• Chaupal

• MP & Soybean
• ITC
• Decided to explore value chain for improvement.
• suggested exploring the digital technologies that were changing so
many of the companies around them. Sivakumar began to rethink the
soybean supply chain. He studied the farmers’ villages and market
yards to identify pieces of the supply chain that could be improved, so
that IBD might reach its goal of Rs. 2,000 crore
Problems for soybean farmers
• Weather reports
• Slim margins
• Middlemen clogging
• No invention
• Less investment
• Risk aversion
• Poor quality inputs
• Unfair practices affected the way the farmers were paid, the weighing
of the produce, and the amount of time taken by the process.
• Farmers harvest the crop, brought it mandi for auction.
• ITC employed CA would bid in the auction and bought at the lowest possible
price and sold it to ITC at pre-decided price, pocketing the difference.
• Mandi was over-crowded, dusted. It was very difficult to reach there.
• Farmers had no storage facility and sold it for any minimum acceptable price
to avoid the hassle of coming again
• Weighing was manual and 0.5% of the lot was wasted during all this
• Farmers had no leverage and no communication amongst one another to
share current price
• CA often paid farmers late.
• Itc believed the supply chain was inefficient and brainstormed
solution in ameeting
• Sivakumar believed that the team had to work with the cultural
infrastructure that had evolved in the villages rather than owning or
controlling the entire value chain from top to bottom.
• Knowledge shared and captured in the traditional choupal could be
extraordinarily useful to farmers, but it had traditionally been limited
to verbal communication.
• Information/news/cashflows were uncertain
• ITC thought prices can be predicted and farmers needed to be aware
of market activity. They needed to understand their product in its
global context, so that they could plan their activities with more
confidence.
• The eChoupal
• At the May 1999 meeting, Sivakumar and his team conceived ITC’s eChoupal initiative. The
eChoupal was based on the knowledge sharing found in the traditional choupal model, but took
the concept one step further. ITC supplied a computer kit to each village with the following
components:
• A PC with a Windows/Intel platform, multimedia kit, and connectivity interface
• Connection lines, either telephone (with bit rate between 28.8 and 36 Kbps) or, more
commonly, VSAT12 (in 75% of eChoupals; average 2003 usage 64 Kbps inbound, 1 Mbps
outbound)
• A power supply consisting of UPS13 and solar-powered battery backup
• A dot-matrix printer
• The site contained much useful information that was previously unavailable to farmers in
Madhya Pradesh
• here were eight links to the areas of key information that comprised the eChoupal:
weather, best practices, crop information, market information, FAQs, news,
feedback, and information about ITC
• ITC had relied on farmers’ input since the start of the project, and, in an effort to
keep the site’s content dynamic and relevant, it was important that the farmers
could continue to be involved in its improvement.
• The eChoupal initiative was based on the belief that the farmer needed an
alternative to the mandi system. By participating in the eChoupal network, farmers
were offered new channels through which they could sell directly to ITC, thus
eliminating the cost inflation and cheating that occurred through the middlemen
• a lead farmer or sanchalak was chosen whose home was used as a chaupal, was
famous amongst people and could take care of equipment.
• Sanchalak had a usernsme and password for account. The log-in
feature was designed with the idea of offering customized content
based on the log-in location;
• He was givenbasic training and know how of usage,
• Basic info was pasted in the house
• He needed to give best advice to other farmers for a good yield and
hence good commission from ITC and then good repo.
• He performed quality comparision with best quality samples provided
by ITC
E CHAUPAL REORGANIZED SUPPLY
CHAIN
• First, the mandi provided the only means for price discovery, and
farmers reasonably assumed they would fare best in open auction.
Second, transactions outside the mandi were officially prohibited by the
Agricultural Produce Marketing Act
• At the conception of the eChoupal, however, ITC was able to convince
the government of the potential benefits to the farmers and the
economy, and the government amended the act to legalize purchases of
beans (and other agricultural commodities) outside the mandi. The
transparency of the eChoupal - the fact that the Web site was accessible
to anyone, including the government, to cross-check ITC’s prices at any
time - facilitated the government’s acceptance of the initiative.
This changed the way farmers did
business
• By comparing price of ITC and nearby mandis the farmer was able to make
an informed decision about where to go to sell his beans.
• Second, by following the real-time prices on the Web site, the farmers could
decide when to sell.
• A third feature distinguishing the eChoupal was its transparency. Seeing
written prices ensures trust. The Web model was also more scalable, since
one kiosk could be used by hundreds of farmers.
• Mandis could be attractive because of open auction but ITC worked to make
its hubs attractive destinations for farmers. In addition to competitive
pricing, the hubs contained multiple amenities that were not available to
farmers in the mandis.
• Itc ensured their hubs were in 30km distance of every targeted
farmer. They covered 80% of the soybean wheat farmers. Had 44
processing facilities. All had a kiosk. Computerized weighing systems.
Farmers were paid then and there. Transportation cost was also
reimbursed.
• Hubs has sitting area and restroom,mandi didn’t. farmers could buy
soyabean oil from there at less cost. Offered soil-testing lab where
agri-scientist offered recommendations.
• Freedom of choice was an important principle of the eChoupal
concept
• Previous CA were made The Samyojak and their role comprised three
major areas of responsibility: 1) setting up the eChoupals; 2)
facilitating ITC’s purchasing transactions; and 3) helping with ITC’s
selling transactions.
• Assissted in groundwork and choosing sanchalak. Became a lison btw
villagers and ITC.
• Managed warehouses, transportation for farmers who couldn’t reach
ITC hubs
Selling system- one stop shop
• The first was at the village level, where the Sanchalak aggregated demand for
products through orders placed by his fellow farmers. This was done during the
traditional choupal time. The Sanchalak then e- mailed the order to ITC
• The second system did not involve any prior orders. Instead, the Sanchalak
bought products based on estimated demand and stocked them in his home.
Products sold this way were again procured by either Sanchalak pickup or
Samyojak delivery.
• The third system for selling additional goods through the eChoupal was
“shopping” for the products at the ITC processing facility. When Sanchalaks and
farmers visited the ITC facility to sell their produce, they also had the
opportunity to peruse the warehousing hubs for items on which they might like
to spend their freshly earned cash.
• Everybody had a chance to earn more then mandi system
• Samojayaks also simultaneously worked in mandis. Itc also purchased from
there. It was a source of market intelligence. It was 50-50 for ITC and it aimed
to increase e-chaupal to 80%
• E-chaupal worked on trust. It was based on complete realization of farmers
that he would be getting more beneit by selling to ITC directly. He could
although choose to do otherwise even after using all services of ITC.
• TC did not ask for commitment; the farmer was free to do as he wished.
• BETTER QUALITY, UNADULTERED PRODUCE, DIRECT CONTACT, COMPETITIVE
PRICING BECAUSE OF GOOD YIELD, CONTROL ON WHAT WAS BEING MADE
AVAILABLE
• oon after soybeans started showing promise, ITC had set up pilot eChoupals in
three other crops in three different regions of India that were as diverse from one
another as possible and representative of all crops in ITC’s product portfolio
• PILOT TESTS- CHANGES-GROWTH ROLL OUT
• New projects:
• traceability (i.e., accountability for the quality of the product vis-à-vis its source)-
did with seafood, ability to match farmer production to consumer demand- did in
wheat for quality & composition in order to buy carefully both ITC & end consumer
, and facilitation of an electronic marketplace- did in coffe since price is vv volatile
and ppl renege contracts Tradersnet, ITC improved real- time price discovery by
hosting anonymous trades and letting the prevailing selling prices be known.
eChoupal as a Marketing Channel

• As he clicked through the constantly changing pages of the eChoupal’s

Web site, he wondered if marketing and distribution to the 60% of
India’s workforce living in rural areas might be the real growth engine
for ITC.
• hree features: superior product and distinctive functional benefits,
• process benefits (simplified transactions between buyer and seller),
• and relationship benefits (farmers’ willingness to identify themselves
and reveal their purchasing behavior
• Fertilizers
• Agrichemicals
• Seeds
• Insuranse
• Credit