abhishreshthaa
Abhijeet S
e-Choupal is an initiative of ITC Limited, a large multi business conglomerate in India, to link directly with rural farmers via the Internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. e-Choupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries. The programme involves the installation of computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information.
PEST Analysis
To clearly foresee the future of ITC e-Choupal and its industry, we have to examine the Political, Economical, Socio-Cultural and Technological environments issues that influence both the company and the farmers. The PEST analysis is useful in this regard to understand market growth, business position, potential growth and direction for the e-Choupal initiative. In the following analysis we will summarize e-Choupal’s present position in the market and the external environmental dynamics in which it operates.
Political Issues:
• The Agricultural Produce Marketing Act (APMA) required the creation of mandis to enable a more equitable distribution of the gains from agriculture among producers, consumers, and traders.
• Due to its inefficiencies, the mandi system didn’t serve the farmers or agriculture trading companies such as ITC very well.
• When ITC conceived the e-Choupal business model, they were faced with a fundamental regulatory barrier, a barrier which prohibited procurements from outside the mandis.
• However, ITC persuaded the government that e-Choupals would operate according to the nature and requirements of the Act and, consequently, e-Choupal procurement was in line with (APMA) goals. ITC convinced the commission that the e-Choupals system would benefit both the market and framers.
• Later, the government waived off the mandi tax on the produce procured through the e-Choupal. Exercising prudence, ITC decided to keep on paying the tax rather than jeopardizing its relationships with the government.
Economic Issues:
• ITC's e-Choupal initiative considered poverty, farming and rural livelihoods as interconnected issues.
• It views rural poverty as the result of how rural society and the rural economy are structured. Therefore, in the locales it serves ITC e-Choupal has quickly impacted the whole agricultural chain from seed to money in the bank.
• The e-Choupal economic impact shows that incomes from farming and support services have risen by over 38 percent since 2000. In particular, a survey by the Institute for Rural Management shows that incomes from farming have risen by about 10 percent in 2004 alone in the locales served by e-Choupal.
• The ITC e-Choupal efforts is to increase economic empowerment for the farmers by connecting people to markets, utilizing a policy for investment climate, ensuring property rights and establishing quality infrastructure.
• This movement is reaching 6,50,000 farmers of 6000 villages through 1,020 kiosks and in the coming decade is planned to cover 15 states, 1,00,000 villages and 10 million farmers by installing 20,000 e-Choupals.
Socio-Cultural Issues: ITC is engaged in a number of other CSR initiatives in the economic surrounding area of its operating locations –
• The Company's Sustainable Livelihoods initiative strives to create alternative employment for surplus labor and reduce pressure on arable land by promoting non-farm incomes.
• The thrust of the company's social sector investments is on natural resource management, which includes wasteland, watershed, and agricultural development, creating sustainable livelihoods, comprising genetic improvement in livestock and economic empowerment of women and community development, with a focus on primary education, health and sanitation.
• A second major area of social impact stems from the capability of the e-Choupal system to open a window on the world and thus impact the future of the villages in which they operate.
• Computers are bringing the same resources to villages as they brought to urban India, and their impact is no less dramatic. This, coupled with higher incomes and changes in farmers’ attitudes, is causing several shifts in the social fabric of village life.
Technological Environment:
• The ITC e-Choupal program is considered by many as an example of best practice in e-commerce that is improving farmers’ productivity and livelihoods.
• Through the establishment of a network of 5,100 local computer kiosks in India villages, an estimated 3.5 million farmers have access to real-time information that increase their ability to make decisions, connect with buyers, and succeed in the marketplace.
• The steady presence of Sanchalaks, who are farmers as well also apply these techniques to ensure that the practices actually make their way from the Web site to the field.
• E-Choupal applies information technology to the advantage of India's small and poor farmers who have previously operated and transacted in un-evolved markets. It resolves the fair exchange problems caused by distortion of information and distance to markets :
• First, it provides access to dependable and high-quality information on the weather, inputs, produce, markets and prices free of charge to farmers.
• Second, it provides access to markets that sell high-quality inputs at the lowest possible prices.
• Third, it provides access to markets where buyers pay the highest possible prices for farm produce.
• The e-Choupal program provides computers, training, and Internet access, helping small producers obtain better prices, as well as the market and agricultural data they need to improve their efficiency and incomes. ITC states that farmers’ output prices are up by 20 percent.
PEST Analysis
To clearly foresee the future of ITC e-Choupal and its industry, we have to examine the Political, Economical, Socio-Cultural and Technological environments issues that influence both the company and the farmers. The PEST analysis is useful in this regard to understand market growth, business position, potential growth and direction for the e-Choupal initiative. In the following analysis we will summarize e-Choupal’s present position in the market and the external environmental dynamics in which it operates.
Political Issues:
• The Agricultural Produce Marketing Act (APMA) required the creation of mandis to enable a more equitable distribution of the gains from agriculture among producers, consumers, and traders.
• Due to its inefficiencies, the mandi system didn’t serve the farmers or agriculture trading companies such as ITC very well.
• When ITC conceived the e-Choupal business model, they were faced with a fundamental regulatory barrier, a barrier which prohibited procurements from outside the mandis.
• However, ITC persuaded the government that e-Choupals would operate according to the nature and requirements of the Act and, consequently, e-Choupal procurement was in line with (APMA) goals. ITC convinced the commission that the e-Choupals system would benefit both the market and framers.
• Later, the government waived off the mandi tax on the produce procured through the e-Choupal. Exercising prudence, ITC decided to keep on paying the tax rather than jeopardizing its relationships with the government.
Economic Issues:
• ITC's e-Choupal initiative considered poverty, farming and rural livelihoods as interconnected issues.
• It views rural poverty as the result of how rural society and the rural economy are structured. Therefore, in the locales it serves ITC e-Choupal has quickly impacted the whole agricultural chain from seed to money in the bank.
• The e-Choupal economic impact shows that incomes from farming and support services have risen by over 38 percent since 2000. In particular, a survey by the Institute for Rural Management shows that incomes from farming have risen by about 10 percent in 2004 alone in the locales served by e-Choupal.
• The ITC e-Choupal efforts is to increase economic empowerment for the farmers by connecting people to markets, utilizing a policy for investment climate, ensuring property rights and establishing quality infrastructure.
• This movement is reaching 6,50,000 farmers of 6000 villages through 1,020 kiosks and in the coming decade is planned to cover 15 states, 1,00,000 villages and 10 million farmers by installing 20,000 e-Choupals.
Socio-Cultural Issues: ITC is engaged in a number of other CSR initiatives in the economic surrounding area of its operating locations –
• The Company's Sustainable Livelihoods initiative strives to create alternative employment for surplus labor and reduce pressure on arable land by promoting non-farm incomes.
• The thrust of the company's social sector investments is on natural resource management, which includes wasteland, watershed, and agricultural development, creating sustainable livelihoods, comprising genetic improvement in livestock and economic empowerment of women and community development, with a focus on primary education, health and sanitation.
• A second major area of social impact stems from the capability of the e-Choupal system to open a window on the world and thus impact the future of the villages in which they operate.
• Computers are bringing the same resources to villages as they brought to urban India, and their impact is no less dramatic. This, coupled with higher incomes and changes in farmers’ attitudes, is causing several shifts in the social fabric of village life.
Technological Environment:
• The ITC e-Choupal program is considered by many as an example of best practice in e-commerce that is improving farmers’ productivity and livelihoods.
• Through the establishment of a network of 5,100 local computer kiosks in India villages, an estimated 3.5 million farmers have access to real-time information that increase their ability to make decisions, connect with buyers, and succeed in the marketplace.
• The steady presence of Sanchalaks, who are farmers as well also apply these techniques to ensure that the practices actually make their way from the Web site to the field.
• E-Choupal applies information technology to the advantage of India's small and poor farmers who have previously operated and transacted in un-evolved markets. It resolves the fair exchange problems caused by distortion of information and distance to markets :
• First, it provides access to dependable and high-quality information on the weather, inputs, produce, markets and prices free of charge to farmers.
• Second, it provides access to markets that sell high-quality inputs at the lowest possible prices.
• Third, it provides access to markets where buyers pay the highest possible prices for farm produce.
• The e-Choupal program provides computers, training, and Internet access, helping small producers obtain better prices, as well as the market and agricultural data they need to improve their efficiency and incomes. ITC states that farmers’ output prices are up by 20 percent.