ITC's e-Choupal: Taking E-Business to Farmers

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Case Details:

Case Code : ITSY023
Case Length : 15 Pages
Period : 2000-2002
Pub Date : 2003
Teaching Note :Not Available
Organization : ITC
Industry : Varied
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"What started as a cost-effective alternative supply chain system to deal directly with the farmer to buy products for exports is slowly going to expand into an alternative distribution mechanism for rural India."

- S. Sivakumar, Chief Executive, ITC Agribusiness, in March 2002.

"The purpose of the e-choupal is to empower farmers with real time information on weather and prices so that they can insulate themselves from the unpredictable climate conditions and price fluctuations."

- Y. C. Deveshwar, Chairman, ITC, in December 2002.

A Quiet Digital Revolution

In the technologically advanced global business environment of the 21st century, e-business and e-commerce initiatives have become quite popular. The very mention of such initiatives conjures up an image of organizations with sophisticated information technology (IT) infrastructure and an IT-savvy workforce. Thus, it would perhaps be rather difficult to think of poor, illiterate farmers in the remote, dusty villages of India making e-business a part of their daily lives. A typical village in India may not have even the basic amenities such as electricity, telephones and transport facilities. A huge proportion of the farmers in the country are illiterate and most of them are not even aware of the existence of computers, let alone the Internet and e-business.

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However, in 2002, this very group of illiterate and ignorant farmers could be seen conducting e-commerce transactions with great ease. All this became possible due to the innovative and revolutionizing concept of 'e-choupal¹', introduced by one of India's leading agribusiness and consumer product companies, the tobacco to hotels major, ITC. The e-choupal initiative aimed at networking the villages via the Internet and procuring agricultural products from the farmers for export purposes.

The initiative enabled farmers to sell their produce more conveniently and at much better prices. Starting with just six e-choupals in June 2000, ITC had managed to establish 1,200 e-choupal centers in approximately 6,500 villages in India by December 2002. The company planned to set up a network of 100,000 villages across 14 states within the next five to seven years.

Management gurus and companies in India as well as other parts of the world appreciated ITC's efforts to successfully carry out this initiative, which was being seen by many as an example of the role big corporations could play in filling up the institutional gaps by making use of IT.

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1] Choupal is a Hindi language term that means 'a gathering place.' It is a place in a village where all villagers converge and discuss their farming and daily life experiences.

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