e-Choupal – The 2 nd Green Revolution

 India is second most populated country in the world. Agriculture is the backbone of Indian economy.  It contributes around 26% of the total GDP. It provides livelihood to about 65% of labour force and accounts for 8.56% of India’s Export.  The 1 st green revolution implemented through state planning and public institutions such as co-operative banks couldn’t bring the desired results.  Congress led UPA governments focus on public- private partnerships the engine of future growth in agriculture sector which can be termed as 2 nd green revolution.  Pepsi India, Monsanto, Tata Rallis,MahindraShubh Labh, Hindustan Lever, and many others, are eager partners in the government’s strong focus on agricultural business. I NTRODUCTION

C ONTRACT F ARMING  In Contract Farming farmer and the private companies get into the agreement.  Under this agreement farmer grows selected crops with buyback agreement with the company for the crop.  In turn company provides capital, superior input, technological guidance and occasional crop supervision which results in high yield for the farmers.  There are few success stories on contract farming such as Pepsico India in respect of potato, tomato, groundnut and chili in Punjab, Safflower in Madhya Pradesh, oil palm in Andhra Pradesh, NDDB & Amul for Milk procurement.

S IVAKUMAR S URAMPUDI, D IVISIONAL CEO OF ITC A GRI B USINESS & E -C HOUPAL A RCHITECT  ITC, among a handful of public Indian companies to adopt the ambitious e-Choupal initiative in 2000 with the dual goal of empowering Indian farmers and creating a unique source of competitive advantage in agro-sourcing for the company.

E-C HOUPAL  ITC took the initiative by innovating e–choupal model. This model is a major sourcing base for company's packaged food & FMCG biz.  Choupal is a hindi word which means a village meeting place, and “E” here stands for electronic so it is a village meeting place on a electronic platform.  It’s a unique hub-and-spoke intervention model that is causing a disruption of the trader-mandi- farmer dynamic.

C ONVENTIONAL MODEL

Sanchalak Information Information to Farmer Input Output Sell Output Kiosks e-Choupal Working Model Sanyojak

T HE P RIVILEGED A SSETS OF e-Choupal 1. ITC Infrastructure: a. Computer b. Internet c. VSAT d. Power Backup : Solar Cells and UPS 2. Physical Reach: a. Choupals within walking distance b. Multipurpose WH hubs within tractor able distance 3. Key Intermediaries: a. Sanchalak (1 per cluster of 5-6 villages) b. Sanyojak (1 per group of choupals)

W ORKING OF S ANCHALAK & S ANYOJAK  Crucial to the success of the e-Choupal model is the sanchalak (manager in English), a village entrepreneur selected by ITC to be the man-on- the-ground and trained by them with computer and internet knowledge.  The kiosk is installed in the sanchalak’s home and he plays the role of disseminating information free of cost to the farmers.  Sanchalak manages 5-6 villages with the help of upa-sanchalak at each village.In all other cases where the sanchalak enables transactions, he gets paid a commission ranging from 0.25% (fertilizers) to 15% (insurance policies).

W ORKING OF S ANCHALAK & S ANYOJAK  Information available on e choupal weather, pricing, world market price, education, news, best practices and Q & A.  Sanyojak’s role is to manage the hub operations including labour, logistics, cash distribution etc.  Manage Physical flows in the supply chain and collect price information form local mandis and maintain records.

24 H UBS U PGRADED TO M ALLS ( CHOUPAL SAGAR )

I MPRESSIVE S TATS  Since it’s implementation in the year 2000 in M.P. now there 6,500 e-Choupal installations reaching 4 million farmers across 40,000 villages in 10 states.  There are 110 warehouse hubs of which 25 are full-service Choupal Sagars.  Study conducted to evaluate the effect of IT on historical geo-coded data from mandis and the locations and installation dates of the ITC shows presence of e-choupal kiosks yielded 1.7% persistent price increase to the average price paid at Mandi’s.  Farmers’ profits increased by 33% and the cultivation of soyabeans increased by an average of 19% in districts with kiosks.

E- CHOUPAL FarmersITCGovernmentSociety  Better Returns  Education  Social Security  Lower Cost of Inputs  Consistent supply of raw materials  Better Relations  Supply Security  Improvement in Productivity  Reduction in Disparity  Reduction in Hoarding & Blackmarketing  Lower cost of products  Social Stability  Check Migration to Cities SOCIAL IMPACT OF e-Choupal

 ITC’s International Business Division was created in 1990 as an agricultural trading company; it now generates US$150 million in revenues annually.  What began as an effort to re-engineer the procurement process for soy, tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly profitable distribution and product design channel for the company  The e-Choupal system has also catalyzed rural transformation that is helping to alleviate rural isolation, create more transparency for farmers, and improve their productivity and incomes. Win-Win situation for ITC & Farmers

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