E-Choupal - IT Initiative Empowers Indian Farmers

Last week, I talked about how technology made an incredible difference to agriculture in the form of the Green Revolution. Technology's impact here was very direct; for example, the introduction of certain strains of rice which would produce higher yields. But technology can also help farmers indirectly, and such is the case with E-Choupal in India.

E-Choupal, a for-profit effort by ITC Limited, has implemented internet kiosks in rural villages which provide farmers not only a resource for vital information (weather, current prices, farming techniques), but also a virtual marketplace, linking them with both buyers of their produce and sellers of seeds/fertilizers. E-Choupal is successful because it combats two big problems with the traditional Indian agricultural markets: information asymmetry (on pricing, weather, and farming practices) and a convoluted supply chain (often with up to six or seven intermediaries including many middlemen who take much of the profits).

Wikipedia actually has a pretty good summary on how E-Choupal works:

Each ITC Limited kiosk [with internet access] is run by a sanchalak—a trained farmer. The computer housed in a farmer’s house is linked to the Internet via phone lines or by a VSAT connection and serves an average of 600 farmers in 10 surrounding villages within about a 5 km radius. The sanchalak bears some operating cost but in return gets commissions for the e-transactions done through his E-Choupal.

Studies have shown that the use of E-Choupal has led to a rise in the incomes of both large and small farmers in India. Equally amazing is that the system is run without government aid or subsidy and is in fact profitable (ITC's net procurement costs fall by approximately 2.5%). Currently there are over 6,500 E-Choupal kiosks serving over 1 million farmers. ITC is expanding still, and plans to have 20,000 kiosks and service 25 million farmers by 2010.

Interestingly, ITC is also looking to take advantage of the E-Choupal network channel its built by introducing more content and business (Murphy, InfoWeek Article).

"We're seeing it as a universal network that connects rural India to the rest of the world," says S. Sivakumar, CEO of the ITC's agri-business division. Sivakumar sees opportunities for credit, health care, and education delivered through the network, though it hasn't figured out the business models for all those yet. This year, it hopes to offer for-fee vocational training, such as in basic computer skills, or in the services and retail industries. It's looking to set up microfinance programs so people buy training and pay it back once they get a job. ITC's also looking at whether e-choupals can support fresh produce sales. Today, it focuses on grains.

E-Choupal is one of the biggest examples of how India's burgeoning IT sector is helping the poor. Another great example I read about recently is Babajob, another example of poverty-inspired IT innovation. Babajob hopes to take the power of social networks and apply them to the low-skilled job market. Take a look at this NYTimes article for more details. Though it may be too early to judge whether Babajob is a success, it and companies like it illustrate that there are infinite ways that IT may be able to help the poor in a sustainable (and even profitable) manner.

** Additional links to check out to learn more about E-Choupal:
Quick Video on youtube
World Resources Institute Case Study
Indian Economy Blog