Virtual choupal, tangible success

According to S Sivakumar, CEO, ITC International Business Division (ITC-IBD) and father of the e-choupal initiative, ITC has already set up 3,200 e-choupals across 1,800 villages. The target: 100,000 villages by 2010.

At the moment they are concentrating solely on Maharashtra and Uttar Pradesh. Catering mainly to farmers in soyabean, coffee, wheat, rice, pulses and shrimp-farming, each e-choupal provides essentially four services: price information, weather report, news and information about best practices in agriculture.

To justify the outlay, ITC runs a marketing channel through the e-choupals. And this is where they manage to make their part of the money. ‘‘After a farmer checks on the prices, if he decides to sell us his produce, we provide the warehouse to store the produce and procure it at competitive rates. We also have some 60 companies who use us (ITC) as marketing channel, they buy and sell produce through us,’’ said Sivakumar.

ITC also saves on the transportation costs since ‘‘the farmers sell their produce to us directly through the choupals’’.

The economics are simple: It takes about Rs 3 lakh to set up one e-choupal. While Rs 1.5 lakh is the cost of hardware, another Rs 1.5 lakh is spent in training and maintenance over a one year period.

And how does ITC manage the infrastructural constraints? ‘‘Apart from the AC current that we get from the normal electricity supply, we provide each choupal with solar-powered battery backup. So in case there is power failure, the solar-powered battery provides a backup,’’ said Sivakumar. Besides, all kiosks are connected via V-sat, that is through satellite, so no need to erect poles to carry wires.

The idea, according to Sivakumar incorporates some 15-20 management concepts, and an amalgamation of business models of five different companies: seeds major Cargill, ITC’s own tobacco division, retail monolith Walmart, American credit card company Capital One, and online auctioneer eBay.

The growth of the e-choupal is largely attributed to the company’s own roadmap, where agri-business finds a place of prominence. ITC chairman Y C Deveshwar has said that ITC plans to invest around Rs 10 billion into the agribusiness over the next 7-10 years.

‘‘E-choupals will create a platform for buying agri-commodities,’’ he had said. ‘‘We want to grow into agri-commodity-based value-added products. We will market to villages anything the farmer wants ranging from goods and services to clothing.’’

Eventually the company expects to sell everything from microcredit to tractors via e-choupals.