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Indian soybean farmers join the global village

(Friday, Jan. 2, 2004 -- CropChoice news) -- Amy Waldman, NY Times, 01/01/04: TIHI, India -- At least once a day in this village of 2,500 people, Ravi Sham Choudhry turns on the computer in his front room and logs in to the Web site of the Chicago Board of Trade.

He has the dirt of a farmer under his fingernails and pecks slowly at the keys. But he knows what he wants: the prices for soybean commodity futures.

A drop in prices on the Chicago Board, shown in red, could augur a drop in prices here, meaning that he and fellow soybean farmers should sell their crop now. An increase there argues that the farmers should wait for prices to rise.

''If it goes up there, it goes up here,'' Mr. Choudhry said. The correlation is rough but real. Real, too, is the link between farmers in rural central India and around the globe, thanks to a company's innovation.

The concept is the e-choupal, taken from the Hindi word for village square, or gathering place. The twist is the ''e'': providing a computer and Internet connections for farmers to gather around. Mr. Choudhry supervises the project for Tihi and several nearby villages.

E-choupal allows the farmers to check both futures prices across the globe and local prices before going to market. It gives them access to local weather conditions, soil-testing techniques and other expert knowledge that will increase their productivity.

Nonprofit organizations have tried similar initiatives but none have achieved anywhere near the scale that e-choupals have. There are now 1,700 in this state, Madhya Pradesh, and 3,000 total in India. They are serving 18,000 villages, reaching up to 1.8 million farmers.

As a result, say those who have studied the concept, the company behind e-choupals, ITC Ltd., has done as much as anyone to bridge India's vast digital divide: most of its one billion people have no access to the technology developed by some of their fellow Indians, whether in Bangalore or Silicon Valley.

E-choupals may offer a model for all developing countries.

''It is a new form of liberation,'' C. K. Prahalad, who led a case study on e-choupals for the University of Michigan Business School, said of the transparency and access to information they give farmers.

More than two-thirds of India's people still depend on agriculture for their livelihoods. With little chance of the huge manufacturing boom that has employed many rural poor in China, the challenge is to increase farmers' productivity.

Even more tantalizing, ITC now has the means to reach into some of India's 600,000 villages, where 72 percent of the people live and where the greatest potential markets lie. Most businesses never venture to an area with fewer than 5,000 people, said ITC's chairman, Y. C. Deveshwar.

Eventually the company expects to sell everything from microcredit to tractors via e-choupals -- and hopes to use them to become the Wal-Mart of India, Mr. Deveshwar told shareholders this year.

''We are laying infrastructure in a sense,'' Mr. Deveshwar said. Sixty companies have already taken part in a pilot project to sell services and goods, from insurance to seeds to motorbikes to biscuits, through ITC.

By overcoming the infrastructure problems that have hampered progress in India's villages in the past -- ITC decided to use satellites and solar panels, for instance, to sidestep the state's shaky power supply and lack of phone lines -- and by offering full Internet service on the computers, the company has instantly broadened villagers' horizons.

''We never dreamed of this, that our village would be connected to the world,'' said Mulchin Sath, Mr. Choudhry's father and also a farmer.

E-choupals were born in 2000 from ITC's determination to capture more of the soybean crop, which it turns into oil to sell in India and into animal feed to export. In purchasing soya, it has long been dependent on a static, archaic system: Farmers sold to village traders or went to government markets, settling for whatever price was offered. ITC then had to buy from the traders or markets, with little quality control and high transaction costs.

The idea of the e-choupals was to allow the company to buy more directly from farmers; e-choupals allow farmers to check prices the night before, and then decide whether they want to sell directly to the company the next day.

The company weighed trying to deliver information through television or radio, but given the variety of Indian farms and farmers -- knowledge, soil conditions and weather all vary immensely -- it thought an Internet channel would allow for more tailored information.

E-choupals also provide information that will increase farmers' productivity and income. An Indian soybean farmer is one-third as productive as an American one, said David Upton, co-author of a case study of e-choupals for Harvard Business School.

Raising farmer incomes was an important goal. S. Shivakumar, 43, the head of the company's international business division and the originator of e-choupals, said he had long been frustrated by how a lack of opportunity limited the ambitions and achievements of Indian farmers.

''This has been a clear commercial initiative with social good in mind,'' he said.

Mr. Deveshwar agreed, saying he found it hard to become enthusiastic about making a rich man richer, but felt very motivated to make a poor farmer less so.

Besides computers, ITC introduced other efficiencies, like electronic weighing, which is more precise than the manual weighing at government markets. Eventually farmers, heavily dependent on the monsoon, may be able to sell futures on their own crops online, thus spreading their risk.

E-choupals have already reduced ITC's transaction costs and the quality of the soybeans it buys is better. As e-choupals continue expanding to other crops like wheat, the returns will be greater.

E-choupals show that ''in an emerging economy, a profitable enterprise can deliver social good without an unnecessary trade-off between the two,'' Mr. Upton said.

The company has also shown that technology can be deployed even in areas with substantial illiteracy. ITC selects a lead farmer, or sanchalak, to run each e-choupal, which serves three to four villages. He is meant to be literate, progressive, young, with an entrepreneurial spark and a good reputation.

Mr. Choudhry, the lead farmer here, said he took an oath in front of the whole village to ''work for the welfare of farmers with honesty and integrity.'' Farmers from his and nearby villages call or stop by to check prices or exchange information. For his efforts, he gets one-half of 1 percent commission on whatever farmers in his area sell to ITC.

Last year, Mr. Choudhry earned 14,000 rupees, about $300, in commission. This year, he has earned that much in one month.

''Our underlying assumption that farmers are entrepreneurial has proved true,'' Mr. Shivakumar said.

Mr. Choudhry has only a middle-school education, and says working with the computer was difficult at first. His 16-year-old son handles most of the e-mail, sending messages about crop diseases and communicating with other sanchalaks.

The venture has not been without challenges. The company had to convince states to waive laws, born of India's protectionist socialist past, that require farmers to sell their produce to government markets.

It has also run up against India's still entrenched caste system, with some communities demanding two computers so castes would not have to mix. ITC refused to yield.

But most of its sanchalaks are from the dominant caste in a village, which is rarely a lower caste, because they must command respect. Mr. Shivakumar said in some cases, low-caste farmers still did not have access to e-choupals, buttressing some critics' concern that technology may just reinforce existing inequalities.

For now, however, e-choupals seem to be reducing inequality of access to information between some rural poor and the urban middle class. Monitoring data show that 70 percent of the activity on the ITC computers does not inolve the choupal, Mr. Shivakumar said, and exploration of the Internet has just begun.

In this village, schoolchildren have already discovered they can check examination results online, and Mr. Choudhry's father and son have found Web versions of Hindi newspapers. In Karnataka State, ITC will soon try allowing farmers to gain access to government land records through e-choupals.

In Chapra village, Atul Singh, 17, the son of the sanchalak, has learned how to download music from indiafm.com and to chat on Yahoo.

''How r u?'' he typed, as his screen informed him that ''asian-honeypie has joined the room.'' A flood of obscenities from a hacker then filled the screen, as the mellifluous cooing of a Hindi song, ''How Unfaithful You Are, My Dear Friend,'' filled the room.

Source: http://www.nytimes.com/2004/01/01/international/asia/01INDI.html