ITC is engaged in imparting a revolutionary dimension to its rural partnership by leveraging information technology to elevate the Indian farmer to a new order of empowerment. ITC's 'e-choupal' initiative is a powerful illustration of the potential of information technology to transform rural economics, notwithstanding the structure and size of land holdings in India.
This alternative model leverages information technology:
- To deliver real-time information and customised knowledge to improve farmers' decision making ability, and thereby better align farm output to market demands and secure better quality, productivity and improved price discovery
- To aggregate demand in the nature of a virtual producers' cooperative and thereby access higher quality farm inputs and knowledge at lower cost and
- To set up a direct marketing channel virtually linked to the mandi system for the purpose of price discovery, yet eliminating wasteful intermediation and multiple handling, thus reducing transaction costs and making logistics efficient.
This model, in facilitating a direct marketing channel in competition with the existing mandi system, is in conformity with the reforms recommended by the Shankarlal Guru Committee appointed by the Ministry of Agriculture. Besides inducing efficiency of the mandi channel through competition, this alternative channel will also serve to conserve public resources that would otherwise be required for the expansion and upgradation of the mandi infrastructure. This digital infrastructure can also be used for channelising services related to credit, insurance, health, education and entertainment, in addition to serving as a strong foundation for creating a vibrant futures market to facilitate farmer risk management.
This model thus enables a quantum improvement in the cost and quality of extension services. In the conventional model the effectiveness of extension service is severely limited by the capability of the individual extension worker. The e-choupal model, on the other hand, confers the power of expert knowledge on even the smallest of individual farmers.
ITC's investment in such an e-infrastructure, whilst creating abiding value for the farmer, is in turn placing the Company in a unique position of trust with the farming community as a reliable supplier of goods and services on the one hand, and as a buyer of high quality, cost effective farm output on the other, thereby supporting its own competitiveness.
The task of adapting the e-choupal concept for different crops and regions continues to test your Company's entrepreneurial capabilities. In addition to special commercial circumstances obtaining in each case, there are many constraints like infrastructural inadequacies, including power supply, telecom connectivity and bandwidth, apart from the challenge of imparting skills to first-time internet users in remote areas of rural India. The potential benefits of this project have spurred ITC to seek innovative solutions to overcome constraints.
Competitiveness of Indian agriculture induced through such a market-led business model, can trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, leading to higher order investments, feeding even higher levels of quality and productivity. Growth in rural incomes would also unleash the latent demand for industrial goods so necessary for continued growth of the Indian economy. Over time this will create another virtuous cycle, snowballing the economy into a higher growth trajectory. This model, with appropriate modifications, can be extended to other facets of agriculture like floriculture, sericulture, horticulture, aqua farming, poultry farming, animal husbandry etc.
International competitiveness can thus be engendered wherever it is feasible to create a structure whereby the corporate sector's need for creating shareholder value can be enmeshed with that of the farming community in a mutually supportive, interlocking and interdependent partnership.
Starting with just 6 choupals in June 2000, this ITC model has already become rural India's largest internet-based initiative, covering over 1900 choupals linking 11,000 villages and serving over 1.2 million farmers by April 2003. ITC's objective over the next decade is to create a low-cost IT-based interactive transaction and fulfilment channel to cover 100,000 villages, representing 1/6th of India's villages, reaching out to millions of farmers.
The challenge of uplifting rural India towards prosperity is so vast that many, many more corporate players are required to participate in such value adding rural initiatives to supplement Governmental effort. The benefits of rural initiatives tend to be back-ended, thereby stretching corporate resources. One cannot expect everyone to be fired by passion alone. In order to mobilise wider participation of the private sector in similar endeavour, Governments, Centre and State, can play a catalytic role by crafting a nurturing policy framework.