ITC E-choupal case

1. ITC E-Choupal
Group 2

2. INDIAN TOBACCO COMPANY
 Founded in 1910
 Turnover - Rs 7.5 billion (US$162 million)
 Market capitalization - US$4 billion
 Annual revenues - US$2 billion
 Its activities span tobacco and
cigarettes, paper and
packaging, paperboard, hotels and
tourism, information technology, and
agricultural exports.
 For its agri-export division, ITC procures various
agricultural commodities such as
soybeans, coffee, and oil seeds.

3. Farmer
Supply Chain Length
Kacha
Adat
Illiterate
Farmer
Pakka
Adat
Literate
Trader @
Mandi Farmer -
Computer
Sales
Broker
ITC
ITC

4. CHALLENGES
 Intermediaries – mandi
 High procurement costs for ITC and in lost
profit opportunities for the farmers.
 Long supply chain - very time-consuming
system, results in deterioration in the
quality of the products.

5. E-Choupal
 June 2000
 Investment – 40000 to 100000 rupees (1000 – 3000 $)
 Cost Split
 Training and commission to the Sanchalak
 Largest internet based initiative - 1,300 choupals, linking 7,500
villages, and
 serving almost 1 million farmers – MP, UP, AP, Karnataka
 Info provided
 crop prices
 weather,
 scientific farming practices
 farmer peer groups
 soil-testing services.
 This online information is made available in Hindi.
 How the system works? – Transportation cost reimbursed

6. Other Parties Involved
 Meteorological departments
 Fertilizer companies
 Seed companies
 Insurance companies
 ITC, which exports US$140 million worth of
agricultural commodities, sourced US$15 million
worth of commodities from e-choupals in 2001. The
substantial quantity (120,000 metric tons of various
commodities) already procured through this
channel has resulted in overall savings of more
than US$1 million. These savings are shared
between ITC and the farmers. . Their savings have
been estimated at Rs 400 to Rs 500 (US$8 to US$10)
per ton of soybeans.

8. Advantages
 ITC’ssupply chain efficiency
 Supply security
 Farmers’ empowerment – lower
costs, better prices, less wastage
 Brokers also taken into fold in the e-
choupal system
 Effective in short term

10. Challenges to E-Choupal
 Training costs
 Legal Issues -The Agricultural Produce
Marketing Committee Act (APMC Act), The
Essential Commodities Act,
 Infrastructure
 Content and regular updates
 Unionization
 Because of multiple variables that affect
productivity, a long-term assessment of the
system’s productivity and efficiency levels
needs to be undertaken

11. KEY TAKEAWAYS
 Efficiency and transparency
 Real time data – no time lag
 Trusting and empowering your suppliers
 Reduction in number of intermediaries – better profits
 Mutual benefit to all
 Information
 Inclusion/participation
 Accountability
 Local organizational capability

12. REFERNCES
Figures Courtesy:
Support for this digital dividend “What works” case
study provided by: the microenterprise
development division of the United States Agency
for International Development (USAID), through the
seep network's practitioner learning program