Industries eye forest land for plantations

29/04/1993
Down To Earth

Industries eye forest land for plantations EVEN WHILE the government is privatising and cutting subsidies, paper and forest-based industries are about to receive in response to their clamouring the biggest bankroll of all: natural wealth. At a recent seminar in Delhi on raw material supply for these industries, the ministry of environment and forests (MEF) hinted it would allow investment in plantations on degraded forest land. The objective is to augment domestic supply of pulpwood and timber and cut import bills. If the proposal goes through, it will be at the expense of millions of rural poor, who depend on forests for fuelwood, fodder, building material and medicinal herbs.

The MEF proposal for industrial plantations departs from the national forest policy of 1988, which states forest land cannot be leased to industries and they must tie up with farmers for supply of raw material. Ironically, the proposal follows the MEF replacing a forestry privatisation programme in Himachal Pradesh with a joint forest management scheme, responding to environmentalists who had criticised it as a land-grab effort disguised as afforestation (Down To Earth, March 15, 1993).

According to the Indian Institute of Forest Management (IIFM) in Bhopal, which co-sponsored the seminar with MEF, of the 158 million ha of wastelands in the country, 113 million ha can be regenerated. And, Piare Lal, a vice president of ITC"s Bhadrachalam paper mills in Andhra Pradesh, says all the raw material needs of the country"s forest-based industries can be met from just 2 million ha.

Not only is there a drastic shortfall of raw material for the wood-based industry, imports are also becoming costlier because of currency devaluation. An IIFM paper showed a deficiency of 629,000 tonnes in 1990 and the Development Council for Pulp, Paper and Allied Industries, an autonomous body set up by the Union government, anticipates a shortfall of 1.06 million tonnes against a projected demand of 3.16 million tonnes of raw material in 1995. The situation with other forest-based industries, such as plywood and paperboard, is reportedly equally grim.

The government allowed liberal import concessions in 1985 hoping to keep industry out of forests and this resulted in large-scale imports of cheap pulp and timber. But with the fall in the rupee value and increasing resistance to wanton tree-felling, forest-based industry has begun to feel the pinch. J C Tiwari, a vice president of Orient Paper Mills in Madhya Pradesh, says, "We expect a decline in international timber trade as there is pressure from the global environmental lobby to reduce tree-cutting." However, while Tiwari"s fear may be premature because Canada and other Western countries have an abundance of raw material for supply to paper mills worldwide, the plywood industry may be affected by environmental pressures. Even though it is switching to substitutes, hardwood is essential to make the outer face of plywood. Concedes P V Mehta, executive director of the Federation of Indian Plywood and Panel Industry, "Timber imports, mainly from southeast Asian countries, have gone up to Rs 1,000 crore annually, compared to Rs 500 crore before 1988."

Environmentalists say paper and plywood industry lobbyists have been working hard to change the national forest policy so as to allow them forest land for plantations. They maintain the lobbyists distort trade statistics to this end and disregard the fact that their raw material needs can be met without using forest land.
Farm forestry Although the industry realises import of raw material cannot go on forever, it ignores a scheme for sustainable supply of such material through farm forestry. This scheme would require farmers across the country to grow commercial wood species for the industry, which, in turn, would organise credit, provide seedlings and establish extension services. Such a scheme would benefit both farmer and industry.

But industries such as WIMCO in Punjab and Haryana, ITC Bhadrachalam, Andaman Timber in the Andaman and Nicobar islands and Kitply in Arunachal Pradesh say they have attempted farm forestry -- and burned their fingers. "Coordinating with thousands of farmers is quite onerous," Piare Lal explains. "It is also difficult to enlist farmers for bank loans as most of them are defaulters or already indebted."

But Piare Lal"s complaint only exposes the industry"s boast of scientific management skills. Says Gurnam Singh, principal chief conservator of forests in Haryana, the sugar industry, which coordinates with farmers all over the country and has no problem coordinating with its branch offices and buyers all over the country, would be justified in demanding forest land to grow sugar cane.

Another grievance, according to N S Adkoli, a former forestry adviser to Harihara Polyfibres, is that forest farmers sell trees to third parties. "It must be ensured trees are sold to promoter companies on a priority basis." Under NABARD loan schemes, farmers are not required to sell trees to the promoter companies. Environmentalists disregard this objection, too, saying if farmers are encouraged to grow enough trees, there would be no third-party demand. Several foresters also disagree with industry. "Farm forestry in India has suffered largely because industry does not cooperate," asserts Gurnam Singh.

In the early 1980s, farmers in Gujarat, Punjab and Haryana raised large eucalyptus plantations but found no takers for the wood, as the industry preferred cheaper imports. As a result, many farmers actually pulled out eucalyptus saplings. Says S K Kapoor, principal chief conservator of forests in Punjab, "After 45 million eucalyptus seedlings were planted in 1983-84, only 15.1 million seedlings were planted in 1991-92. The demand from Himachal Pradesh for eucalyptus wood to make apple crates is not enough to support what our farmers produce."

Gurnam Singh says third-party sales take place because "obviously, people are willing to pay the right price. If industry paid the right price, the farmers of Haryana and Punjab could support all the forest-based industries in the country."

Industry, on the other hand, explains the failure of farm forestry in terms of "local imbalances". Says Piare Lal, "There aren"t enough industries to utilise the raw material base. Paper mills in the south do not benefit because of the high transportation costs of timber." But forest officials in Punjab ask, "If import concessions are allowed, why can"t transport subsidies be given?"

A highly placed Punjab official says "local imbalances" can be corrected if the industry stops manipulating the market. For instance, when Grasim India Ltd proposed setting up a pulp unit in Yamuna Nagar in Haryana, the Thapar group"s Ballarpur paper mills objected, saying there wasn"t enough raw material in the area, even though the forest department had stated otherwise.

WIDENING GAP

Raw material for paper and pulp industry will be increasingly in short supply. (all figures in million tonnes)
Year	Raw material from					Demand	Deficit
1990	1.2	0.18	0.20	0.21	1.79	2.4	0.61
1995	1.2	0.36	0.22	0.28	2.06	3.1	1.04
2000	1.2	0.60	0.25	0.48	2.53	4.1	1.57
2005	1.2	0.72	0.25	0.56	2.73	5.0	2.27
2010	1.2	0.84	0.25	0.83	3.12	603	3.18

Pampered industry
Pricing is a major issue in both farm forestry and import subsidies. "In farm forestry," says R D Kutty, managing director of ITC Bhadrachalam, "the industry will have to deduct input costs from the price." The IIFM report maintains forest-based industry has been pampered for long. The 1952 and 1984 forest policies authorised forest departments to supply the industry"s need at concessional rates and the industry continues to expect lower rates. Says Kutty, "We want raw materials at `realistic" prices." But, a forest official noted, "Industries do not want competition as it will raise raw material prices."

The issue is whether industrial plantations should be allowed on forest land. At the seminar, MEF minister Kamal Nath asked, "Why does industry want only forest land? It can utilise abandoned mines and degraded wastelands outside the forest land." But industry eyes forest land for definite reasons. Piare Lal explains, "Most of the 40 million ha of non-forest wastelands is heavily encroached upon or not easily identifiable. It falls within the purview of the Land Ceiling Act and reclamation is prohibitively expensive." On the other hand, forest land is free of such hitches.

Another reason for industry wanting forest land is that it believes it can be used for plantations. Says Adkoli, "The Forest Conservation Act allows joint-sector plantation on forest land. But in 1988, MEF discontinued the practice by issuing a letter to state governments. What is the legal validity of this letter?" Karnataka Pulpwood Ltd, he adds, was formed by the Karnataka Forest Development Corp and Harihara Polyfibres, "but the promised land never came." Even though industry ignored environmentalist questioning its curbing access of local people to the forests, the project ultimately had to be abandoned.

The government, however, has yet to take a final decision on leasing forests to the industry. Kamal Nath said at the seminar, "While we must help the industry overcome the shortage, it would be wrong to consider captive plantation as an Aladdin"s lamp and disregard the social complexities involved." He promised, however, that bottlenecks in forest policies hindering raw material supply would be removed.

Industry"s insistence on using forest land aroused the suspicions of NGO participants at the seminar, who expressed concern that poor people would be denied access to vast stretches of forest land. But industry representatives contend grass and lops and tops from plantations are enough to take care of their needs. And, they warn, "Industry cannot subsidise the public in a big way, if it is to remain viable."

The paradox remains: Farm forestry can adequately supply the wood-based industry"s raw material needs, but the industry insists that its craving for forest land must be fulfilled, even at the expense of local populations and diverse vegetative systems.

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