Itc_E-Choupal

1 Farmers Empowerment – An ITC Way “Internet will extend electronics marketplace and make it ultimate go between the universal middleman.” - Bill Gates ITC’s Brief History ITC was incorporated on August 24, 1910 under the name of ‘Imperial Tobacco Company of India Limited’. The Company’s ownership progressively Indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company’s multibusiness portfolio encompassing a wide range of business – cigarettes and tobacco, hotels, information technology, packaging, paperboards and specialty papers, agri – exports, foods, lifestyle retailing and greeting, gifting and stationery. The full stops in the Company’s name were removed effective September 18, 2001. The Company now stands rechristened as ‘ITC Limited’. ITC is one of India’s leading private companies, with annual revenues of US$2 billion. It is one of India’s foremost private sector companies with a market capitalization of nearly US$ 18 billion and a turnover of over US$ 4.75 billion. ITC is rated among the World’s Best Big Companies, Asia’s ‘Fab 50’and the World’s Most Reputable Companies by Forbes Magazine, among India’s Most Respected Companies by Business World and among India’s Most Valuable Companies by Business Today. ITC also ranks among India’s top ten ‘Most Valuable (Company) Brands’, in a study conducted by Brand Finance and published by the Economic Times. ITC’s Agri – Business is one of India’s largest exporters of agricultural products. ITC is one of the country’s biggest foreign exchange earners (US$ 2.8 billion in the last decade). The Company’s ‘e-Choupal’ initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. Its International Business Division was created in 1990 as an agricultural trading company; it now generates US$ 150 million in revenues annually. The company has initiated an e-Choupal effort that places computers with Internet access in rural farming villagers; the e- Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. What began as an effort to re-engineer the procurement process for soy, tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly profitable distribution and product design channel for the company – an e-commerce platform that is also a low-cost fulfillment system focused on the needs of rural 2 India. The e-Choupal system has also catalysed rural transformation that is helping to alleviate rural isolation. ITC’s e-Choupal creatively leverages information technology to set up a meta-market in favour of India’s small and poor farmers, who would otherwise continue to operate and transact in ‘un-evolved’ markets. As of July 2007, ITC’s e-Choupal services, through 6400 e-Choupal across eight states, reach more than 4 million farmers in about 40,000 villages. ITC intends scaling up the initiative with 20,000 choupals and 700 saagars to reach 10 million farmers in 100,000 villages by 2010. Free access to Internet is also opening windows of rural India to the world at large. ITC’s e- Choupal is now being regarded as a reliable delivery mechanism for resource development initiatives. Its potential is being tested through pilot projects in healthcare, educational services, water management and cattle health management with the help of several service providers including non-governmental organizations. Access to information through e-Choupal has reduced the dependence of the farmers on the traditional agricultural intermediaries. It has also enabled them to align their agricultural output with market demand. e-Choupals enable transparent listing of various mandi prices, giving the farmers a fair chance to choose where to sell their produce to gain a better price, thereby increasing heir bargaining power. Historical data and figures on supply expert opinion on future price movements, information on farming practices and techniques, soil testing, virus testing, and weather information also contribute to the empowerment of the farmer. The e-choupal model involved farmers in the design phase of the project. In some cases, farmers have also contributed to the content on the Web to ensure user – friendliness. The sanchalak who operates the computer is also a farmer selected from the village itself. Farmers actively access information for crop prices in mandis, and get inputs on soil testing, best farming practices, and expert advice from the system. The e-Choupal system considerably reduced transaction costs for the farmers. The weighing techniques under the system are accurate and transparent, and farmers are paid in proportion to the quantity of their produce, unlike the mandi system. In addition, quality measurement is more open as results are immediately available to farmers. This initiative has created an organization at the local level that is transparent and accountable in its operations. Through the e-Choupal system, ITC has empowered farmers by giving them more control over their choices, that is, what they grow, how much they sell their crops for, a higher profit margin on their crops, access to information that improves productivity, and improved crop quality, which contributes to making Indian agriculture more competitive. Villages benefit in other ways as well. For example, children often use the computers for schoolwork, and games, and to receive information on school test results. Large profit-seeking companies can invest in rural development in ways that are affordable, sustainable, and replicable. e-choupal benefits farmers, rural communities and the company’s shareholders. e-Choupal is also 3 expanding the range of its activities to support rural communities, using its network to deliver a broader range of services. Working in partnership with government agencies and civil society organizations in watershed development, animal husbandry, human-capacity development, education, healthcare and gender empowerment, as such, e-choupal is an excellent example of scaling up in terms of both the geographic reach of its activities, and the scope and potential impact of its activities in rural India. The e-Choupal system faces multiple continuing challenges: 1. The possibility that radical shifts in computing access could fundamentally alter communitybased business models. That is one of the reasons ITC seeks to build and control its own ITC infrastructure. 2. As the number and power of the sanchalaks increase there is a threat that they will unionise and extract rents unwarranted additional payments based on their increasing influence on the system. 3. ITC’s relationship with the samyojaks seems to be uneasy, and competitors with the financial muscle to invest for scale could conceivably use discontented samyojaks as the base to obtain market share. 4. The scope of the e-choupal operation, the diversity of activities required of every operative, and the speed of expansion create real threats to execution management. ITC has awakened the aspirations of farmers. If ITC fails to fulfill these aspirations, the farmers will look elsewhere for satisfaction. Source: Farmers Empowerment- An ITC Way by Prashant Amin and Bijal Zaveri. Published in Cases in Organizational Behaviour and Human Resource Management edited by Mirza S Saiyadain, J S Sodhi and Rama Joshi. Published in Association with Sri Ram Centre for Industrial R elations and Human Resources, New Delhi and Tata McGraw- Hill Publishing Company Limited, New Delhi.