e-Choupal Stimulates Agricultural Growth With Technology

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,