Tobacco-to-hotels major ITC is hoping to leverage its rural e-marketing venture into a major business initiative. Surajeet Das Gupta reports

Tobacco-to-hotels giant ITC Ltd has been trying to find a solution to an old problem for years. The company used to buy soya bean for export. Like everyone else, the corporation had no option but to source its supplies from the local mandis. This created two problems. One, quality was not guaranteed and, two, since supplies were sourced through middlemen, the company had no contact with the growers- a crucial pre-condition for orders in many European countries.
Direct contact with farmers was all but impossible given the fact that they lived in far-flung villages in Madhya Pradesh. ITC's problem was that it did not have a mechanism to approach them directly- and, as importantly, cost effectively.
The company looked for the solution in information technology, through a project called e-choupal, launched one-and-a-half years ago. A classic click-and-mortar business, the idea behind e-choupal was to offer an alternative distribution and supply chain system to the rural market.
How does it work? Soya bean farmers in Madhya Pradesh can now come to the e-choupal, which is nothing but an Internet Kiosk set up mostly in the house of an influential man (mostly the headman) in the village. The village official is appointed by the company and is known as the sanchalak.
The site provides farmers with real-time information on the latest weather report, prices in various mandis, world prices and even best farming practices.
More importantly, it offers a price at which ITC would be willing to buy the soya from them directly through the sanchalak. Says S Sivakumar chief executive of ITC's international business division: "The biggest problem for farmers is that middlemen have blocked information flow. Now the price discovery is met through the kiosk and it is transparent."
The farmers have the choice of selling their product in the mandi or to ITC. If a farmer accepts the company price, the order is confirmed promptly by the sanchalak on the Net.
But the e-choupal is not merely an instrument for effective supply chain management for ITC. By using the power of information technology, the company has converted the computer into the popular US concept of a "meta market", or a one stop shop right in the village, where farmers can sell their produce, buy products (from farming inputs to daily items for household use), receive all the information needed to improve their yields and even get a better price for their produce.
For ITC, it opens up new windows of opportunities. It allows it to source more products directly from farmers at a more efficient price discovery mechanism. It also provides a platform for it to sell its products directly to the customer. This, in turn, provides the company with some direct information on consumer needs in the booming rural markets and reduce dependence on wholesalers.
Explaining the logic behind the move, Sivakumar says: "what started as a cost-effective alternative supply chain system to deal directly with the farmer to buy products for exports is slowly going to expand into an alternative distribution mechanism for rural India."
The tobacco giant has already set up over 700 choupals covering 3,800 villages in four states- which include Madhya Pradesh, Uttar Pradesh, Karnataka a