Imagine that you are a farmer with rain fed fields in the middle of a dry spell. You would value information on the weather but can rely on no more than intuition. ITC, one of India’s leading groups with a market capitalisation of $4 billion decided to tackle this with technology.
The e-Choupal, information centres contain a computer linked to the internet that connects local farmers to potential buyers, prices, current agricultural research and global markets. Choupal is Hindi for a village “gathering place” where such information was traditionally gathered and exchanged. This initiative which is run by a lead player in each local area – the sancalak – allows for a virtual integration of the supply chain. Primarily, it is breaking the dependence on agents working from the local mundi. [i]
ITC, one of the leading exporters of agri commodities has launched e-Choupal as a means to build connectivity between the informal agricultural community and the products and services of the formal market through a network of PCs with broadband connection. Launched in 2000, e Choupal covers 31,000 villages with 5,200 kiosks in 5 States. This means access to 3.5 million farmers.
The kiosk is open for use to any farmer from the community. Fundamentally, it allows them to align their farm output with market demand without the noise of agents and assorted intermediaries who add little value to the system.
e-Choupal tackles head on the challenges posed by the unique Indian agricultural sector which is characterised by fragmented farms, weak infrastructure. Above all, it provides a way through the low risk taking ability, low investment and low productivity that paralyses the sector in remote areas.
The learning curve on this project was steep. The voltage fluctuated between 90 and 350 volts against a rated 220 volt transmission. Sudden surges in current were normal and so the pilot test machines were burned out and landlines were useless. This meant a move to satellite usage.
This concept of using technology to enhance connectivity is a feature of several other initiatives with mobile phones. Shared or mediated ownership can enable a village to establish and maintain contact beyond the local area. One village used a PC mounted camera to take photos of villagers eye ailments to submit them to a local eye clinic for assessment as a basis for treatment. Another village used the same approach to send photos of infected vegetables to experts who sent back their views and action plans by e mail. These initiatives are the modern day equivalent of the way in which catalogue selling opened up the Western United States to the merchandising and distribution of essential supplies back in the 19th century.
The e Choupal model has now moved beyond agricultural products and TVS, the motorbike manufacturer, is using e choupal as a sales channel generating nearly 35,000 bike sales, primarily its Star range, since 2005. TVS sells about 1.2 million bikes annually and the rural market accounts for 50% of sales. This e choupal project includes geographies where TVS penetration has been non existent. This shows an 8% growth in 2007 against the overall negative growth in the two wheeler market. Though strictly not comparable, a TVS city dealership sells roughly 1,000 bikes a month.
This is a win win for both TVS and e choupal with ITC earning commissions from all sales generated. In addition, complimentary sales of fuel with BPCL are working well. Momentum is building elsewhere as the scheme is throwing up positive growth in weather insurance, agri inputs and even mobile phones such as Nokia and Motorola. As S Sivakumar, International Business Development Chief puts it, the e choupal role is about referring potential customers and enabling informed choices.[ii]
As C K Prahalad points out, “BOP markets exist in a hostile infrastructure and this must be taken into account.”[iii] For example, Logistics and transportation services are of vital importance to the development of places such as Afghanistan where linking the country to major markets becomes a means to grow the economy. However, to get there the need for major infrastructure investment and construction requires the capacity to deal with the influx of materials and goods. Unfortunately, for many reasons, major investment in infrastructure within and to connect informal markets is not forthcoming. We have to learn to deal with what is there and not be distracted into spending all of our time lobbying governments.