Indian lac production has hit an all-time low. RICHARD MAHAPATRA seeks remedies
In the last week of February this year, the Election Commission office in Delhi sent an urgent request for 30 tonnes of lac for use as sealant during the coming general elections. The request sent officials in Ranchi, the capital of Jharkhand -- India's largest lac producing state -- into a frantic search. Though the required consignment was finally arranged, the message was clear: India's standing as the world's largest producer of lac was in serious danger and livelihoods of the country's three million lac cultivators in terrible jeopardy.
In Jate village about 50 kilometres from Ranchi, lac farmer Pyare Poti feels the effects of dwindling production. Rain-fed agriculture provides just four months of sustenance to her and other residents of Jate; lac farming becomes a handy supplement. "Less investment and high returns," says Poti. However, she doubts if she can bank on lac in the next few years. "In the last four years, I haven't earned anything from lac. And I don't even have the seeds to start fresh," she laments. Three years of drought combined with foggy winters have killed the lac-producing insects that visit trees in her backyard.
The scarcity has also hit big traders like Roshan Lal Sharma, who stays near Poti's village and has been running a lac-processing unit since 1950. "The situation is so bad that to keep commitments with my clients in us, I have to import lac from Thailand," he says.
More than competition and droughts, lack of a domestic policy has hit lac production the most. Despite its importance for rural livelihoods, the forest department does not have a support price for lac, leaving producers at the mercy of traders; they get about 80 per cent of the market value while the cultivators get just 10 per cent. Says Bengali Baboo, director, ilri "The traders' lobby dictates lac prices. The sepc is their body and has no concern for farmers."
Moreover, lac trade is prone to extreme price fluctuations. For instance, the average growers' price rose steeply from Rs 773 per quintal in 1991 to Rs 4,100 per quintal 1993 onwards. This encouraged lac farmers in the short run, but tribal cultivators, perpetually in need of cash, harvested the immature crop and then sold it, resulting in seed shortages for the next season.
Price fluctuations also harm exports to developed countries where manufacturers of lac-based products have to guarantee stable prices. These manufacturers react to uncertainities by replacing lac with resins that afford price stability. Consequently, lac exports have plummeted from 34,037 metric tonnes (mt) in 1952-53 to 5, 670 mt in 2000-2001 (See table: Low demand).
Earlier, price fluctuation effects were absorbed, to an extent, because developed country consumers received shellac supplies from two large factories: one in Germany and the other in the us. Today, the German factory has considerably scaled down production, while the us plant has been buying in bulk from Thailand, which supplies cheap and reliably. This buyer has acquired 95 per cent shares in seedlac purchases. Also, till the 1980s, the Indian government kept buffer lac stocks to check any demand-supply problem; this has stopped since the 1990s.
The seps plans to increase lac exports to Rs 150 crore by 2006. The council proposes to raise lac production to 30,000 mt; 10,000-12,000 mt of that would be exported. But it faces serious bottlenecks. For one, lac factories are located in hinterlands of West Bengal, Bihar, Jharkhand, Madhya Pradesh and Chhattisgarh; moving materials from here to a port and ultimately to destination ports implies freight costs amounting to approximately 15 per cent of the final selling price. The sepc sees this is a major cause for Indian lac losing competitive edge.
More importantly, hidebound forest laws keep lac-producing trees in dense forests out of bounds for lac collectors (most of them tribals without any land deeds). A conservative estimate puts untapped lac in Jharkhand's forests to around 30,000 mt -- the sepc's target for next five years for the entire country. In India about 5 million trees with potential for lac cultivation remain unused.
Opening forests to lac cultivators thus becomes necessary. Also, small landholdings of such farmers (about 50 per cent own less than one hectare (ha) while 42 per cent have one to two ha) do not encourage large-scale plantation of host trees. The ilri has developed bush-like lac plants which can prove useful to such cultivators: about 10,000 trees can be planted in one ha of land and 3,000 kilogrammes of lac worth Rs 2-3 lakh can be harvested annually.
Lac generates four million man days of employment currently. It can thus become a powerful instrument of poverty eradication. Thailand, India's main competitor has taken lac cultivation as a part of its poverty eradication programme. It has opened its rainforests to lac farmers. We will do well to emulate its example.
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