ITC e-Choupal Case Study

1. What is the innovation of the e-Choupal?

• As stated in the book, the e-Choupal innovation “allow for a virtual integration of the supply chain and significant efficiencies in the traditional system. The farmers benefit by realizing better prices for their crops, better yield through better practices, and a sense of dignity and confidence in being connected with the rest of the world.”

• Through here we will recognize the ingenuity to deploy a system that will give India’s farming industry a boost.

2. Discuss the paradox of Indian Agriculture?

• The first absurdity about Indian Agriculture is that there Agriculture economies are being regulated by the government, where most produce is sold only in government-recognized locations to authorized agents. Processing capacities, private storage, forward trading, and transport were restricted. The result was corrupt, ineffectual, and archaic systems[1].

• Second, though there is a big number of production, producers as well as farmers have less profit from there cultivation resulting for them to be poor.

• Last, though there is a big production for the Agricultural industry, the numbers of interested parties are minimal. Thus, making the employment of non-agricultural jobs is giving much option     for  producers.

3. Why is soya an important innovation in the Indian oilseed complex?

• As stated in the article, “Soya represents an important innovation in the Indian oilseed complex that is resulting in better utilization of scarce resources and greater cropping intensity. Soya was exempted from the Small Scale Industries Act in its crushing sector to allow for processing in large-scale, modern facilities.”

• It is explain that because of Soya’s exemption to the Indians Small Scale Industries Act, there are more opportunity for the producers to produce with much ease not worrying about the government limiting there transaction.

4. Describe the marketing process before the introduction of e-Choupal.

Basically, the marketing process starts when “farmers traditionally keep a small amount for their personal consumption and get the produce processed in a small-scale job-shop crushing-plant called a ghani.”   When it is settled it will be organize by the Mandi, a government delivery man whose task is to be the middle man between traders and the farmers. There will be two types of Mandi business which will be directed by commission agents (Kachha adatiyas and Pukka adatiyas) where both parties will deliver it to the private oil mill.

5. Why is the Mandi not an optimal procurement channel?

Because farmers does not have the resources to analyze the price trends since they are selling to the night Mandis and the overnight stay make them cost a lot of money.

Because crops are displayed in the open, it is being judge by its texture and scrumptious moisture, most of the time it is expose to the elements which might result for foreign objects to enter the crops.

Because farmers felt belittled every time there are auctioneers who ask for price lower than what they wanted but they cannot reject.

Because farmers doubt when their crops are being weigh since it is being done by another individual called tulavatis which they thought underweight their crops, but even though they know this they are not obligated to have any comments since it is regulated by the Mandis.

Because “farmer gets no interest for the delayed payment and bears the cost of the time and travel.”

Because national pricing information is unreliable or unavailable, it is usually mandated by the Mandis themselves.

6. What were the advantages of ITC's competitors? How did ITC address them?

ITC agricultural commodity trading business was small compared to international players, making large companies at risk.

ITC’s “horizontal integration deficiency was addressed through customer relationship management (CRM)-based solutions that were used to identify and provide for the nonstandard needs of customers in an industry where the basic services had been standardized.”[2]

7. How did ITC "re-engineer as opposed to reconstruct"?

“ITC not only kept efficient providers from the existing system but also created roles for some inefficient providers from the previous system. The benefit of these is first, it avoids reinventing the wheel in areas where ITC would not be able to add value through its presence. Second, it co-opts members of the rural landscape, thereby making their expertise available to ITC and foreclosing the same from ITC’s competition.”[3]

8. How did ITC "address the whole, not just a part"?

“The trader enjoys two competitive benefits. First, his intimate knowledge of the farmer and of village dynamics allows him to accurately assess and manage risk. Second, he reduces overall transaction costs by aggregating services. The linked transactions reduce the farmer’s overall cost in the short term, but create a cycle of exploitive dependency in the long term. Functioning as a viable procurement alternative therefore requires one to eventually address the gamut of needs, not just marketing.”[4]

9. Was it wise for ITC to install an IT-driven solution where most people would not?

Yes, since it will address those single accounts from farmers which manage to survive the business being mistreated by their own kind.

10. Why does the ITC insist that the sanchalaks NOT give up farming?

“ITC insists that at no time should the sanchalaks give up farming, for this would compromise the trust the sanchalak commands. The fact that the sanchalak works on commission could undermine his credibility. ITC mitigates this by projecting the role as a public office as opposed to a profitable venture. This is one reason he holds a title (sanchalak).”[5]

11. Why did the samyojaks introduce the ITC to the sanchalaks?

Because samjoyaks were setting into motion an initiative that would reduce their commissions. Also, any e-Choupal procurement would happen over and above the volumes ITC would procure in the mandis, thereby protecting their commission earnings. Second, samyojaks would be involved with all new revenue streams arising from the e-Choupals. The trust ITC had built in the mandi made this statement believable.

12. Describe the new ITC value chain. How different is it from the former value chain?

The new chain priorities pricing, where the farmer brings a sample of his produce to the e-Choupal. The sanchalak inspects the produce and based on his assessment of the quality makes appropriate deductions (if any) to the benchmark price and gives the farmer a conditional quote. The sanchalak performs the quality tests right in front of the farmer and has to rationalize any deductions to the farmer. The benchmark price represents the upper limit on the price a sanchalak can quote checks and balances to ensure transparency in a process where quality testing and pricing happen at multiple levels[6]. second is the inbound logistic, where The farmer takes the note from the sanchalak and proceeds to the nearest ITC procurement hub, ITC’s point for collection of produce and distribution of inputs sold into rural areas[7]. Third part of the chain is inspection and grading where ITC is developing an appreciation of better quality by using the subsequent lab tests to reward farmers with bonus points if their quality exceeds expectation[8]. Fourth process is the weighing and payment where the farmer is also reimbursed for his freight expenses. Every stage of the process is accompanied by appropriate documentation. The farmer is given a copy of lab reports, agreed rates, and receipts for his records[9]. Lastly, logistics and storage where farmer bears the risk of transportation until it is delivered and the sale is completed. The transportation costs he incurs are reimbursed by ITC. This reimbursement was initially based on the distance of the issuing e-Choupal from the processing center. This gave farmers the incentive to travel to a faraway e-Choupal with their samples to get a higher transport reimbursement[10].

13. What is the social impact of the e-Choupals?

On my opinion, the e-Choupal innovation gives the farmers the opportunity to improve their resources for better grading. They develop Better lifestyle by being part of the process and not by limiting themselves by bartering with the Mandis which degrade them. Also, they see a brighter future because they are given an option to be one with the traders and not by being the fewer people out.

14. Describe Wave 6 of the e-Choupal. DO you think it is feasible?

Yes, the improvement will make the peoples spirits high for much development and social intervention.

15. Can something similar to an e-Choupal be implemented in the Philippines?

I absolutely say “YES” to this kind of improvement in the Philippines, our governments badly need this kind of process and we should not le the idea of it be put to waste.

[1] The ITC e-Choupal Story: Profitable Rural Transformation,  p.319

[2] The ITC e-Choupal Story: Profitable Rural Transformation,  p.331

[3] The ITC e-Choupal Story: Profitable Rural Transformation,  p.332

[4] The ITC e-Choupal Story: Profitable Rural Transformation,  p.333

[5] The ITC e-Choupal Story: Profitable Rural Transformation,  p.336

[6] The ITC e-Choupal Story: Profitable Rural Transformation,  p.340

[7] The ITC e-Choupal Story: Profitable Rural Transformation,  p.341

[8] The ITC e-Choupal Story: Profitable Rural Transformation,  p.341

[9] The ITC e-Choupal Story: Profitable Rural Transformation,  p.342

[10] The ITC e-Choupal Story: Profitable Rural Transformation,  p.342