ITC E CHOUPAL- PIONEERING BREAKTHROUGH

One of the pioneering concept which has revolutionized Indian Agri system has been ITCs E-choupal If we look back at the circumstances which prompted ITC to go for an alternate supply chain model is purely innovational and inspirational based on the inadequacies of the Indian Agri system To go back into the history ITC had set up an International Business Division (IBDS) in 1990 for exporting agri commodities ITC was exporting Rice,Soyabean,acquproducts,peanuts,wheat,coffee,black pepper, sesamum seeds, processed and frozen fruits and vegetables It had over the years established tremondous capability But ITC believed that the profit margins were not high as they would ideally have been because it did not have sufficient control over the supply chain of Agri produce In Madhyapradesh Soya one of its important exportable item was facing huge problems as the farmers were located in remote villages Furthermore the company did not have any control over the quality of the products In addition to this the middlemen exerted influence on the farmers by concealing the prevailing market prices and other related informations They made huge profits by themselves by blocking access to such information So ITC conceived an alternate supply chain management model by using internet to provide realtime flow of information and market signals directly to the farmers Thus the primary task for ITC was to bring marketing information to the farmers The basic idea was to equip the village choupals with a PC and internet connectivity The Echoupal model was based on two important coordinates 1 Samchalak +PC and internet who uses Net to provide spot quotas and after examining product sample and if the price is right ,farmers take the produce to the ITC collection centre 2 Samyojak who coordinates a group of villages and performs documentation work He also supplies inputs from ITC and associate companies to Sanchalak The Sanchalaks were paid 0.5% of the procurement price for each tonne of soya procured by ITC from their Choupal The Sanchalaks paid operating cost like electricity and internet connection charges ( Rs 2900 to7600 per year) and ITC covered cost of PC maintenance and misalleneous travel(Rs 4800 per year per unit) Similarly Samyojak were paid 1% commission for each tonne of soyabean sold to ITC and they were also responsible for collecting the produce from the villages and bring it to the collection centres Thus by this innovative scheme ITC could prevent middlemen excessive price, could control quality and more importantly farmers got right price At present ITC has 6500 choupals and has projected to increase it to 20000 by 2012 covering 100000 villages in15 states covering almost 15 million farmers This homegrown strategy seemed to be a clear winner and more importantly has left important lesson for Agri companies and cooperatives for future times