LIRNEasia has come up with startling evidence on how transaction costs in agriculture could be reduced by simple mobile phone applications. The organization’s Lead Economist, Dr. Harsha de Silva called for a multi-stakeholder action plan to implement a series of actions that would help poor farmers as well as consumers by reducing information costs in agricultural markets and value chains. He was speaking at a panel following a public lecture by Indian Institute of Management Professor, Subhash C. Bhatnagar, who spoke on the benefits of ICT applications to farmers, taking India as an example.

eChoupal model, an initiative by Indian Tobacco Company, said Prof. Bhatnagar, is a good case study how ICTs can reduce transaction costs for the farmers. Electronic market places or Internet kiosks are set up in houses of a trained farmers within walking distance of target farmers which they can use not just to sell their produce, but also to receive services including obtaining information about local weather conditions, farm management and insurance. This will enable higher incomes for farmers through improved quality and reduction in transaction costs. Now 6,400 eChoupals are operational in 5 states of India covering 38,000 villages, servicing 4.0 million farmers, sourcing 13 agri commodities including oilseeds, grains, coffee and aquaculture products. Overall eChoupals have reduced the transaction costs to INR 335 (about LKR 1,000) per one MT of vegetables from the previous figure more than twice of that.

e-Sagu system, another collaborative effort of agriculture research institutions, currently tested among 5,000 farmers among 40 villages in Andra Pradesh, India has shown providing information at right time can result in a net reduction in the farmer transaction costs by INR 2,620 per acre. (about LKR 7,900) farmers need not even be literate to enjoy the benefits of this system, the implementers say.

Read more on our news release lirneasia-public-lecture-news-release.doc

Ethalaya.com reported the event within two hours. See its story here.

Click here to Download Prof. Subhash Bhatnagar’s slides

Click here to download Ms. Helani Galpaya’s slides

Click here to download Dr. Harsha de Silva’s slides

Rural BPO at Mahavilachchiya received wide publicity yesterday, with several local newspapers prominently highlighting the to-be-success story like Sunday Times did below in a first page half page article, and a finance editorial.

BPO in the Anuradhapura backwoods
IT rumble in the jungle

What puzzles us is why some of these articles (Not the Sunday Times story) referred to the venture as a ‘corporate responsibility’ (an euphemism for ‘charity’) of John Keels Holdings (JKH), a top business conglomerate in Sri Lanka.

When Indian Tobacco Company (ITC) launched e-Choupal chain in India, nobody branded it ‘corporate responsibility’. It was an online window for its rural suppliers of first tobacco and later other agricultural/aquaculture produce like soya, coffee, and prawns, to interact directly with the company. It was part of ITC business and definitely not charity. That was why e-Choupal could survive and expand within a short period of time to over a thousand of centres, while most of the other tele-centre chains died down when the donor money was over.

The future of not just the MV project, but perhaps the whole ‘bottom of pyramid’ as well depends on the attitude the business takes. If this is just a promotional activity of a business firm, funded by its marketing budget, it might not lead anywhere. It is essential that corporate sector treats such ventures as a part of their core business rather than charity or mere image promoting activities.