Technology

The computer is linked to the Internet via phone lines or, increasingly, by a VSAT connection, and serves an average of 600 farmers in 10 surrounding villages.

by / May 26, 2010
Previous Next

The village of Baseri, near the Indian city of Agra (famous for the Taj Mahal) seems hardly the setting for a technological revolution. Inhabited by generations of farmers, Baseri has seen little of the rural development witnessed by many other regions in India. Yet each day, Ajay Singh, a farmer living in Baseri, scours the "world of earnings" (Rozgar Duniya) jobs-for-youth website, and sends mobile alerts to young villagers, who then come to his Internet kiosk to apply. "Once selected," said Singh, "they get a call letter alert also on their mobile; this is of great help since the candidates don't have to continuously check the website."

Started in 2000 e-Choupal is a rural networking initiative of ITC Ltd., a large business conglomerate in India. Derived from the Hindi word "Choupal," which literally means "rural meeting place," e-Choupal provides computers with Internet access in rural areas to directly link the farmers with the company for sourcing farm produce and providing farmers up-to-date agricultural information.

"It was created on the basis of a market-based business model where the farmer did not need to pay for accessing information and knowledge," said S. Sivakumar, ICT's chief executive of agribusinesses, who crafted the e-Choupal concept.

e-Choupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries. The intermediaries were, in fact, the biggest concern of the archaic supply chain of the country's agricultural sector because they often deprived farmers of correct market prices in order to get a bigger margin for themselves.

"This system still exists in many parts of the country which is one reason why Indian farmers continue to live below the poverty line," said Sivakumar. e-Choupal begins with a computer, typically housed in the residence of the farmer who has agreed to become a host and is called a Sanchalak, The computer is linked to the Internet via phone lines or, increasingly, by a VSAT connection, and serves an average of 600 farmers in 10 surrounding villages within about a five-kilometer radius.

Each e-Choupal costs between US$3,000 and $6,000 to set up, which is usually borne by ITC, while the $100 yearly running cost is borne by the Sanchalak. For this, the Sanchalak's return is a commission for all e-Choupal transactions and the social recognition. The Sanchalak is also obligated by a public oath to serve the entire community and provide free access to the farmers the e-Choupal kiosk serves.

The farmers in turn use this infrastructure to access daily closing prices of their produce on local markets as well as to track global price trends or gather information about new farming techniques. e-Choupal has an e-commerce model built in as well that is used for procuring farming inputs, and even consumer products from ITC or its partners, at prices lower than those available from village traders.

In the setup, the Sanchalak typically functions as an aggregator, who gathers the information on the availability of the community's harvest and conveys it to the company.
On harvest, a farmer has the option to sell it directly to ITC at the previous day's closing price. Unlike the traditional system, it is also the farmer's responsibility to deliver the harvest at an ITC processing center, where the crop is weighed electronically and assessed for quality.

Moreover, in contrast to the traditional -- where the middlemen pays after as much as three month's delay -- the farmer is paid directly and instantly by ITC. "The biggest contribution of this concept is that using ICT, e-Choupal brought price discovery to the farmer," said Sivakumar. "This not only empowered with knowledge of correct market prices,

but also on where to market the harvest -- an ITC hub or the nearby local wholesale markets."

According to Sivakumar, e-Choupal has helped transform the traditional, low-value agricultural marketplace into an open arena, enabling more people to participate and succeed in the rural economy. According to ITC, e-Choupal has reached out to over 4 million farmers in over 40,000 villages through 6,500 kiosks across 10 Indian States since its inception. While the farmers benefited through enhanced farm productivity and higher farm prices, the company also benefited from lower cost of procurement (despite offering better prices to the farmer), and eliminating costs in the supply chain that do not add value.

The latest version also provides employment opportunities to rural youths and has helped fill 1,200 job openings from 52 companies. But Version 3 has gone beyond just helping rural India to reduce its pressure on land. "e-Choupal's next goal is to try and insulate Indian farmers from the country's still government-supported farm sector," says Sivakumar. Although the farm sector contributes 23 percent of the country's economy, feeding 1.2 billion people, and employing 66 per cent of the country's workforce, its functioning methods are still archaic.

Heavy government intervention in most aspects including control of land ownership, input pricing, and regulated marketing opportunities with the government as the largest buyer have ensured that the sector has advanced little in the last six decades.

Under the new version, ITC plans to address the sustainability angle of the Indian agricultural sector by promoting the practice of green farming. "The company is now pushing farmers to adopt organic farming with maximum efficiency in terms of use of water, fuel and power, as well as reducing of greenhouse gas emissions," says Sivakumar. "This would entail personalized crop management advisory services to individual farmers, for which we are taking e-Choupal beyond computers and Internet to integrating the system with mobile phones."

To integrate mobile phones with sophisticated analytics ITC has roped in Nokia, which through its Life Tools will offer relevant, personalized agri-services to enhance the potential for sustainable livelihood creation and improving the quality of life of Indian farmers. "Following full implementation of Version 3 (expected within a year), e-Choupal is expected to reach to 16 million more farmers within its existing network," says Sivakumar.

Indrajit Basu is the International Correspondent for Digital Communities, and writes the International Beat Blog.