The meet was called the National Conference on Forestry. Its venue was the luxury Maurya Sheraton hotel in Delhi. It was organised by cii in association with the Union ministry of environment and forests (moef) in February 2006. The announcement said Indian industry was organising the event because it was willing to take the lead to "devise effective management perspectives for sustainable forest management in an integrated manner". Industry was most competent to undertake this work because "Indian industry has contributed to transforming the nation into a rapid developing economy". Its effort now was "for a trinity for re-greening India -- strong bondage of partnership across community, state and private sector, which would go a long way in opening up the space for a fruitful partnership in re-greening the country by putting into practice the private-public partnership".
The minister of state in the ministry, N N Meena, was the chief guest. The participants were industry leaders, forest officials and a sprinkling of civil society. The minister's message was that India needed to afforest its lands -- it needed to reach the target of bringing 33 per cent of geographical area under forests. His ministry he said was working on a framework for public-private partnership for attracting private investments for afforestation of degraded forest lands. The secretary to the ministry, Prodipto Ghosh, led the way with a presentation on the proposal.
The proposal is called a multi-stakeholder partnership for forestation, Ghosh said. The first document detailing the scheme was prepared by the Indian Institute of Forest Management, Bhopal, for the National Afforestation and Ecodevelopment Board in November 2005. The proposal has since been cleared by the board and presented to the state forest ministers' meet, which was also held in February 2005. The secretary promised that the proposal would be presented to the Union cabinet shortly.
The scheme, which is detailed below, has been worked in close consultation with industry, in particular the wood-consuming pulp and paper sector. The sunshine biodiesel industry is also a big player -- its demand for forest land has been incessant. In 2003, cii had commissioned a study on public-private partnership to re-green degraded revenue/private/forest land. But for the moment, industry is voicing its problems with the draft, presumably to get more out of the deal. Sandeep Shrivastava, counsellor (environment) at the cii environment management division told Down To Earth that in the formal submission to the ministry, industry has asked for the rules to be relaxed further.
For instance, it wants the criterion that the maximum parcel of land that can be bid on be limited to 50 hectares (ha) be removed. This view is endorsed by representatives of the world's largest forest and paper industry consultants, who are prowling the ministry these days. "Economics of scale demand that industry should be given large parcels of land -- 6,000-10,000 ha of contiguous lands," says David Gardner of Jaakko Poyry Consulting. The draft stipulates that when the multi-stakeholder partnership contract ends, the land should have a minimum of 40 per cent canopy cover. cii has asked for the removal of this clause. In addition, it wants a tax exemption as it is re-greening the country and bringing development. It forgets that it is getting the mother of all subsidies -- free land -- to underwrite its development.
In all this, the ministry has chosen to ignore the conclusions of a working group set up by the Planning Commission on leasing out degraded forest lands to industry. This group had rejected such a scheme and endorsed a forest policy that requires industry to source its raw materials from farmers. Though this group was constituted by the last government, it was chaired by N C Saxena, then secretary, department of wasteland development, and now member of the National Advisory Council (nac), until recently chaired by Congress leader Sonia Gandhi.
The ministry wants to move fast. Meena has admitted in the Rajya Sabha that the state is pursuing the multi-stakeholder programme. With this done, the ministry hopes to see trees planted and green bucks for its activities. The question is whether this scheme is workable, and in particular, will it work for the forests and the people. It's important then to look at the past avatars of privatisation schemes and to seek a set of realistic analyses of what's happening now.
Once this is done, the DFO will obtain approval from the competent authorities and will send the approved scheme (in local language) to the gram panchayat and joint forest management committee. The written resolution of the gram sabha giving its no-objection certificate will be mandatory for the scheme. The government then becomes the official middleman in this game of land subsidy for industry. It even has the role of 'seeking compliance' from local communities in this 'single-window' clearance method. Industry gets the land on a platter, with all clearances completed. Deal done.
This land will then be put to bid. The forester will invite expressions of interest through public notice and look for a sponsor. The sponsor is defined as a company, firm, user group, trust, society or organisation -- public or private -- which is competent to enter into a contract and interested in making investments for afforestation in the bid-area. Based on the deliberations of the pre-bid conference, the DFO will invite sealed technical and financial bids. The offers will be evaluated based on their technical soundness and their potential to improve the site and bring environmental benefits. The sponsor offering the highest present net value of the payment or the highest percentage share of the harvest will be invited for negotiations. Once awarded, the decision will be "communicated" to the local community, whose representative will sign the document so that it can be truly multi-stakeholder-based -- a favourite word in the vocabulary of World Bank-educated Indians.
The formula for benefit-sharing (the sponsor on one side and the combined share of the forest department and local community on the other) will be determined at the time of the finalisation of the tender. There are two options listed. The sponsor could give an assured periodic payment to the forest department (including the share of the local community). Or it could be a percentage share of the forest produce and revenue share in other services such as ecotourism and carbon credit.
The benefits will be received by the forest department and shared with people. The local community stands to get 25 per cent of the agreed benefits, with the department earning the rest.
People living in and around the forests and using its resources for their daily sustenance have been given the first right of refusal to work on the land as daily wage unskilled workers for the corporate entity. Keeping in view past criticism of such an arrangement, this scheme says that the sponsor has to ensure provision of fodder, fuelwood, non-timber forest produce and small timber to local communities, as per their existing rights and concessions as well as the agreement arrived during the pre-bid conference. But what it does not say is how this arrangement will be ensured. In turn, the community is responsible for immediately reporting any instance of illicit felling or unusual happenings. In other words, the community is the unpaid watchman of the entrepreneur. Given that people heavily use these lands, this arrangement means that they have to find alternatives to their basic needs -- including grazing. Users are poor, they are also 'illegal', because grazing animals or collecting firewood is 'customary', not stipulated in law. But if their animals stray into the forests they are responsible to report back to the de facto owners. Given the conflict this scheme is bound to create in rural and forested India, it allows the forest department to build walls around forest land for its clients, on payment of course.
The contract period for these 'partnership' areas is to be of a maximum of 30 years. During this time, though the ownership of the land remains on paper with the state, the corporate entity becomes de facto manager and owner, growing and cutting what it requires. This provision has been inserted to circumvent forest laws, which explicitly disallow the diversion of forest land for non-forest purposes as well as planting trees on forest lands by non-forest authorities.
The pulp and paper industry needs raw material. In the past, industry had been given 'concessions' over vast areas of forests at throwaway prices. Ecologist Madhav Gadgil documents how between the 1950s and 1980s, industry had destroyed each patch it had taken and moved on to ask for more and more. By the mid-1980s, forests were decimated. Interest in conservation peaked and it became clear that strategies had to be reworked. Industry wanted the easy way out. It wanted government to give it land for captive plantations. The plea was that land being given was 'wasteland' -- acres and acres of land lying waste across the country. Industry merely wanted to green this degraded land, it was argued.
In the mid-1980s, the Karnataka government drew up a plan to lease forest lands for eucalyptus cultivation in Davanagere district. To work around the forest laws, Karnataka Pulpwood Limited (kpl) was created as a joint-sector partnership between the state forest department and the Birlas-owned Harihar Polyfibres. kpl, with an initial outlay of Rs 30 crore, was allotted over 8,500 ha of forest lands to grow eucalyptus and other fast-growing trees for captive consumption of the pulp mill owned by Harihar Polyfibres. But this meant that local people living around the forests were to be further marginalised and their access to lands curtailed. The matter went to court. A public interest petition was filed by local ngo Samaj Parivartan Samuday with the support of noted Kannada writer, Shivram Karanth. The state government responded to public pressure and the entity was wound up.
Industry was frenzied about this proposal to get land. The National Wasteland Development Board -- which was the predecessor to the current afforestation board, was besieged with proposals from industry to be given 'wasteland'. However, when industry was offered revenue land, which was lying waste in some parts of the country, it would turn it down. These wastelands were too unproductive. It wanted forest lands.
These moves forced the government, then led by Rajiv Gandhi, to enact the first policy changes to guard against giving land to industry. The national forest policy of 1988 (which is the prevailing policy) incorporated the proposition that industry should source raw materials from farmers.
Click here to see the reports... It made it explicit that natural forests would not be made available to industries. An amendment to the Forest Conservation Act, 1980, was proposed, stipulating that only governmental agencies would be involved in planting trees on forest land.
Five years passed and industry tried a different tack. They did not want a small patch of land for just one factory, they wanted an amendment to the recent forest policy and a free run over government-owned forestlands.
In 1992, Kamal Nath, the then environment minister (and the current commerce minister) came under their spell, proposing to give 1.7 million ha of forest lands for the captive consumption of paper and pulp industries. A proposal was made to the Cabinet Committee on Economic Affairs to amend policies that barred government from granting land for captive plantations. The project proponents had done their homework. To stymie their detractors, they proposed creating forester-industry collaborations for the 1.7 million ha to begin with, with the following caveats:
• There would be a mix of species grown with no single species having more than 50 per cent area. This would ensure a minimum level of bio-diversity and no monocultures. (This has been carried over in the current proposal; in new words)
• To take care of the subsistence needs of people, 20 per cent of the project area would be planted for non-commercial use in consultation with local villagers. This would meet their 'bona fide' requirements of fuel, fodder and small timber. (Ditto in current)
• Only severely degraded forest areas (less than 10 per cent density) would be given to the state forest development corporations to plant in financial and technical collaboration with private sector. (Carried forward in current plan)
• There would be a management committee with equal representation of the foresters and village community and industry head for overall technical supervision. (In the current proposal, it has been refined to become the multi-stakeholder partnership)
But the proposal did not go far. It was severely criticised by environmentalists, tribal leaders and politicians. They argued that industry should be given non-forest wasteland, which would not impinge on the survival of the poorest. With elections round the corner, the proposal was buried but not killed.
After the 1995-1996 general elections, the moves began again. In 1996, the then environment minister, Saifuddin Soz (now minister for water resources), refused to succumb to pressures and openly opposed industry's proposals to privatise forest lands. But, the Madhya Pradesh government invited tenders from private entrepreneurs for grant of forest land, which would be leased out for 30 years. This was stopped under pressure. In 1998, a working group was then set up under NC Saxena, then secretary, wasteland development, to report to the Planning Commission on the issue. The group, which was mandated to examine the feasibility of leasing out or otherwise making degraded forest land available to private entrepreneurs, held wide-ranging consultations with industry and other interest groups. The report concluded that while industry should be involved in re-greening revenue wastelands, it should not be given forest land as it would impinge on both people and forests.
The report concluded:
• Since most degraded forests are close to habitations, they have extreme biotic pressure and have rights of people recorded on such lands. In fact, these lands are degraded primarily because of people's pressure and are not 'unproductive'. It will be impossible to extinguish such rights or to reduce biotic pressure, without people's involvement. It noted that in many national parks and sanctuaries, the government is finding it difficult to guard against people's use. If this is tough, then giving land to private entrepreneurs who are less legitimate users of the forest land will exacerbate tensions manifold
• It was not possible to find degraded forests in a contiguous patch of say 2,000 ha suitable for effecting economies of scale. Such patches are found only in reserved forests of good quality. Industry, during its enquiries, had also clarified that it required forest lands with good soil depth, so that afforestation is possible without huge costs
• Industry had shown no interest in leasing in non-forest wastelands and therefore their plans to operate on equally degraded barren forestlands were highly suspect
The Saxena group supported the involvement of industry in the use of non-forest wasteland, such as the Bhal lands of Gujarat or the ravines of Madhya Pradesh. These lands added up to 20 million ha, out of industry's total requirements of 2 million ha to grow plantation crops. But industry turned down this offer. It wanted more.
In 2000, the first to bite the bullet was the poster boy of liberalisation, Chandrababu Naidu, then chief minister of Andhra Pradesh. But times had changed and old players had learnt the language of reform. The proposal was sweetened by new terminology of partnership and involvement of stakeholders.
The state government proposed (surreptitiously as it emerged) to sign a memorandum of understanding with the Reliance group of industries for setting up plantations in government forest lands.
For the first time in the country, institutions under the joint forest management scheme -- the non-legal entities created by the forest department to involve people in planting trees -- were to be part of this scheme (see 'Seeking Reliance', Down To Earth, September 15, 2000). The company was ready to launch plantation activities on 10,000 ha of land in three districts: Visakhapatnam, Adilabad and Chitoor. But if proved successful, more land would be provided, Naidu had then promised.
But as news leaked out, opposition mounted. Groups in the state argued that the government should give the rights to local vana suraksha samitis -- village-level forest user groups that protected and regenerated degraded forests. These were tribal lands and the area fell under Schedule v of the Constitution, which debarred alienation of the lands from its inhabitants. In 2001, the state government was forced to give up this proposal.
But there is no permanent opposition in politics. In February 2006, when the cii meet was held, the current Andhra Pradesh forest minister -- now from the Congress, which had opposed the Naidu government for being anti-people -- supported the multi-stakeholder partnership with gusto. The players had come full circle.
Another round had previously been played out in 2002. But to give the then ruling National Democratic Alliance government its due, it did not succumb to the pressures. Its finance minister, Yashwant Sinha, in his 2002 budget, had provided that his government would give tax deductions for afforestation projects on degraded non-forest land. The crucial prefix was "non", because without this, Sinha would have had to capitulate to pressures of the industry lobby.
But its successor government, which came to power on the vote of common people and vowed to wipe out poverty and provide employment to all, seems to be working in reverse gear.
The question is what does industry want and why? What will the proposal end up doing?
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Wood-based industry says that it needs land, because it needs continuous and sustained supply of raw materials. In addition, there are new demands on this land. There is growing interest in biodiesel, with many Indian and foreign companies jumping into the fray to produce fuel from plants. There is the possibility of earning carbon credits, as trees sequester carbon. There is money in forests. And industry wants it.
Critics of the scheme to give land to industry say while it is the case that industry needs raw material, the question is why it needs captive plantations. The Saxena report pointed out that if this is done, then all other industries based on agricultural raw material should make their growth dependent on being given land -- for instance, the sugar industry, the textile industry and the rubber industry.
The issue, according to them, is to examine the current raw material sourcing pattern of this industry to find the best options for growing its renewable and profitable raw material. In 2004, the Green Rating Project (grp) of the Centre for Science and Environment (cse) found in its study on the pulp and paper industry that Indian companies were moving towards innovative and very viable methods of producing wood. It also found that these methods would be seriously compromised if captive plantations were allowed.
It found that by 2001 the sources of raw material of Indian industry had changed dramatically. Instead of depending on the supply of wood from government forests, it was now getting over half its wood from private sources, including farmers. In other words, by early 2002, this industry was buying as much as 1 million tonnes (of dried wood) directly from farmers and another 1 million tonnes from the open market. Farm forestry now contributed as much as 30 per cent of the forest-based raw material of large mills, the main users. This supply is bound to increase, as paper mills have encouraged farmers to invest in forestry operations. In fact, some pulp and paper mills were almost wholly dependent on wood sourced from farmers, found the study.
The shortage of raw material was a convenient bogey, possibly a ploy to get land at throwaway prices. "In the last few years there has not been even a single incident when a major wood and bamboo-based paper mill has closed down due to scarcity of raw material," says Chandra Bhushan, coordinator of grp. He points out that the performance of the mills shows that during the past five years, most mills based on wood and bamboo have operated at very high capacity utilisation, indicating no real raw material crunch.
However, he accepts that consistent supply of a single species of wood or bamboo will improve efficiency because of quality control. But he finds that quality control is happening where industry has developed tissue culture farms to sell saplings to farmers. "Farmer- and tribal-grown wood is a critical source of this industry's raw material mix and I see this trend growing substantially in the coming years, provided that captive plantations are now allowed," adds Bhushan.
Industry says in its defence that it will continue to source raw material from farmers and tribals but needs land to grow plantations for assured and consistent supply. But unfortunately, its sums just do not add up.
Firstly, its demand for land adds up to 1.2 million ha, which it says will produce 3.4 million tonnes of paper and paperboard. This assumes that it requires 4 tonnes of wood (wet) to produce 1 tonne of its product. It also assumes that it will be able to harvest wood in any given year from only 14 per cent of the land area, in other words it assumes a 7-year rotation period. Given that farm forestry based on tissue culture is beginning to bring returns within 4-5 years and that bamboo crop can be harvested in three years, this clearly underestimates the total harvest. The desire for landlordism seems to be taking priority.
Secondly, even if industry estimates are taken, its wood production will completely replace the market for farmers' produce, unless it substantially increases its installed capacity. The top 28 companies in the country which use wood produce roughly 2.28 million tonnes, accounting for 60 per cent of the country's total production. The cost of a 'greenfield' project is so high -- Rs 75,000 to Rs 100,000 for each tonne -- that new capacity addition has remained low in the country. Companies have expanded production by process improvement and not expansion of installed capacities.
But let us assume that industry will expand its capacities, from 2.28 million tonnes to say 6 million or 8 million tonnes by 2010. This would mean that industry can continue to source half its raw material from farmers and the rest will come from its own lands. The problem with this logic is that it fails to understand the dynamics of growing wood and the fragility of the market.
The real reason for industry's keen and dogged demand for land lies not in its raw material insecurity, but in its greed to maximise profits. The fact is that the cost of raw material from captive plantations is less than half the cost of raw material from the open market, or when it is sourced from farmers. This is because of the fact that industry does not pay the opportunity cost of land of the farmer, as land is subsidised.
The difference is substantial -- where wood grown in industry's own plantations would cost it between Rs 1,000 to Rs 1,500 per tonne (dried basis), the average cost of wood from other sources is between Rs 2,600-2,700. It is for this reason that critics of the scheme call this scheme the mother of all subsidies as it will destroy the farmer market for this product.
This is not an imaginary fear. In the mid-1980s, the market for wood was wilfully destroyed. This was the period when the government had launched a massive farm forestry programme and farmers were beginning to invest in a crop requiring a long gestation period. But industry wanted a quick buck. They were used to cheap raw materials. They persuaded the government to bring pulp under open general licence (ogl), making it cheaper to import pulp from Canada than to buy from Indian farmers and pulp it locally. The government stepped in with more cheap wood from its forests. In months, social forestry collapsed. Farmers plucked out their wood sapling, swearing never to trust industry and government again.
Currently also, the price of government supplied wood distorts the market. Almost 40 per cent of the wood and bamboo used by industry comes from government forests, which seriously undercuts the price for farmers. The government supplies bamboo -- largely from forests of the northeast -- on an average for Rs 2,600 per dry tonne. The minimum cost of bamboo supplied by tribals or farmers is Rs 3,200 per dry tonne. In other words, the government elbows out farmers.
It was only in the mid-1990s, when industry's efforts to secure land for plantations failed, that some industries turned to farmers again. These mills are reaping huge benefits and the examples are outstanding. Firstly, the companies have invested in developing nurseries of high-quality seedlings and tissue culture farms, so that planting material is of high quality. Secondly, they have invested in research and development to reduce the crop cycle, so that farmers can harvest more and faster. They have also successfully demonstrated that inter-cropping is possible, so that farmers can maximise benefits. It is clear that farmers will take to this crop if it is competitive and therefore, efforts of industry have been to improve productivity on marginal lands, where crop choices are limited.
This has meant that 1 million tonnes of wood come directly from farms. A conservative estimate of grp is that between 1998 and 2002, as much as 0.1 million ha of land was brought under forestry of farmers and tribals, for industry. This provides huge employment benefits. It also gives money to the rural poor. Currently, it can be estimated that industry pays Rs 280 crore directly to farmers.
The price of raw materials determines the cost of the final product and the profits of any industry. grp has computed that the raw material cost of large-scale wood- and bamboo-based mills is roughly 18 per cent of their turnover. In comparison, agro-residue-based mills spend 22-25 per cent on buying their raw material. It is also important to note that, in spite of the so-called wood shortage and the high-price bogey, the cost of raw material has remained consistent over the last few years. Even with this, the average operating profit of the top 10 companies in India in 2002 was 19 per cent of turnover. The same for five global companies was 3-9 per cent.
It is only the paper mills that are totally dependent on government-supplied raw materials which have been blessed with raw material costs as low as 12-15 per cent of their turnover. The plants that buy from farmers spend between 15-17 per cent. But these costs do not impinge on the profits. More importantly, these costs contribute directly to increasing the bottom line of thousands of people.
The proponents of this scheme clearly need a lesson or two in the economics of market and reform.
The country needs to invest in its forests. The question again is where will this money come from. The target is challenging: large parts of the existing forest land, which constitutes roughly 21 per cent of the land area, are degraded and need investment to plant trees. In addition, as per this target (which has been set for some not-so-clear reason), the country has to bring an additional 12 per cent land under forests.
Some money and provisions for fuel and fodder needs of the people are provided for in the multi-stakeholder partnership. They also have the right to first employment on requisitioned lands. But for people crucially dependent on these lands, this movement of enclosure will be devastating. More and more it will lead to tensions between the richer in the village -- less dependent on the commons for survival -- who can afford to 'agree' to private control and those who are landless and marginalised and have no alternative but to use these lands.
The contempt of industry towards poor people is an indication of things to come. The cii report on re-greening India makes telling (and chilling) comments in its reply to the contention that this scheme will make the poor more destitute as it will deny access to minor forest products and other biomass that they gather. It says, "It is time to realise that the access, if any, enjoyed by these millions to forest products is simply by default, as the forest department is not in a position to enforce the rights conferred on them by the Forest Act 1927." In other words, people are illegal users and continue to get away because the forest department can't beat the life out of them.
In addition, industry says that the recent Supreme Court judgements banning felling in reserve forests and collection of any material from inside protected areas have already ensured that access to minor forest produce and other biomass by the 'millions of voiceless forest dwellers' shrinks considerably. In any case, these decisions are taken because government is clear that it needs protection and conservation and that is why industry is willing to be part of this re-greening effort, it says. The callousness towards the poorest in the country is evident and indeed shocking. Whatever compensatory safeguards are included in the scheme, this "partnership" is cleared doomed.
The paper industry says it needs 1.2 million ha. Seen in the perspective of the total forest land - over 66 million ha in the country -- this is small. But firstly, government does not even know how much land it will put under this multi-stakeholder partnership or under de facto corporate control. The paper industry has already said that it will need an additional 1 million ha for its export ambitions. It wants large, contiguous areas so that it can achieve economies of scale.
There are many others who are waiting in line. Once the scheme is formulated, the floodgates will open. For instance, the emerging biodiesel industry is desperately scouting for large areas to grow its oil plants. Again, economics teaches it that the cheapest option is to grow captive plantations and that is what it wants. Already big players -- Reliance, uk-based D1 Oil as well as British Petroleum -- are lobbying hard to change laws, which will allow captive plantations on forest lands.
At the same time, the Union minister for panchayati raj (who was till recently also the minister for petroleum and natural gas), Mani Shankar Aiyer, has been advocating the need to involve local communities in this greening effort.
Different states are working to incorporate the 'jatropha model' in rural development programmes. But with cheap land at its disposal through this partnership, this market will go for a toss. How much land is needed to grow oil crops that can fuel the growing numbers of vehicles on our roads? Take a guess.
The nature of the problem is not in contention. It is the nature of the solution suggested. Clearly, the paper and pulp industry can grow substantially if there are more sources of raw material. This is not to say that there is a raw material crunch. Phenomenal growth is possible for this industry, which uses renewable raw materials. But is land to industry the solution to its growth? That clearly is more than debatable. It is absurd. With inputs from C Balaji, Padmaparna Ghosh and GRP team