ITC e-Choupal 4.0

This was an interview given to Commodity India Magazine. Reposted here: 

CI: We came to know that you are about to launch the next version of ITC e-Choupal, called 4.0. Can you tell us something about that? Actually, please tell us about e-Choupal 1.0 to 3.0 first.

SK: In a sense, it’s not the next version, as much as it’s the next tier, because e-Choupal 1.0 to 3.0 continue to operate and reinforce one another…

The e-Choupal 1.x series is about re-engineering the agricultural supply chains to make them more efficient and effective.

For example, 1.1 eliminated the non-value-adding costs along the supply chains of oilseeds and grains – such as, multiple handling costs & transaction charges – by enabling competitive price discovery of the price of farm produce in the village itself instead of farmers taking their produce to the mandi, which resulted in the avoidable additional costs. Free access to Internet through the e-Choupal Sanchalak, prices published on the echoupal portal, quality assessment system and quality-factored pricing mechanism at the e-Choupals in the village have made this possible. Because of this re-engineering, farmers net revenue increased while ITC’s gross costs reduced.     

In 1.2, the identity of each variety of a commodity (eg wheat) and its unique characteristics were preserved along the supply chain by virtue of direct buying from the farmers. Specially developed blends of such multiple varieties offered value-added products to the diverse needs of the different segments of consumers (eg atta of different colour, texture, taste, water-absorbing capacity, broken-starch content etc). Because of this re-engineering, ITC was able to build winning brand (Aashirvaad) and the farmers received better prices for the varieties in demand, instead of the usual average price that is equivalent to the lowest common denominator.

In 1.3, the traceability is pushed one-step further upstream to the practices followed on the farm (eg prawns) to ensure food safety and deliver the same to the consumers around the world. Similar innovations in 1.4 to 1.6, each suiting the dynamics of different agricultural commodity.

The e-Choupal 2.x series is about reimagining the infrastructure built for re-engineering the supply chains as a platform, and improving the delivery of products & services into rural India. The reverse flow…

If 2.1 delivered agricultural extension services through Choupal Pradarshan Khets, 2.2 to 2.4 delivered agri inputs, financial services (Kisan Credit Cards, Insurance) and FMCG. 2.5 brought modern retail experience to the rural consumers by co-locating hypermarts at Choupal Saagar Integrated Rural Service Centers. Each Choupal Saagar is positioned at the hub of a cluster of e-Choupals, housing a commodity warehouse, soil testing centre, fuel station, food court etc. Similarly, 2.6 to 2.8 deliver other goods & services relevant to the rural production or consumption.

To deliver the 2.x services effectively, ITC partnered with several businesses, governments & government agencies, not-for-profits etc combining their domain strengths with e-Choupal’s terrain knowhow and on-ground presence.

Bundling the strengths of e-Choupal with those of the partners brought together in Tier 2.0 ITC e-Choupal became a more complete rural ecosystem. In the 3.x series, the whole ecosystem is offered as a service, as an EaaS model, to bring more platforms to the rural markets…

3.1 connected rural youth to vocational skilling and employment markets, and 3.2 connected the farmers to the farm-machinery based service providers. Choupal Haats became 3.3, providing rural marketing services through a unique interactive engagement platform for the rural consumers. As many as ten million consumers annually across the e-Choupal geographies. More platforms are work-in-process, as we speak.

CI: So, how many e-Choupals exist today?

SK: Actually, after e-Choupal 1.0, the number of e-Choupals is a redundant metric. In its evolution into a platform and then an ecosystem, the media for interaction naturally expanded to mobile phones, Farmers’ Field Schools, Choupal Haats etc. So, while for record, there are 6100 e-Choupals, a better metric would be an outreach to 40,000 villages through one or the other medium.

CI: That’s a mind-boggling evolution through three tiers in seventeen years! Now, can you tell us about e-Choupal 4.0?

SK: In a way, e-Choupal 4.0 is an aggregation of e-Choupal 1.0 to 3.0, but more “plug & play ready” for partners in the rapidly growing digital economy.

In addition to the conventional agri input selling and agri output buying companies, you are seeing hundreds of agri services start-ups in the recent past. From hyper-local weather forecasts to support systems for precision agriculture; from sensors for smart irrigation to drones for crop-health monitoring; from image processing for disease recognition to predictive analytics for epidemic management; from next-gen farm management to online consumer outreach directly… the list is unending!

Most of these start-ups have brilliant technological solutions to everyday farming problems, and their business models are relevant across the country. Their technology is scalable too, but a large majority of them find it difficult to reach the farmer physically beyond their own local areas. With the rest of the agricultural ecosystem like ground-truth correlation, quality assaying, logistics, credit ratings, payment etc having not evolved enough, for each IT based solution to offer value to the farmer as a point solution.

e-Choupal 4.0 becomes an aggregator for all such services after integrating them with the on-ground presence of ITC’s agribusinesses across 70,000 villages (this goes beyond the reach of e-Choupal 1.0 to 3.0) and offers a meta-market to the farmers.

Two prototypes are already in their second season. First one, for example, is about building a community of seed producers and consumers focusing on open-pollinated seeds in which the seed companies have low interest (because there are no hybrids) and the farmers are saddled with impure seeds (because of low seed replacement ratios). From among the same community, there are seed processors, seed certifiers, seed financiers until the planting season and so on. In effect this is a self-managing community accessing all the relevant agri services through e-Choupal 4.0 platform.

Our plan at this time is to roll out the full-scale e-Choupal 4.0 by late 2018, by fusing multiple such communities across agriculture, skilling, health care etc.

CI: That’s a grand vision! But, do you think rural telecom infrastructure is geared to support such a platform?

No doubt, the infrastructure is still evolving. The penetration of low-cost bandwidth and the smart gadgets in rural India will reach an inflection point in a couple of years. The idea is to build partnerships and refine the business model by then.

In any case, even where farmers have personal smart phones, the preference is for assisted service. Like the e-Choupal Sanchalak who was key in executing 1.0 to 3.0, service providers dedicated to each identified group of farmers will be key in 4.0 as well. The Sanchalak numbers will multiply manifold.

CI: What’s the role of government policy in all these plans?

SK: Right from tier 1.0 to tier 3.0, the ongoing reform of agricultural policy has played a key role in expansion and evolution of e-Choupal. When 1.1 was first conceived, the APMC Act wouldn’t allow an agri produce marketing transaction outside the mandi. Since then a few states reformed their APMC Act and e-Choupal could operate in those states. Now, as part of doubling farmers incomes goal set by the Hon’ble Prime Minister, a new Model APMC Act is being proposed. Once implemented, this will open several possibilities for e-Choupal 4.0.

Similarly, allowing futures as a commodity derivative since 2003, and now options, the price risk management for the farmers as well as the processors like us becomes more institutionalized, laying ground for transacting much larger volumes of commodities.

The new GST regime, where basic agricultural commodities are exempted from tax, more transactions will happen in the formal sector because the tax-evading unscrupulous do not have an advantage any more.