ITC's e-Choupal boosts farmers' income by 50% with direct sourcing

The Farm Acts may have opened up a debate about whether or not the entry of the corporate sector would actually lead to rise in farmer incomes. ITC, one of India’s largest conglomerate, however, claims it has already demonstrated corporate intervention in agriculture pays going by the success of its famed e-Choupal model.

The company says farmers have earned up to 50 per cent more by using e-Choupal, which it uses for direct sourcing of agri commodities. An important part of ITC’s agri sourcing infrastructure, it is a combination of click and mortar. While farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement having eliminated undue expenses in the supply chain.

ITC sources over three million tonnes of agri-products from 225 districts in 22 states; about two-third is directly through the e-Choupal. Over the years, ITC has been engaging with farmers through the e-Choupal to produce high quality wheat, potato, fruits, milk, vegetables, coffee, among others.

The company claims it has been a win-win proposition. Now in its 20th year, the e-Choupal translates to about a 6-10 per cent saving in cost for ITC and 10-25 per cent improvement in productivity for farmers based on the level of adoption of recommended practices, leading to an overall higher income of up to 50 per cent. Those benefits, ITC says, hold for any point in time.

Some projects have yielded incomes higher than even 50 per cent for farmers too. Projects like Baareh Mahine Hariyali (covering 200,000 farmers) have demonstrated potential of doubling farmer incomes through multiple interventions like increasing cropping intensity, Sivakumar group head, agri and IT businesses, ITC, noted, adding e-Choupal had helped farmers in getting price discovery of crop in the village itself helping him to make right selling decisions.

“The scientific quality assessment and digital weighment at purchase centres ensured additional benefit of 4-5 per cent,” he said.

The farm bills – that allowed farmers to sell outside of the Agricultural Produce Market Committee (APMC) – opened a debate as soon as they were placed before the Parliament on the adverse impact it might have on farmers. Apprehensions were expressed that the small and marginal farmers would be exploited by big companies. 

However, Sivakumar, the architect of the e-Choupal, contends that in the new paradigm of creating an ecosystem that offers “freedom of choice” to the farmers, power of competition from multiple buyers is the best safeguard. 

“Exempting the value chain players from the provisions of Essential Commodities Act will bring more competition. In any case, with APMCs continuing to operate, the farmers will have even more choices than before,” he pointed out.

Incidentally, the growth of ITC’s e-choupal had hit a speed breaker in 2007-08 due to lack of agricultural reforms; export bans, subsidies, stock controls, the prohibition of futures, and slow amendment to the APMC Act had stymied the growth of e-Choupals and prompted ITC to focus on expanding the scope of services.

Sivakumar said that ITC was now ready to implement e-Choupal 4.0 at scale and bring the benefits of the digital 

revolution to empower farmers even more effectively. From pilots, ITC is now looking at taking the e-Choupal 4.0 to cover one million farmers.

“The digital platform, designed as a crop agnostic integrated solution framework, will synergistically aggregate technologies like remote sensing, precision farming, drone-based services, quality assaying, e-marketplace and many others. It is now ITC’s vision to empower 10 million farmers in India multiplying livelihoods that will benefit over 50 million people,” he explained.

The e-Choupal ecosystem has so far reached out to four million farmers. 

The new farm laws are making ITC to explore opportunities. One of the areas could be to expand the scope of contract farming to include specialty crops like organic and certain attribute-specific produce. 

“Contract farming can help farmers produce attribute-based crops and negotiate much better prices than for the undifferentiated commodities,” said Sivakumar.

ITC already has contracts for seed potato and banana saplings under its wholly-owned subsidiary, Technico Agri Sciences. 

Even as new vistas of opportunities open up for companies like ITC, Sivakumar believes that APMCs will continue to play a vital role in moving crops from the farmers along the value chain. 

But, they need to improve their competitiveness through more transparent processes in price discovery, create more storage infrastructure, improve quality assaying systems and handling of perishables, he pointed out.

BENEFITS GALORE

Outcomes under e-Choupal

6-10% saving in cost of cultivation for farmers

10-25% improvement in productivity

Higher income up to 50 per cent for farmers

e-Choupal 4.0

Version being scaled to cover 1 million farmers

The digital platform will aggregate technologies like remote sensing, precision farming, drone-based services, quality assaying, e-marketplace

Agri support services, agri inputs, financial services, farm equipment, farm produce selling would be part of e-marketplace