48
World Bank Study
E-Choupal sought to avoid some of the payments to traditional intermediaries and instead sought to obtain primary agricultural produce direct from farmers. Quality was indifferent in the mandi system and there were losses owing to multiple handling. The company re-engineered the procurement chain to reduce these avoidable costs. ITC ABD started e-Choupal operations in MP in 2000 as a one-way platform for the procurement of soybean, which is a homogenized crop with relatively few quality parameters. The first e-Choupals were established in the state of Madhya Pradesh. The system involves establishing a center in a village with a computer, power supply, and reliable internet access.6 A trained coordinator (a “sanchalak,” who is also a farmer and paid a commission on completed transactions) operates the village kiosk, providing free internet access to about 600 farmers in five to six villages within a five kilometer radius. Essentially, it is a hub-and-spoke system. When the concept started, ITC’s goal was to have a hub within 30 to 40 kilometers of every farmer. Table 5.1 shows the e-Choupal coverage over time and figures 5.8 and 5.9 show the spread of distances to the nearest hub in two states, U er Pradesh and U rakhand. Through e-Choupal, the farmer is provided with a facility for current price discovery and other information regarding his produce and has the option of making an Table 5.1. e-Choupal Coverage as on March 31 of Each Year Item
2001
2002
91
484
Number of Hubs
6
States covered
3 420
2003
2004
2005
2006
2007
2008
2009
1,348
3,398
4,930
5,936
6,400
6,426
6,476
11
35
90
127
139
150
140
130
4
4
7
7
9
9
9
10
2,280
6,340
15,975
23,180
27,900
30,080
30,200
30,430
e-Choupals Number of e-Choupals
Villages networked Farmers in coverage area (mill)
0.06
0.3
0.9
2.2
3.2
3.9
4.2
4.2
4.3
Source: ITC ABD.
Figure 5.8. Distribution of e-Choupal Distance to nearest hub in Uttrakhand State
Source: Author’s estimates, data from ITC ABD.