Information, Efficiency, and Sustainability in Indian Agricultural Markets: E-Choupal, ITC's Private Initiative

Spiraling food prices and low productivity in Indian Agriculture has made food security a cause of great concern, more so in rural India (FAO, 2011; ADB, 2011; Kaur 2013; IFAD, 2011). Despite India’s good economic performance, it is home to the largest number of hungry people in the world. In the ranking of the Global Hunger Index (2013), India ranks 63rd out of 88 countries. In Madhya Pradesh alone (a state in India) more people suffer from hunger than in Ethiopia or Sudan. Needless to say, steps need to be taken at war-footing to improve agricultural productivity. With fiscal deficits already high, public investments in agriculture are not expected to pick up. In this context, private initiatives in Indian agriculture that promote productivity and embed sustainability in their business model remain important. The basic objective of the paper is to focus on an illustrative case study of setting up of internet kiosks referred to as ‘e-Choupals’. This case study empirically substantiates what economic literature has always been emphasizing, i.e. information is critical for the efficient functioning of markets (Stigler 1961; Salop and Stiglitz 1977). ‘e-Choupal’ is an innovative market-led ICT project by an Indian private sector company (ITC), which provides access to information primarily to farmers. Since e-Choupals have figured prominently in the context of transformation of agricultural systems in India, we have analyzed it as a case study. Thereafter, based on existing research the paper reviews the impact of this intervention on outcomes such as: the price of soybean received by the farmers; their subsequent plantation decisions as captured by acreage under cultivation; income of farmers; and benefits to ITC. Leveraging the power of Information, Digital Technology and the Internet ‘e-Choupal’ empowers small and marginal farmers with services related to know-how, best practices, timely and relevant weather information, and transparent discovery of prices (Anupindi and Kumar, 2006; Goyal 2010, Kumar, 2004; Meera etal., 2004; Upton, 2003; Yogisha etal, 2008). The paper discusses how the system eliminates most intermediaries and develops a virtual integration of the supply chain, thereby triggering a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, and larger investments to enable higher quality and productivity. We believe that analyzing the role of e-Choupal as an illustrative case study is amenable to extension to other developing countries where agriculture and food security remain a cause of concern.