India Inc taps UP's rural economy

Large private sector companies, including ITC, the US-based Cargill and Rallis, are entering the agriculture supply chain in Uttar Pradesh for the first time.

These firms, which were so far interested only in selling their products in the state's rural market, are now supplying seeds and fertiliser, providing technical inputs and conducting local research as well as procuring farm produce.

Some more Indian companies are expected to join the list, while the Birla and Tata groups could also set up marketing operations in the state.

The Kolkata-based ITC has set up several e-choupals in the state, which offer agri-business information, products and services to farmers. They can access latest information on weather, scientific farming practices as well as market prices on its portal www.echoupal.com. They can even buy farm inputs on the website.

ITC is planning to invest Rs 100 crore (Rs 1 billion) in setting up around 1,500 e-choupals, covering nearly 10,000 villages and 2.5 million farmers, in the state in the current financial year.

A Federation of Indian Chambers of Commerce and Industry study says ITC's e-choupal initiative has helped farmers to increase sales by 10-15 per cent. It has also helped the company to save 3-4 per cent of its procurement cost.

Cargill India procures directly from farmers, who get an assured marketing outlet, eliminating commissions and brokerages paid to a host of middle-men in the supply chain. The company is involved in procurement, storage, warehousing as well as marketing of farm produce.

Rallis, with the help of partners, markets key inputs like chemicals, pesticides, seeds and fertilisers to farmers.

For instance, banks and financial institutions like ICICI Bank and the National Bank for Agriculture and Rural Development provide financial assistance to the farmers -- offering credit to buy necessary inputs as well as funding working capital requirements.

In Uttar Pradesh, Rallis is involved in wheat and basmati rice cultivation in the Atrauli, Hardoi and Shahjahanpur districts.

With big companies directly buying their products, farmers are assured of immediate cash, while the state's monopoly over procurement has also ended.