Report No. 1745-IN 1ndia Forestr/ Pros npcts April 1978 Agriculture Division B South Asia Projects Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients .,nly in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFIClAL USE ONLY INDIA FORESTRY PROSPECTS Table of Contents Page No. SUMMARY AND CONCLUSIONS .................. .i - iii I. INTRODUCTION .......... ............................... 1 II. REVIEW OF PAST PERFORkAJNCE ........................... 1 Background ........... ................................ I Resource Base ......... ............................... 2 Area . ........................................... 2 Volume & Yield ....... ........................... Productivity ........ ............................ 3 Institutional Arrangements ........................... 3 Industrial Base ........ .............................. 3 Contribution to the Country's Economy .... ............ 4 Performance Under Development Plans Allocations ........ .............................. 5 Physical Achievements ....... .......................... 6 III. ISSUE'S AND CONSTRAINTS ............................... 8 Issues . ............................................... 8 Constraints .......... ................................ 8 Framework for Forest Products Development .... ... 9 Balance between Hardwood and Tropical Pine Programs ....... .......................... 9 Quick Growing Plantations Researcn .... .......... 9 Role of Private Sector .......................... 10 Relationships Between Land Use Planning and Forest Policy ............................. 10 Fuelwood Supply ....... .......................... 10 Extraction ........ .............................. 11 Forest Inventories .............................. 12 Project Planning and Implementation Cell .... .... 12 IV. FUTURE PROSPECTS ........ ............................. 13 Features of the Forestry Sector ..... ................. 13 Roundwood Demand and Supply to 2000 AD .... ........... i3 Industrial Roundwood ............................ 14 s docu[entII hias a resiricied disributioni and may ob used by recipients only in the performanzee of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. -2- Table of Contents cont'd. Page No. Coniferous ........... .................. 14 Hardwood ......... .................... 14 Fuelwood ......... .................... 15 Action Program ......... .................... 15 Industrial Forestry ............................. 16 Social Forestry ............................. 16 Environmental Forestry .......................... 17 Export Prospects ............ ................. 17 Investment Possibilities ............................. 13 ALNNE X S 1. 1971 Classification of Forests by Categories 2. Recorded Volume Production of Wood 3. Value of M.ajor and Minor Forest Product Exports 4. Volume of Log Exports 1970-76 5. Public Sector Outlays for Forestry 6. Investment in Man-Made Forests 7. Estimated Financial Commitment to Social Forestry in the Fifth Plan 8. Investment in Environmental Forestry 9. Physical Achievements in Establishing Man-Made Forests 10. Estinated Physical Achievements in Social Fcrestry During the Fifth Plan 11. Estimated Domestic Roundwood (Industrial and Fuel;ood) Requirements to 2000 AD 12. Past and Projected Percentages of Consumption of Various Cellulosic Raw Macerials in Pulp and Paper Industry 13. Financial Rate o. Return on Eucalyptus Territicornis Grown in Uttar Pradesh 14. Forestry Project Possibilities 15. Glossarv and Abbreviations INDIA FORESTRY PROSPECTS STTMMARY A-ND CONCLUSIONS The forestry sector makes an ideal vehicle to initiate economic develop-ment. Forests, almost by definition, are locatea in the less developed rural and tribal areas. Forest development -- management and production -- -whether based on natural or man-made forests, is highly labor intensive, as are some of the primary forest industries. The required skills are those common to almost all rural/tribal populations (including the women and children), yet the production process is one which lends itself to gradual mechanization whenever labor costs rise. Plantation forests are particularly labor intensive (200-300 man-days per hectare over three years for teak plan- tation establishment in Madhya Pradesh) and it is not unusual for wages to make up 80% of total costs. These wages go almost entirely to families in the lowest 40% of income earners. In the tribal/rural areas, properly located forestry projects are an excellent way of increasing employment, raising income and initiating the first steps to development. ii. Given the potential of India's designated forest lands, which account for 75 million hectares or 23% of the total land area, it i8 perhaps surpris- ing that the forestry and logging sector's contribution to NDP in 1976-77 was a little over 1.5%. This sit1-ation has prevailed s,ince - bfore 'he Firs Plan, primarily because the hardwood forest (which makes up 95% of the forest cover), under tensive fo,s of ma,agement and . u has a low density, low yielding res urce. The average annual gross increment is currently between 0.5 an' 0.9 m /ha/year compared to the world average ror hardwood forest of 2.5 m . In areas where indigenous forest can be converted to quick growing eucalyptus, pine, popiar, casuarina and acacia pian ations, productivity could be increased over ten times to between 7 and 12 m /ha/year. iii. Investment in forestry since 1951 has amounted to about 0.5% of the total plan outlay and has been insufficient to finance the production programs needed to supply projected demand for industrial hardwood and fuelwood by the end of the century. The main reason is that forests were traditionally looked upon by the Government of India as a source of revenue rather than as a sector needing investment. During the First Plan 15% of forestry funds were earmarked for growing long rotation (40-60 years) hardwoods such as teak and sal; none was allocated for short rotation (5-15 years) eucalyptus, poplar, casuarina, acacia or tropical pine species. By the Fifth Plan 36% of funds were allocated initially for man-made forests as a whole, 9% for short rotation species and 8% for fuelwood; the emphasis is still very much on long rotation hardwoods. Environmental forestry activities have received only 7% of total plan alloca- tions to forestry since the Third Plan. Moreover, u,ntil very recentlv little progress was made in financing the afforestation of water catchments. If - ii - the indiscriminate removal of forest cover in catchment areas continues un- abated as it is doing in some areas (particularly in the Himalayas), it will lead to further soil erosion. rapid run-off and floodinz in the rainv season. followed by reducing down-stream dry weather flow. In extreme cases, for xATmnpl- in the Shiwalikg-s this has alreedy Ld to the comnplre rpcsatinn of dry weather stream flow and the consequent disruption of agricultural development . iv. ~By the enA of the Fifth DI an it i9 -expec-ted that some 3.8 million LV . JJJ L*f- -L~. I LflA I I."fl . LOl LI' ~ . 0 -.L,a 0IL~.. LL * WLJLI hectares of man-made forests including fuelwood plantations (about 5% of the country's forest lansi will be estabullshed. By then eucalyptus, poplar, casuarina, acacia and conifer species are likely to account for only 10% of the established plantations and to comprise Less than 0.5% or the country-s total forest area. v. During the Fifth Plan, special emphasis is being given to (a) pro- duction forestry aiming at clear felling and replacement with man-made forests, (b) establishment of additional wood processing facilities to utilize the timber from clear felled areas, (c) the development of farm forestry and improvement of degraded forests to increase fuel, fodder and timber supply in rural areas, and (d) forest inventory to improve information on standing volume and yields. vi. Domestic roundwood requirements by the year 2000 4re projected to be nearly 290 3million m- (industrial roundwood 65 million m and fuelwood 225 million m ). Demand for industrial roundwood is expected to reach 52 million m for hardwoods and 13 million m for conifers (45% of this is made un of c,onifprous nulpwood)_ eontinuation of existing programs should be able to ensure the supply of industrial hardwood requirements and about half of the coniferous roundwood deand * f big gaps are coniferous pul p- wood and fuelwood. To supply 6 million m of coniferous pulpwood in the year 2000 will rqn abu lhectares of trpc l pir. -lan by 1994 and an investment of some Rs 1,750 million (US$220 million). Regard- ing fuelwood, if it is ass-umed 15J million m (etLimLaedU co-UwUpLloQL in 1970) will continue to be supplied from existing resources--and this could be a rash asSumption--then provision wiii have to oe made ror an additional 75 million m by the year 2000 requiring an annual planting program of 450,000 hectares costing some Rs 1,125 million (US$140 million) annually. This figure is impracticable in terms of availability of both land and financial resources. More realistic might be a target of 225,000 hectares over the next two plan periods. Economic rates of return for quick growing pulpwood integrated with processing facilities usually range between 12% and 20%. Fuelwood plantations are also expected to show a satisfactory economic rate of return if the opportunity costs of alternatives are taken into consideration. vii- Clearly; India has two major tasks to accomplish over the next quarter of a century: first to improve the productivity of its forests to supply the growing neAd of the domestic wood produirts industry (particuilarlv - iii - pulp and paper), and second to develop its farm forestry programs to supply fuelwood, fodder and farm timber in rural areas. Encompassing both priorities is the vital role environmental forestry plays in soil and water conservation; this will need much more investment than it has been given in the past. INDIA FORESTRY PROSPECTS I. INTRODUCTION 1.01 This brief report was prepared by Mr. R.D.H. Rowe of the Bank New Delhi Office in Sentember 1977 with three ronnidprations in mind: (i) Tn supporvrt- the foroatr- contri bution torr ~ t 1077 report entitled, "Economic Situation and Prospects in (iL.Lj lo updUate the Bank's 1974 Forestry Sector Survey; arna (iii) To identify project priorities within the forestry sector for Bank lending. In January 1978 it was discussed with GOI in New Delhi. This Gray Cover Report contains the agreed views of the Government and the Bank on the prospects of future development in forestry in India. II. REVIEW OF PAST PERFORMANCE Background 201 Forestrv is an nld pqtahli,hpd Artivitv in Tndia hpbcasi1P merrhants in the 19th century were quick to realize the importance of teak and sal for firr"4tir7D vv1o ,avn~,~ n. 4 --_ .- T,s 1 QA #-Ih- furniture, 1- paelig ve.e flooing moldng ar.d -marine --- -1 n use. -r -186 -he first Indian Forestry Act was passed to control the indiscriminate felling of hardwood forests "an - yi- A i;eld regulation throug..h wori plans This was followed in 1894 by a statement on National Forest Policy which emphasized the r,eed to demarcate, reser-qe ar.d con.ser.ve forests. A reiio n 1952l re- emphasized the environmental protection functions of forestry and suggested 3% Li/ of tne country snould De retained under forest cover. Although some recognition was given to production forestry in the Third Plan it wasn't until the National Commission on Agriculture (NCA) published its interim report on "Production Forestry - Man-made Forests" in 1972 that the full importance of improving the productivity of Indian forests was recognized. For a quarter of a century (1947-72) India had been slow to adopt new devel- opments in forest management, extraction, processing, research and planning that were being used in developed and many developing countries. However, since the State Forestry Corporations started operations in 1974, significant improvements have been made on all fronts. 1/ The criteria supporting this figure were never clearly defined. Resource Base 2.02 Area: Although India possesses the third largest area of forests in Asia 1/ less than 50% is classified as reserve forest and less still is productive (Annex 1). In terms of total forest area per capita it ranks third to last in Asia with 0.15 ha. Coniferous forests, found mainly in the Himalayas, comprise only 5% of the forest area. Protected and unclassified forests account for 55% and are so burdened with local rights and privileges that scientific forestry management is virtually impossible; this leaves the accessible, productive reserve forests amounting to some 30 million ha as the country's future source of industrial roundwood. 9203 The bulk of Tndia's remaining indigenous forests are concentrated in four major geographic areas: Percent of Forest Area A - A 'L. ~ ra - Ife "Dome Area" (raudhya Pradesh, nldhra Pradesh, Orissa and Maharashtra) 50 - The Northeast (Arunachal Pradesh, Assam, Nagaland, Manipur Mizoram, Iripura & Meghalaya) 14 - Western Himalayas (Uttar Pradesh, Himachal Pradesh and Jammu & Kashmir) 10 - Andaman & Nicobar Islands 1 75 These forests have one feature in common which is perhaps why they still exist relatively intact; poor accessibility. Forest road density in these areas averages less than 0.2 km/sq. km whereas some 0.75 km/sq. km would normally be required to operate the forests efficiently. 2.04 Volume & Yield. No comprehensive national forest inventoryis available, so little information exists on global volumes and yields. nJowe-Ver LL Ls .lear froL UL Are.LVLhoaL LI.V-LL.ven Lr . LaatLed Lin thLle I;19U6 that=6 many of India's fore ts are poorly stocked. The estimated average standing vol e is aDout 25 m /na; in Ene DTome Area- volumes range Detween ov ana 80 m (ha; in the Nort14east and Andaman and Nicobar Islands this can ixceed 200 m-/ha (cf 20-30 m in3Savanna Forests of Central Africa, 50-60 m in Finland a9d Canada, 200 m in temperate zones of Austria and Chile and 300-400 m' in tropical rain forests). 1/ Indonesia - 120 million ha, China - 96 million ha, India - 75 million ha. -3- 2.05 Yield from India's merchantable forests is Xow. The average annual gross increment is estimated at between 0.5 3and 0.9 m'/ha/year compared to the world average for hardwood forests of 2.5 m . Intensive silvicultural treat- ment of the Sxisting productive forests may produce mean annual increments close to 5 m /ha/year; if the indigenous hardwood forests were converted to quick growing, short rotation eucalyptus, 5ropical pines, poplars, casuarina, nrnria etc. vi1ldc ranging from 7 tn 15 m /hn/vpAr rnil1d hp rpal i7pd 2.06 Productivity. RaeoA r-emov7yl al of ;nAia- rou'nd-wood and fueal- wood from 1970 to 1974 averaged about 24 million m annuilly (Annex 2). When related t1-o gross forest. area tlis amount0s to about n.3 m t/hnaf/year -.-ch is very low compared to the 3-4 m /ha/year normally expected, for example, in 'west Germany or th e -U C'A Institutional Arrangements 2.07 Over 90% of the country's forests are owned and managed by Govern- ment; the balance by civil authorities (3%), corporate bodies (4%) and private individuals (2%). 2.08 An All-India Forestry Service was created in 1966. However, man- agement of the forestry estate continues to be a state responsibility with each having its own Forest Service. At the center (under the Department of Agriculture), an Inspector-General of Forests assisted by a small team of professionals attends to general forest policy and planning. 2.09 In 1972 the NCA recommended the creation of autonomous State WFnrptrv Development Cornorations for establishing and managing man-made forests and forest based industries. Sixteen corporations have been set up and now have a t i tinal financing, mainly through the Agricultural Refinancing and Development Corporation (ARDC). The land an,d its stLandir,g t imbU ier transferred t ot Lthe Corporation are value and together form the basis of equity capital against which it can borrow. 2.10 The training of forestry staff is conducted by the Government of India ( on behalf ofL the states at the IndianL Forest College, anru NiorthLern Forest Rangers College (both at Dehra Dun) and the Southern Forest Rangers College, Coimbatore. Forestry Research on an Ali-India basis is conducted at Bangalore and Coimbatore. Industrial Base 2.11 Forest based industries occupy a relatively minor position in India's manufacturing activities. The forest industries' contribution to NDP in 1975-76 at constant prices was a little over 1.3%. On a world- wide basis, wood-using industries in 1967 accounted for 5% of the total value of production and about 7.5% of employment; in India the figures were about 2.6% and 2.9% respectively. The existing industry is characterized by san-l privatelu own(ed nrntd,ti,in uinits onprating at relatively low levels of efficiency. This is particularly so in the pulp and paper - 4 - industry where the average size mill is only 15,000 tons per annum (TPA) with a range from 1,000 to 85,000 TPA. Economies of scale in other parts of the world are forcing entrepreneurs to build mills exceeding 150.000 TPA. 1/ The estimated number of mills, annual installed capacity and production for 1976 are shown belonw Prodiirtion value was some Rs 8,148 million (USTs 936 millior). Ar,nnlua Produc- Capacity Produci.-o Installed tion in Utiliza- Value Industry Ur.it Number Capacity 1957 to s crores Sawnwood '000 m3 5,000 ? 6,000 ? 300.0 Plywood & Veneer '000 m 100 215 192 89 53.8 Particle board '000 mt 6 /a 51 8 16 2.4 Fiberboard '000 mt 4 35 18 51 3.6 Matches million 43 /b ? 11,000 ? 15.0 boxes Pulp & Paper '000 mt 69 1,068 880 82 440.0 11o 1 a1Q 1,. Q /a On.ly 3 were operating in 1976. T7 Western India Match Co. Ltd. is responsible for 50% of production from J mLLls. 2.12 Development or tne forest industries sector nas been handicapped by a lack of integration between public sector supplying the timber and the private sector manufacturing wood products. To attract investment raw materials need to be assured on a long term basis; in the past flows have been uncertain. Contribution to the Country's Economy 2.13 The forestry and logging sector 2/ contribution to Net Domestic Product in 1976/77 at constant prices was very small (1.5%). This is pri- marily due to the low productivity of India's hardwood forests, difficulties in marketing secondary species, relatively low royalty rates, poor infrastruc- ture and a reluctance to give un conservation-oriented forest nractices in exchange for higher production man-made forests which, although requiring funds for establishmernt, promise much better returnrs. I.1 I.ATdia's fo ---r*. L 1974/75 re14aleA a grs revenue of Rs 38.04/hLa and a net return of Rs 17.51/ha compared, for example, with West Germany 1/ But profit margins are meager due to exceedingly nign capitai costs; in India manufacturers make reasonable profits in spite of their small sized mills because (a) local equipment is relatively less expensive than its counterpart overseas and (b) the tariff (protection level) is considerable. 2/ Does not include the forest industries sector. - 5 - where an expenditure in the 1960's of Rs 435/ha brought in a gross income of Rs 565/ha and a net return of Rs 130/ha. In UK the net return was Rs 140/ha and in Switzerland Rs 190/ha. 1/ 2.15 Forestry and logging operations only supply full-time employment for about 0.2% of the working population compared with 70% for agriculture. But part-time work in forestry/logging and the collection of minor fnrest produce may account for as much as 12 million man-years annually. 2.16 Total export of wood based products and minor forest produce amounted to about Rts 713 million (UTS82 million) in 1975/76 or about 1.8% of India's total exports (Annex 3). Imports of wood products during the same year dLour[eeud to abuout Ls 447 mLi.L.LL (US52 mLL1l)on or about 0.9% of Inuia's total imports. Newsprint accounts for over 70% of the wood product imports anra in 19/7i'5 amounted to 141,000 tons valued at Rs 450 million (US$52 mil- lion). In 1975/76 minor forest produce accounted for 53% of the value of exports; the balance was made up by wood-based panel products, paper a d paperboard and logs. During the period 1970-76 an average of 26,000 m of logs was exported annually (Annex 4). The main species exported were rosewood, teak and sal. 2.17 Consumption of newsprint, paper and paperboard since 1970 is shown below: Imports Paper & Apparent Year Production Paper Board Newsprint Exports Consumption ---------------------------'000 tons ----------------------------- 1970/71 795.8 14.7 144.2 23.8 930.9 1971/72 820.8 14.3 206.8 8.4 1,027.5 1972/73 QA.2 Q 1 .7 153.i Q in Q 1,008.5 1973/74 840.2 17.0 117.0 20.3 953.9 1974/75I 6 0 in 10. 14.11 Q 0 1s n 11 1975/76 860.0 16.3 100.8 4.7 992.4 Source: NCA Report, Part IX, 1976 and Monthly Statistics of the Foreign Trade of India, March 1975 and 1976. Per capita consumption in 1976 at 1.63 kg is very low compared with other countries (Egypt 7 kg, USSR 16 kg, Japan 57 kg, UK 106 kg and USA 205 kg). Consumption has suffered a decline during the last few years due, not to lack of demand, but to lack of supply, i.e. lack of capacity, production disturbances and severely restricted imports. The reduction of imports has mainly affected newsprint but the entire paper market is undersupplied; this in the long-term will create a strong upward pressure on paper prices. 1/ Gnost Stutdies i n Tirnnien anre fry, 1967R Rnvya CnGlege of Fnrestry, Stockholm. -6- Performance Under Development Plans 2.18 Allocations. A review of plan allocations shows that since 1951 forestry has received between 0.4 and 0.6% of the total plan outlay as com- pared, for example, with agriculture which ranged between 12 and 20% (Annex 5). Investment in forestry has been inadequate particularly as far as production programs are concerned. The main reason for this was that forests were traditionally looked upon by government as a source of revenue rather than as a sector needing investment. Lack of funds has curtailed the reDlacement of low density, low production, hardwood forests with higher-yielding planta- ton species. Duri.ng the First Plan prio o nly 15% of funds were earmarked for the establishment of long rotation hardwoods (teak, sal, sissu, etc.), .d t.-he rehabiltation ofl degraded forest: none was allocated to the estab- lishment of quick growing species (tropical pines, poplar, eucalyptus, casuarina, acacia, etc.) (Annex 6) It wasn.t until thIe T.Li r PIan that a start was made on plantations of fuelwood and quick growing species. By the Fourth Plan 50% of funds were allocated to man-made forests as a whole but only 19% to plantations of quick growing species and 4% to fuelwood planta- tions; the emphasis was still very much on teak, sissu, sal, babul, khair, cashew and other miscellaneous hardwoods collectively known as "economic plantations of industrial and commercial use". If the allocations indicated in Annex 6 remained unchanged during the Fifth Plan the proportion of funds allocated to man-made forests relative tco other forestry investments will re- main about the same as they were for the Fourth Plan; but funds spent by the State Forestry Corporations would more than double this amount. An improvement also is the increase in farm forestry allocation to 8%. In overall terms the total amount allocated to man-made plantations will be more than twice that spent in the Fourth Plan. 2.19 Social forestry on a meaningful scale started only in 1974 in response to the suggestion contained in the NCA report that some Rs 770 million choiul be eararkedr fnr these act ivities during the Fifth Plan (Annex 7). Unfortunately less than half this amount (Rs 373 million) has actually been allocated. 2.20 Enviro-enutal forestry activities (nature conseraon y protection and development of pastures and grazing) have received only 7% of the total plan allocation to forestry since the Th1ird Plan (Annex 8). Moreover, little progress has been made in financing the afforestation or reforestation of water catchments, reclamation of ravine lands, afforestation of erodable waterlands or the development of recreational forestry. Physical Achievements 2.21 By the end of the Fifth Plan it: is expected that some 3.8 million hectare of man-made forests including fuelwood plantations will be established made up as follows: -7- Percent of man- Percent of total made forests / Aha '0 ha f'orest area Ms. sell aneous bjtOroadu=U leaved species 75 2,704 3.61 Teak. 1i 397 0.53 Eucalyptus sp. 8 288 0.38 Sal 4 144 0.19 Coniferous sp. 2 72 0.10 100 3,605 4.81 State Forestry Cor- poration plantations 186 3,791 Source: Ministry of Agriculture. /a Percentages were derived from the total area of man-made forests established by 1973. It is assumed these would remain about the same to the end of the Fifth Plan Period. By 1979 eucalvntus nponlar, casuarina, acacia and conifer species are likely I -_ - - - - - I- I - --- , .7 to account for some 10% of the established plantations and to comprise less than 0.5% of the total forest area of 75 millionr ha. Th.e total area of man= made forests is likely to account for no more than 5% of the country's forest area. Physical achievements in establishing man=made forests by plan periods are given in Annex 9. 2.22 During the Fifth Plan special emphasis is being given to (a) pro- duction forestry aiming at clear felling and replacement with man-made forests, (b) the establishment of additional wood processing facilities to utilize the timber from clear felled areas, (c) the development of farm forestry and improvement of degraded forests to increase fuel, fodder and timber supply in rural areas, and (d) forest inventory to improve information on standing volumes and yields. 2.23 Physical achievements in social forestry activities during the Fifth Plan are likely to fall short of the areas suggested by the NCA (Annex 10). Actual and targeted results for three years (1976-79) are shown below: Achieved Target Target Social Forestry in for for Estimated Activitv Unit 1976/77 1977/78 1978/79 Total --------------------(thousands)----------------------- Mixed forestry ha 3.4 19.4 36.0 58.8 Reforestationf. o Degraded Forests ha 13.1 43.6 69.0 125.7 She'lter BDe'lts, Road & Rail Side Plantations row km 1.2 5.4 3.7 10.3 - 8 - III. ISSUES AND CONSTRAINTS Issues 3.01 Today's foresters in India are faced with three major challenges: (a) How to take advantage of the potential of the forestry -etor to supply goods and services and thereby contribute to economic growth. (b) How to replace low productivity and deforested areas with fast growing plantations at a rate wnich will keep pace with rising demands of fuelwood, fodder, sawnwood, lumber, wood based panel and pulp and paper products. (c) How to protect India's remaining forest resources from indiscriminate destruction and how to preserve the environment. Constraints 3.02 The main constraints currently inhibiting realization of these goals include: - lack of a long-term framework for forest products development; - lack of proper balance between hardwood and tropical -I no n Ion t *,- nfl nrnar ma; - inadequate~~~~~~~- -uc -rwn -lrtto -eerh -p I artiual L t4U aU 4U±.L.%.N r,I.JW.L.16 F J. CLIL CAL. L ULAL CO Z L~ -Li, p L. .~ ~LAU L ~A. LY species/provenance and pilot plantation trials; - lack of complementarity between the private and public sectors in developing forestry and forest industries; - absence of a clear relationship between land use planning, preservation of the environment, and forest policy, and in particular the competing land use claims between agriculture and forestry; - lack of institutional base to implement fuelwood supply and social forestry programs; - the need for new extraction techniques in forest areas; - inadequate forest inventories; and - lack, until very recently, of a project planning and imJ.plA.ement atior. ceLl. 3.03 Framework for Forest Products Development. The demand for forest products is pressing. Yet, opportunities for satisfying tnis demand on a national scale are limited and vary from place to place. Therefore, the forest products production policy has to be specific as to location and end use. Because of the scarcity of agricultural lands, areas available for forestry are scattered and limited to those unsuited for agriculture. Only certain regions such as the Central Plateau ("Dome Area"), Western Himalayas, the Northeast and the Andaman Islands, have major forests. The wood supply in most other areas can only support industries which require limited through- put of timber, i.e. mechanical wood processing industries (sawmills, plywood, fiberboard and particle board) and local markets for forest products, includ- ing fuelwood. Industries requiring large throughput, such as the pulp and paper industry, can achieve satisfactory economies of scale only in the few regions mentioned above. It is in these regions that projects suitable fnr World Rank finannina arp likplv tn Pmprae. ~~~~~~~~~~~~~~~- - - - - - - - - - - I 3.04 As much of the existing industry is comprised of small widely scattered units, there is a demand for plantations to supply them with raw mat"erial. 1%,.s sit-uatior. calls 'for fast growir. species, -such as pin,- ---Iar LUOLCL L L. *,,S ~ ~0J. L%J LO t. Lt~ LL*, QFtL.L O , 0tl'&4 00 .*~ j.lJjJ.L0 and eucalyptus. Furthermore since land available for forest plantations is limiLedU In moUs parLs of Lne counLry, mosL planLatLin proJecLs are sMall. Therefore, they are likely to offer only very limited opportunities for direct project financing by the Bank Group or other external sources. Yet, tne financing need is there and in aggregate terms the requirements are substan- tial. One way to handle this situation institutionally would be to establish a Forest Finance Corporation, as proposed by the Planning Commission. This corporation could build up the competence required for appraising the local projects, and any external assistance, from the World Bank for example, could be channeled through it. Another might be to encourage tree farming wherever appropriate. 3.05 Balance Between Hardwood and Tropical Pine Program. Prospects that the projected demand for hardwood will be met if the State forestry departments and corporations continue on their present course are good. But even an imme- diate start-up of large-scale tropical pine plantations will not meet expected demand for long-fibered pulpwood material by 2000 AD. Therefore more emphasis should be placed on tropical pines, and the Bank is ready to be associated with their snpedv and Pffpetiup develnpment= This in not to say that tronical pines should replace indigenous forests and their current programs of planting long rotatior. (50-70 year) species such as teak and sal; on the contrar h is a place and need for both in a balanced plantation development program. 3.06 Quick Growing Plantations Research. With the exception of the on- going technical assistance project in Madhya PradUesi anu some work ir 'uttar Pradesh, Punjab, Haryana, Tamil Nadu and Andhra Pradesh, relatively little scientifically planned research has been carried out in other parts of the country on species/provenances and pilot plantation trials to determine what high yielding, long and short fibered pulpwood and fuelwood species can be grown successfully to replace degraded forests and make marginal agricultural areas more productive. Large areas, in for instance northern India and the other States that make up the "Dome Area", await the creation of much needed - 10 - large scale renewable pulpwood plantation schemes, because insufficient is known about what species will grow or how they can be established and tended at minimum cost. Area specific research usually covering a minimum of 5 years is needed to produce the answers for a specific location and the format devised for Madhya Pradesh should be rep:Licated wherever appropriate. 3.07 Role of Private Sector. The public and private sectors should logic- ally be complementary to each other. The public sector has a major role to play in pnnlying timhbr for the existing forest industries and local markets. If raw material is assured on a long-term basis, the private sector is normally willr.g to inves -r procsi. -aiiis -----5 ----- Unfortunately,teeiseiec suggesting the private sector has suffered unnecessarily in the past because O.' c L. tl . - ..-. ...- .<.... .,1 Cpl --.. A ...nIn. - -1n .,n.. n.l - . LLth UL1n.e.rain Law LL ateraLLLCL LoW. A 'Y-'t -f -t..-- s would radically enhance the performance of the private sector. Long-term contracts anu certalinty Of Supply - evten to the exLent of alowing the pulp and paper company concerned to grow part of its own pulpwood requirements on a joint venture basis with the forest department 1/ would largely overcome the restraints to private sector investment in forest industries. It also appears there has been a certain reluctance on behalf of GOI to grant iicenses to private pulp and paper industries. Given GOI's resource constraint and the fact that technical expertise in the forest industries sector lies largely with the private sector, the Bank believes that Government should continue to promote the joint sector approach, with management mainly in the hands of the private sector. 3.08 Relationships Between Land-Use Planning and Forest Policy. Although the National Development Council has taken an unequivocal decision that no forest areas should be sacrificed to the extension of agriculture it is well known that encroachment continues. Some 3.4 million ha of forest lands were deforePst-ed during the 21 year neriod fron 1952 and 1973: half of this was lost in the last three years (1970-73) and 46% of the total area deforested was in Madhya Pradesh . Th.e purposes for which fnrest lands were given up are shown below: Thousands O.a hectares Percer.t Agricultural purposes 2,432.5 71 River valley projects 401.4 12 Establishment of industries 124.5 4 Construction of roads 54.7 2 Miscellaneous 387.9 11 Total 3,401.0 100 1/ The Western India Match Co. Ltd. has such an arrangement with the Uttar Pradesh Forest Denartment. An alternative would be to lease land to the private sector for this purpose but under the land ceiling set it is virtually impossile to grow trees on npblic land for private purposes. - 11 - It is doubtful whether in practice it is possible to defend forest lands which would be suited also for agriculture. This raises the question of the benefits of orderly reallocation of land in such cases. For example, the 1974 Bank sector mission observed that because of high population density in the coastal plains in Kerala, population is spreading from the plains up the steep slopes of the western ghats, while parts of the plateau are held as a forestry reserve. In this particular case a more rational land-use policy would be to utilize the western ghat plateau, where population density is low, for agri- culltu and AA-nrnfin forestrv to the hil1 areas. Also related to the nuestion of alternative land use is Government's policy towards taungya. In certain states taur.gya is either discouraged or disallowed be-u -the*i foresters Aar afraid agricultural yields would eventually lead to alienation of forest land fror agriculture. The Govern.-me..t's forest poli Acy 1 shouldA focus on. thAe ques- tion of competing land claims, since in the long run no legal approach can resist basic economic trends. Sectoral plans for develo-pment of forestry and agriculture must therefore be based on sound land use and environmental protection policies. 3.09 Fuelwood Supply. Ever since NCA's Interim Report on Social Forestry was published in April 1973, there has been an attempt on the part of many States to formulate appropriate social forestry programs on the lines recom- mended by the NCA. However, until May 1978 no comprehensive project proposals had been prepared for external assistance. One major constraint has been the lack of appropriate institutional arrangements for project implementation. Some states (e.g., Gujarat, Uttar Pradesh, Punjab and Haryana) however., have achieved some progress. Guiarat in particular is as successful with its vil- lage common lands as it is with road/canal side plantations; it has created a workable institutional approach and has largely overcome village reluctance to provide land for forestry. 3.10 Extraction. Timber extraction is a field of specialization where outside technical assistanc. is.. .S needed to 4-ntroduce recernt technological developments. Traditional logging methods have been: felling and bucking with axes; skidding by elephant, oxen or manpower, and haulage by bullock cart or water to log sale yards. At these depots logs are sorted, remeasured, LeUU V~L~U dI LVLL.LOCU CU JL %A 6 4 U. LA.A1 LJ0~Wr ,L. U A renumbered, adIv e rtie and auctior.ed. Thel- g ar1adedfeunty-r often in the depots for long periods which causes deterioration and then have to be reloaded and transported to consumer industry. More recently handsaws, agricultural tractors, simple cable systems and lorries have been introduced. Capital equipment is underutiiized, frequently standing idie for up to four hours while loading takes place by hand. All this, coupled with poor roads and frequent handling, causes extremely high delivered wood costs. To facilitate the conversion of the present inefficient extraction system some important changes are required. 1/ The country's 1952 statement on forest policy is about to be updated and will address the issues raised in this paragraph. 2/ A number of papers on this subject for a Forestry and Community nevelopnment meeting held in Diakarta (December 1977). - 12 - 3.11 Logging is a full-time professional pursuit and the system of training and career development should be changed to recognize it as such. A trained silviculturist transferred for two years to a logging post is not only ineffectual but creates inefficiency in the whole system. Road construction methods need to be changed from boulder soling. Road construc- tion has been hampered in the past since, apart from temporary extraction paths, road construction costs cannot be amortized and deducted as a business expense. This mitigates against building any but the minimum possible to to extract the timber, which can then be deducted as an expense. Considerable benefit could be brought about through changing the tax law This wouild encourage the construction of better roads; the cost could be offset against the revenue from the felled forest crop and this l4 Ould reduce the tax liab il- ity on revenues. Other improvements would include the phasing out of log sale yards and replacement by direct sale of the standng tm ber . A sophisticated capital intensive extraction system is not recommended. What is needed is the introduction oL improved but simple technology, such as winch-lorries which perform three separate functions - skidding, loading and trucking. These could be manufactured locally. 3.12 Forest inventories. Inventories of India's forests are often inadequate for industrial development planning. 1/ This prevents preparation of industrial feasibility studies, hampers industrial development and hinders the introduction of effective silvicultural and management systems.. One reason for this is the high cost of inventory particularly when a national inventory of large tracts of land are irLvolved. Today a 500,000 ha inventory with aerial photos and a 0.2% systematic ground survey (suitable for macro planning and forest management, but not operational exploitation) would cost nearly Rs 5 million and take over a year to complete. Lack of research data particularly with respect to secondary species is a serious deterrent to expansion of the number of species which reach the market. Certainly entre- preneurial activity is unlikely unless assurances of adequate and sustainpd supplies of a particular species or group of species can be given. 3.13 Project Planning and Implementation Cell. The organizations at the Cer.ter an.d.. it 1.hAe 0L.es h,ave been ir.adequate for dym..ic forest devellopment planning and project formulation. The NCA report recommended the creation of a nnri.ung CeIll at the Center anu a P"laniung, rrolJec Analysis and LLtlmaLtIon Cell in each State where development programs were being formulated. In June 1977 a start was made on setting up such a cell in the Union Ministry of Agriculture. This cell is now operational and is undertaking the economic analysis of forestry projects prepared by the Forestry Department which should lead to a pipeline of investment projects. However action on establishing such cells in the states has been slower to materialize. 1/ The Pre-investment Survey of Forest Resources has so far inventoried some 12 million ha of forest (22 million ha gross geographical area) or about 16% of the country's forested area. These inventories are designed for macro planning and forest management; not for operational exnloitation- - 13 - IV. FUTURE PROSPECTS Features of the Forestry Sector 4.01 Certain features of the forestry sector make it an ideal vehicle th.rough which to initiate -economi. development. For-ts alos by -definitior., L.LA Lt 6i WLA.L~.Li #_ L .,L. LLA.~ t- J2~VL%JULL'~%~ -A WFA~. * & ~ Q )~ Y _ J are located in the less developed rural areas. Forest development, management, and production, wnether based on natural or man-made forests, are highly labor intensive, as are some of the primary forest industries. The required skills are those common to almost all rural populations including the tribals, yet the production process is one that lends itself to gradual mechanization whenever labor costs rise. Because timber extraction and sawmilling require little capital, these small industries serve as a training ground for managerial skills. 4.02 Plantation forestry is particularly labor intensive in India (200- 300 man days/ha over 3 years for the establishment of teak plantations in the clear felled natural forests of Madhya Pradesh). 1/ While developed countries employ very large and expensive equipment for both land clearing and planting, equally good results can be obtained through the use of unskilled labor and simnle hand tools - nrovided. of course, that wage rates are low as is typical in India's rural and tribal areas. In plantation establishment it is not un- usual fo ages to make up aC mn asl 90% of tonA1 costs and these wages go almost entirely to families in the lowest 40% of income earners. In the rural areas properly located forest-ry -:,ct =r an excller.t ayl of i"tr.ncrasn tribal employment, raising income and initiating the first steps of develop- ment. rForest industries themselves are chcL Aterzed by0 tr0 LL f rwsrd ard backward "linkages" and can produce significant employment multiplier effects as well as stimulating expansion of servicing industries and transpuuLdLiuu systems. 4.03 Of paramount importance is that forest resources can be renewed and yields greatly increased by more intensive management. Roundwood Demand and Supply to 2000 AD 4.04 Revised roundwood demand projections to 2000 AD prepared by the NCA in 1975 2/ indicate a serious gap between requirements and supply which will widen unless positive steps are taken to establish high yielding industrial roundwood and fuelwood plantations. Assuming the government's higher estimate of per capita GDP at 1971-72 prices (Rs 1,772) and a popu- lation of 935 million by 2000 AD. total domestic roundwood requirements are expected to almost double from an estimated 166 million m3 in 1970 to about I/ "Th.e Role of Oorest Developent Corpor-ations in Generating Emlnvyntnt in Rural Areas - Case Study" by V. K. Seth. 2/ These are the most up-to-date projections available. - 14 - 3- 290 million m in 2000 AD (Annex ll). Fuelwood accounted for about 90% of roundwood consumption in 1970; it is expected to account for 78% by 2000 AD. 4.05 In4ustrial Roundwood. Industrial roundwood requirements m,ay reach 65 million m~ in 2000 AD (cf 1970 consumption of about 16 million m') with hardwoods accounting for 80% of requirements. 4.06 Coniferous. Based on NCA's assumption that conifers will make up 24% (Annex 12) 1/ of the raw material required for domestic pulp and paper production. a total of 1.6 million m of coniferous pulpwood will be recuired annually by 1985 and 6 million m by 2000 AD. If we assume (a) that the 2.7 millinn ha (Annex 1) nf ancpqniblep rniffrn,t, forepts in thp Himalaya region can supply the bulk of the 7.2 million m rSquired for sawnwood, panel products and poles, etc., (bk) that t Ate6 il ma of pulpwoo wl have to come from concentrated blocks of pulpwood plantations situated close to suitable industrial mill sites, and (c) that tropical pines gro-wn on 15 year rotations can yield 12 m /ha/year--then it would be necessary to implement the following annual planting program: Average Annual Estimated total Planting Program Total New Areas Cost of Planta- New Area Replanting Pianned tor tion program /a Plan Period ha Plan Period Rs mill. US mill. Fifth (1974-79) 20,300 101,800 274 34 Sixth (1979-84) 28,500 142,800 385 48 Seventh (1984-89) 36,600 183,000 494 62 Eighth (1989-94) 24,400 + 20,300 122,000 603 75 Total 550,000 1,756 219 /a Based on an estimated establishment of cost of Rs 2,700 ($337) per ha inrlhidina nric and nhvsical contingencies. A total of some 550,000 ha of low nrod,crt-itv hardwood fnrest would have to be converted to tropical pine pulpwood plantations by 1995. At current costs this ouldrequre a..investent of some Rs !,756 million (T3$1V)1 million). However as the techniques of tropical pine establishment are still being explored in India, it is safe to conc-lude that tbe indicated quantitiv target will not be within reach until a much later stage. 4.07 Hardwood. If the Government continues with its proposed programs to: (a) establish hardwood plantations for industrial and commercial use; (b) rehabilitate degraded forests; (c) improve the management of the pro- ductive hardwood forests; and (d) step-up its social fo ests program, there should be little difficulty in meeting the 51 million m required for indus- trial purposes by 2000 AD. 1! Judging on the demand in most countries this could be closer to 50%. - 15 - 4.08 FeiiIwosd= Lack of fuielwood has forr ed many rural households to usp cattle dung as an alternative fuel. It i' estimated that current consumption is chmicaly equvalet- touovr A m4llio-n tor.s o%f fe-rt-;iizer. Gont i nual diversion of animal dung and agriculture residues to use as fuel will obviously reLduce potential agricultural production anu lead Lo declinir.g soil structure and fertility. Alt ough recorded production of fuelwood in 31970 amounted to nearly 14 million m (Annex 2) actual3consumptLion of U.28 m3 per person Lias been estimated at about 150 million m . Thus 136 million m of unrecorded pro- duction comes from treelands, farms and pi'rerage rrom tne forest. Assuming per capita consumption will drop3to 0.24 m /person 1/ by32000 AD requirements are expected to be 184 million m- in 1980; 202 million m in 1985 and 225 million in 2000 AD. If NCA's forecasts are reliable, and they probably are, fuelwood production for the future will be the most urgent priority for Indian forestry. 4.09 If we assume 150 million m will continue LU U pi fUoLmU existing resources - and this could be a rash assumytion - then provision will have to be made for an additional 75 million m by 2000 AD. Moreover presuming that land of only moderate quality will be available to grow this very large quantity ot tuelwood, and that properly managed eucalyptus, popiar, casuarina, acacia, babul or other quick growing plantations will be by far the most effective means of producing it, the area of land and magnitude of in'estment can be calculated. Eucalyptus for example should produce 7.5 m'/ha/year or better. 2/ Thus St would take about 10 million ha to produce the additional 75 million m of fuelwood required by 2000 AD. At current costs including price and physical contingencies this would need a massive total investment of about Rs 25,000 million (US$3,125 million). The annual planting program would need to be some 450,000 ha costing about Rs 1.125 million (US$140 million). Artion Pro-raTm AL in From the fnregoing analvsis of the roundwood demand-supply situation to 2000 AD it is clear that India has two major tasks to accomplish over the n.ext quarter of a century: f-rstly to *,pra the produ tiVity of its forests to supply the growing needs of the domestic wood products industry, and seconuly to develop its farm forestry programs to supply fJue!od, fodder and farm timber in the rural areas. As protection of catchments (parti- cularly hill catchments in river valley prUJecsLz soil and wat,er conse.atior, reclamation of ravine/easily erodable areas, etc. are of growing importance, environmental forestry will also have a vital role to play in the future, and will need much more attention than it has been given in the past. 1/ Assumption made in the NCA Report. 2/ In Uttar Pradesh the average mean annual investment is about 7 m - 16 - 4.11 Industrial Forestry. The main emphasis here will be on (a) conver- sion of low density, low increment. mixed hardwood forests to higher yielding hardwood (3-8 m /ha/year) and coniferous (10-15 m /ha/year) plantations; 1/ (h) imnnrnvAr rnnii danc4t-r mnti P-vtrnr-tirn tPoehnimilac in t-ho 4nrl4aann,ic f> c (c) tropical pine species/provenance and pilot plantation trials; (d) indus- tri_al. feasoibDilit y studies. AS there i s ar n.o study which inA4icte. to what extent industrial roundwood requirements can be met from the existing forestry resources, dLL IJULLdLLL LaUW,IJiLt pII L 0pI. LULULre pL.UrLdfmb Will We Lt complete inventories of the country's remaining productive forests. The State Forestry Corporations have until now concentrated iargely on conversion to teak, shisham, sal and mixed hardwood plantations. As established techniques are well proven and institution funds are usually available, there is little need to seek Bank funds for the creation of indigenous hardwood industrial plan- tations. Rather, Bank assistance should be concentrated on the neglected but vital task of creating a coniferous pulpwood resource in compact blocks close to potential mill sites. As in the case of Madhya Pradesh, this will initially require further research to find suitable tropical pine species and provenances plus industrial feasibility studies. If suitable species are found--and the indications are good, that they will be--a number of viable industrial plan- tation projects with substantial industrial components will emerge which would be suitable for Bank financing. 4.12 Social Forestryv The Government's main focus will have to be on the establishment of fuelwood plantations: inside the forest estate; on village rcomninal lands;l- along -r…n … ,4dac r-o1w:3-jc ntl e:lnq1a- nel on thce marginal areas and bunds of private holdings. Anywhere, in fact, where trees The concept is simple but its implementation is not for a number of reasons: - the sheer magnitude-of the need for wood and the scale of growth in demand; - tree planting programs do not win elections so schemes are not given political priority; - lack of support at the local level; and - establishing plantations on a large scale requires a formidable effort both to establish and protect the trees. A successful national strategy has yet to be developed, 2/ but clearly imple- mentation would have to be organized at the district and village levels and hbcnmn integrated with general rural and area develonment schemes. A fuelwood plantation target of some 450,000 ha annually (para 4.09). is impracticable I / /l is also itee ain, te ppose. -LI ~*1at t ~ I! i! ~ 1 2/ Tne exception is Gujarat which, since 1974, has esLablished cousiderable areas of plantations on village communal lands and along roadsides. - 17 - (on a country-wide basis this would average about 0.8 ha per village) in terme rof aaia b litr rof both 1 ar. dA financ r esMoources More realistic might be a target of say 225,000 ha/year (0.4 ha/village) over the next two plan-periods. If successful this would make a significant impact on the problem. 4.13 One key issue in this area is the need to compile data on the economic justification or ruelwood projects. A review of the status of such information both from within India and elsewhere should be given high priority at an early stage of project preparation. In particular, reference should be made to the effect on crop yields and soil fertility of diversion of agricul- tural residues and cow dung to use as fuel in the absence of fuelwood supplies. Provided such economic analysis showed satisfactory returns, the Bank would support fuelwood plantation projects. An example of eucalyptus grown on four, eight year coppice rotations in Uttar Pradesh (Annex 13) shows a financial internal rate of return of nearly 12% which is satisfactory. This example assumes costs and benefits increase proportionately, whereas in practice, over the last two years in Uttar Pradesh, wages have increased at 3% per annum and wood Drices at 7 nper annum- The bank would also enrouiraoe_ where appropriate; the inclusion of fuelwood components in area development programs such as the extpnsinn projects, rAn proje-t ar.d upcomng rairfed nar intgated rural development projects. 4.14 Environmental Forestry. Grouped under this heading are numer.ous actiLvL.i1es, -wt,ich year'ly beua nraigymr rtar.;: W LIL LJ=%L. LyuIUW A.LI%..LCCd.2LLL6.LJY LLULC LMIkJUL.L . refLorestation or arrorestation of catc'nment areas or river valley projects particularly in the mountain and hill areas; - reclamation of ravine lands, chos and other erodable areas; creation of wilderness areas, wildlife and nature reserves, preservation plots, etc. to preserve endangered ecological zones and species and to maintain a gene pool; identification and preservation of protection forests; - development of recreational forests: - control and restriction of forest grazing; and - rehabilitation of degraded forests. Tr.dia's ojecvye l 1 be to elv A, a hblanced and r appoac to development which would take into consideration the relationship between eniorn- I--afeg- - -4-uard's and eonEi gr_--IU LA.VL %J LU= 1-UL.d.L 0 ZA u= ,L1U IAJ L~L.LL. SLUJW.LL. E_xport -rrospects 4.15 Tne NCA report suggests that wniist plywood/veneer iog exports should be progressively discouraged, the export of processed products such - 18 - as sawanwood, nlvwood/veneer, broken-down furniture, rayon grade pulp and minor forest produce should be stepped up. For example, the prospects for teak san.wood exports are good but nprf,rmanre has hben unsatisfotonrv so far because of high domestic prices (even for sub-standard qualities) leaving no in…centive for export, lac of organized export --omotion and aquota ste.m for different ports. The NCA has proposed that the sawmilling industries' installed capacity snouuld ue 1%. HiLgher thlan is required forLUL mUeeLtLn UU1UoaL demand to allow for exports and that in the plywood industry the proportion should be increased to 50% by 1985. Tney nave further suggested that severe excise duties should be introduced for teak sawnwood and high grade plywood to restrict domestic consumption and boost foreign exchange earnings. 4.16 Although promotion of selected wood product and minor forest produce exports has a role to play in India's overall forest strategy, clearly the first priority must be to satisfy domestic requirements. For this reason and because the private and public sectors are perfectly competent to enter this field it is unlikely that Bank assistance for export-oriented ventures would be forthcoming. Investment Possibilities 4.17 Within the framework of the action program outlined above, Annex 14 contains a list of possible projects with an indication of their costs and preparation. status. Further formulation is nrspsArv mand it is honed that the forest project planning and formulation team recently established in the Union Ministry of A--1icu-lture 1%l be able to identify a pipeline of these and nther projects suitable for external financing. - 19 - ANNEX 1 INDIA 1971 CLASSIFICATION OF FOREST BY CATEGORIES (million hectares) ha % Total (a) By Composition Coniferous 4.2/a 5 ",on-oUULL=frous 7.1 J. 7S. kD) B5y Function Merchantable 57.7 78 Non-merchantable 16.1 22 Unclassified/b 1.5 - 75.3 (c) By Legal Status Reserved 33.7 45 Protected 22.0 29 Unclassified 19.0 26 75.3 (d) By Ownership Forest Department 68.3 91 *Civi Auth.ities. 2. 3 Corporate Bodies 2.7 4 Private individuals 1.3 2 Unclassified 0.6 - 75.3 Total area of India 328.0 Percent of area under forests 23 /a Some 2.7 million ha is thought to be available for industrial wood production. /b Area by composition and function not available for Uttar Pradesh. - 9n - ANNEX 2 INDIA RECORDED VOLUME PRODUCTION OF WOOD (ml114nn m3 (r) ? Year Industrial Wood Fuelwood Total f% .UULLYU 'IUULLM ~ LLJ * on"ero s Naon-con' ' C- u ta'L ;956e/;7 . 3.5 4.5;0 i.2 14.7 1961/62 1.3 4.1 5.4 10.7 16.1 1966/67 1.0 8.3 9.3 12.2 21.5 1969/70 1.3 7.6 8.9/a 12.9 21.8 1970/71 1.2 7.9 9.1 13.7/b 22.8 1971/72 1.6 8.0 9.6 16.0 25.6/c 1972/73 1.6 8.1 9.7 16.1 25.8/c 1973/74 1.6 8.1 9.7 16.5 26.2/c 1974/75 1.1 8.7 9.8 16.7 26.5/c 1975/76 1.1 8.8 9.9 16.6 26.5/c 19 A,.4-i,1 - nn.n,mn*Igl nf 4tnilAtio~n - ll-anAlnnAl wna aDemt.AS n- 51 h.-s 15.9 million m3. /b TStal consumption of fuelwood for 197Q has been estimated at 150 million m , tblUs thLle balance ofA. L i. mJU ML±.L-o M came Lrom otULer treelands. /c Provisional and subject to revision. Source: NCA Report, Part M, 1976 and Forest Department - 21 - ANNEX 3 INDIA VALUE OF MAJOR AND MINOR FOREST PRODUCT EXPORTS (Rs million) Major/a % Minor/b % Total Value 1970/71 1141. 40 211.5 60 352.8 1071 /72 113.7 32 237.9 68 351.6 J. 7II J2U3.7 1 9 4'7 J I J1.5. i973j74 293.i 45 370.3 0 0663.4 1974/75 252.5 30 604.7 70 857.2 a. 1975/76 337.9 47 374.8 53 712.7 /a Includes loe. sawnwood. panel products, and pulp and paper. h Tng.l,.4m0a nst*tsl apima v-oa4ing nnl A1l eamo laie net 4t-a pn-tetiet-a vPvPt:ah1P f ^^ *___ -_w__---- r ~ -o-.---- -. … ,…*0~ materials used for planting, etc., plants and seeds used in pharmacy and per.n-ry; bJ.1 l .i lees, --A oi's snA p u and t-..nAn Source: NCA Report, Part IX, 19706 and Forest nesearch Institute Export Import Bulletin of March, 1977. - 22 - A MnTWV X VOLUME OF LOG EXORTS 19/0-76 (ml (r)) 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 TOTAL 7% Rosewood 16.410 201300 27,000 30,180 12,690 15,740 122,320 79 Teak 880 480 200 860 4,500 9,720 16,640 11 Sal - 320 2-5jO80 1680 540 10;430 7 Red Sanders 480 440 210 770 290 610 2,800 2 Sandalwood 4,2 TOTAL 18,190 21,990 30,600 37,290 19,400 26,960 154,430 100 Source: NCA Report, Part IX, 1976 and Monthly Statistics of the Foreign Trade of India, March 1976. - 23 - ANNEX 5 TNDTA PUBLIC SECTOR OUTLAYS FOR FORESTRY (Rs m.Li..Lon) Total Agriculture Percent of Total Plan National (including Outlay Plan Period Outlay forestry) Forestry Agriculture Forestry First (1951-56) 19,600 3,930 85 20 0.4 'T'1J....J _ /1 1 £C O- #; nn Qn1n n n A LLIJ.ru %L v.L VUO OJ1I/V .Uw07L --UV L3 . annuai kivioo-o6) 6;,60U iU,2OL 42i O.0 Fourth (1969-74) 159,120 27,280 890 17 0.6 Fifth (1974-79) 392,875 46,436 2,057 12 0.5 Source: Planning Commission - 24 - ANNEX 6 TN DTU T1'YSCMt'T1'T' TM INAAZ.UADE FOADRESTS (Rs million) Man-made Forests Economic Rehabili- Farm Planta- Plantations tation of Forestry tions of Z of Indust- Degrad- cum Fuel- Quick (g) (f) Plan Total rial & Com- ed wood Plan- Growing of of Period Forestrv mercial Uses Forest tations Species Total (b) (2 (A wW th r) fd(e f) 1P}- (h) (i First (1951-56 85i 11.2 1. 1 - 12.8 15 0 S econdu (1956-61) 212 48.7 19.9 - - 68.6 32 0 Third (1961-66) 460 116.3 38.0 10.9 40.6 205.8 45 9 Annual (1966-69) 421 93.4 23.0 15.2 93.9 225.5 54 22 Fourth (1969-74) 890 201.5 32.0 36.1 168.6 438.4 50 19 Fifth (1974-79? 2jO57 355.2 50.6 155.8 176.4 738.0/a - - /a Maybe increased to Rs.904.6 million or 447. of forestry's total allocation. Neither of these figures include the funds spent by the State Forestry Cornorations on man-made forests which could amount to an additional Rs.280 million. Source: NCA Report 1976, Part TY and Ministry of Agricuhtire. - 25 - AN.NEX 7 INDIA ESTIMATED FINANCIAL COMMITMENT TO SOCIAL FORESTRY IN THE FFIHLn PFLAN (Rs millions) Suggested Allocation Percent of in NCA Report on Actual Suggested Activity Social Forestry Allocation Allocation Center State Total Total A. aru Forest-0.8 780 2. Extension Forestry (a) Mixed Forestry 100 - 100) 66.6 67 (b) Shelter Belts 75 75 150) (c) Road/rail sides ) 100.0 40 & canal banks - 100 100) 3. Reforestation of Degraded Forest 150 150 300 50.6 17 4. Recreation Forestry - 100 100 - Grand Total 345 425 770 /a 373.0 48 Ia IncLLUdes expt2ULUre ZUfo stLiLU up LLIh texter.sion org ar.'nzation but not the funds required for research or the preliminary survey needed for selecting suitable districcs and areas wilthi districts. and survey were included total could amount to Rs.800 million. Source: Ministry of Agriculture. - 26 - ANNEX 8 INDIA INVESTMENT IN ENVIRONMENTAL FORESTRY (Rs million) Environmental Forestry % Nature Forest Development (f) Plan Total Conser- Protect- of Pasture of Period Forestr" vation ion & Grazing Total (a) (a) ~(UN (c) (d) (e) f First (1951I-JO) 85 Second (1956-61) 212 9.9 - - 9.9 5 Third (1961-66) 460 17.5 10.7 5.3 33.5 7 Annual (1966-69) 421 12.5 6.3 4.7 23.5 6 Fourth (1969-74) 890 44.5 11.5 7.8 63.8 7 Fifth (1974-79) 22057/a /a ".Se breakdo-w,. 'y category riot available. Source: NCA Report rart IX, 1976 and Forest Department, Ministry of Agriculture. - 27 - ANNEX 9 INDIA PHYSICAL ACHIEVEMENTS IN ESTABLISHING MAN-MADE FORESTS (Thousands of ha) Economic Rehabili- Farm Planta- Plantations tation Forestry tions % of Indus- of cum of Quick (e) Plan trial & Com- Degraded Fuelwood Growing of Period mercial Uses Forest Plantations Species Total (f) (a) (b) (c) (d) (e) (f) Cg) First to post annual (1951-69) 594.5 477.6 72.8 255.6 1,400.5 18 Fourth (1969-74) 291.2 127.3 63.0 232.8 714.3 33 Fifth/a (1974-79) 760.0 200=0 180.0 350.0 1490-0/b 23 Total/a 1,645.7 804.9 315.8 838.4 3,604.8/b 23 /a Estimates only: actual establishment will not be known until the end of the Fifth Plan period. Lb Some 186,200 ha of plantations established by the State rorestry Corporations must be added to these figures to arrive at total estimated physical achievements by end of the Fifth Plan (i.e. some 3,791,000 ha). Source: Ministry of Agriculture. - 28 - ANNEX 10 INDIA ESTnhATED PHVSITCT ACH.IEIMT,ENT TSN SOCLA FRTAT F.v TY DTMITM THE FIFTH PLAN ;LhIousandUs o'U . hLa or row Ium) Suggested Area/ Actual Area Distance in NCA Estimated as a percent- Repnort on Social Anvmal age of Activity Unit Forestry Achievement Suggested Area 1. Farm Forestry ha. /a 180.0 2. Extension Forestry (a) Mixed Forestry ha. 100 58.8 60 (b) Shelter Belts row km 100) ) (c) Road/Rail ) 10.3 10 Sides & Canal ) Banks rnw km 8) 3. l,eforestation of Degraded Forest ha. 300 125.7 42 4. Recreation Forestry ha. not specified Nil /a Work was proposed in 100 districts. Source: Ministry of Agriculture. - 29 - ANNEX 11 TN,nTA WO1fl?A 'P'f TDnUVCPTfT 1f%OTTF!T%fTAfnT% (TMrwtCPN qTAT & r'T7TT rdAnN Q6 L XL'MJLQ1jJ L~JWLI5j,;, J L.JLUF'/J JLO J.JA ~ v - - - /- REQUIREMENTS TO 2000 AD 3 (millions of m (r)) Coniferous Hardwood Total 1980 1985 2000 1980 1985 2000 1980 1985 2000 .Jawuwuoou 2.0 4 C. 1.7 25. 14A.1 18 . 29,6 Panel Products 0.1 0.2 0.5 0.6 0.9 1.9 0.7 1.1 2.4 Pulp & Paper 1.1 1.6 6.0 3.1 4.4 11.7 4.2 6.0 17.7 Matchwood - - - 0.5 0.7 1.4 0.5 0.7 1.4 Roundwood 1.5 1.8 2.7 5.9 7.2 10.7 7.4 9.0 13.4 Industrial Ronundwood 4.7 6.2 13.2 22.2 28.9 51.3 26.9 35.1 64.5 m.ffi1.Tr% el _ - - - 184.0 202.0 225.0 Total 21?n9 27.1 289.5 Source N- _ UA _ -r . _ Part * 1o zource: i'iA feport, rari .LA */.LI3 - 30 - ANNEX 12 INDIA PAST ANI) PROJECTED PERGFNTAR OF CON'nTTMPTTON OF VARMTOTT5 CELLULOSIC RAW MATERIALS IN PULP & PAPER INIXDSTRY A. J.J-UI.J L' A.7IV ~ A.~J 70: .vl.J -(percent)-------------------- Hardwood 4 24 45 46 49 Bamboo 70 51 32 31 15 Softwood 1 3 16 16 24 Bagasse 3 5 1 1 3 Imported Pulp 5 Neg - - - Other (waste paper + aericultural residues) 17 17 6 6 9 100 Source: NCA Report, Part IX, 1976. - 31 - ANNEX 13 Page 1 INDIA FINANCIAL RATE OF RETURN ON EUCALYPTUS DTPADM1Y ('flttDnThT TMT TTMTAD DDAMCPU /e J.J.&w^LI..L4 aLJLU _J VLV" .L '.J A& X *1JJSt Ia YEAR TOTAL COSTS TOTAL BENEFITS BALANCE Rs./ha Rs./ha 1 1,500 -1,500 2 300 -300 3 200 -200 4 50 -50 5 50 -50 6 50 -50 7 50 -50 8 50 -50 9 50 -50 10 550 4.250 +3;700 11 50 -50 12 50 -50 13 S -50 14 50 -50 15' S =50 16 50 -50 18 550 4,250 +3,700 19 50 -50 20 50 -50 21 50 -50 22 50 -50 23 50 -50 24 50 -50 25 50 -50 26 550 4,250 +3,700 27 50 -50 28 50 -50 29 50 -50 30 50 -50 31 50 -50 32 50 -50 33 50 -50 34~~~~~~ 50 A,5 124 ,200i.) Financial rate of return 11.85% /a Assumptions are on page 2. - 32 - ANNEX 13 Page 2 INDIA FINANCIAL RATE OF RETURN ON EUCALYPTUS TERRITICORNIS GROWN IN UTTAR PRADESH The following assumptions are based on actual data from Uttar Pradesh: cacUalaYtUs erriticorn (lJ LL sore 'ElnyJr d) Year Yield Yield and m3/ha /a Thinning Schedule: Thinning 10 85 18 85 26 85 Final felling 34 85 Total yield 340 m3/ha Mean Annual Increment 10 m3/ha/year Costs: Rs./ha (Direct and Year 1 1,500) gstablishment Tndirect) 2 300) Cost - Rs.2,000 3 200) 4-9 ) 11-17) 19-25) 50 m_inte-nce 27-34) IV0,18,26 'J50 relling and maintenanc, Benefits: Rs. 85/ADlM or Rs. 50/m3 standing /: Vialti h:le holn cnmp Sn ADTr er 1mptr7r t.7nn3 (ATIMT np-r hprt:wrv I ADMT =1.7 m3 INDIA FORE;STRY PROJECT POSSIBI:[LITIES TYPE OF LOCATI1ON POSSIBLE COMPONENTS EST . TPC PRESENT STATUS NEXT STEPS PROJECT USs MILLION 1.Integrated Bastar Establishment of an 250 The: ongoing MP i(a) Complete study Oct. '79 Forest DiLst., integrated forest Forestry TA Project (b) Appraisal Dec. '79 Utilization M,P. utilization coun- (Cr. 609) iLs i(c) Negotiation June '80 plex comprising: f inanci ng S'andwells C(d) Effectiveness Sept. '80 (a) industrial to undertalce an plantations; industrial feasi- (b) roads and ex- bility study. traction facilit:ies; (c) pulp & paper mill; (d) mechanical wood using industries (e) research training. 2. Fuelwood A,1P. Establishment of short ro- Few states are pusEh- (a) Project preparation Planta- Gujarat tation 3 x 20 year, high volume ing ahead due mainly by State Governmenli tions HP. species for fuelwood to (i) institutional (GOB and COUP) with M.P. production in degraded difEficulties; and, the assista,nce of lIDO U.P. reserve & revenue (i:L) scarcity of and FAO/CP (JIITm 7R) Orissa forests as wel]L as idientified lands (b) Appraisal Oct. 78/Nov. W.B. communal lands, roaid- suitable for such Karna.- sides, canal banks, etc. development. Gujalrat taka Components to cater for and U.P. have BiLhar small pole, timber & presented satIsfactory fodder requirements at proposals under review the village levrel c ould by NDO (May 1978) also be incorporated as would infrastructure research and training. TYPE OF LOCATION POSSIBLE COMPONENTS EST . TPC PRESENT STATUS NEXT STEPS PROJECT US$ MILLION ____ 3.Industrial Orissa, Establishment of 3 x 15 (a)Uncoordiniated (a)Invite reps.from P'Lantations A.P., quick growing colli- 7 5 approach currently each State to on- U.P41, fferous and/or hard- beinjg taken to going HSP Forestry Bilhar & iwood pulpwood planta- species trials. TA project to get Mtahairash- tion in each of the (b)Orissa has proposed them operating on tra States. Also in- a pine planta- similar lines. cluded would be: tion project which(b)If conceplt readily (a) infrastructure; is :Like:Ly to be acceptable maybe (b) extraction financed by aLnother TA project facilities; A.R.D.C. combining a (c) funds for (c) Dr. Ghosh of FRI number of States feasibility is investigat- would be warranted. studies; ing the pros- (d) research & pects of addi- training; tional pine (e) community de-- plantation velopmerLt. schemes. 4.Urban Calcutta, Establishment of 5 An iLdea in the early GOI is looking into Fuelwood Bombay, short rotation, high stages of discussion. the prospects of such Planta- Madras volume (e.g.casuarina) Before promoting schemes. A start is tions plantations close to would have to deter- being made in Calcutta high density urban mine if: where a fuelwood areas, (a)sufficient suit- demand survey has just able land exists been completed. near Bombay, Calcutta and M4ad ras; (b)scheme would be implemented; by municipality or for,est dept.; (c)fuelwood could comlpete with other soDurces of energy available in cities. TYPE OF LOCATION POSSIBLE COMPONENTS EST. TPC PRESEENT SUATU:S NEXT STEPS PROJECT US$ MILLION 5.Watershed Punjab Stabilization of 6 This component is Projiect wilL be Rehabili- catchments in the under preparation appraised iir tation Shiwalik Range as a by the PunJab April/May 1978 component oi- the Forest Dept. Kandi Watershed and Area Development Project. This would comprise: ha. (a) reforestation 16,000 (b) pasture dev,, 7,000D (c) check dams 23, 000D 6.integrated Jammu Establishment of inte- 100 (a)This project is NDO expects to visit Forest Uti- &6 grated complex being promoted by Srinagar in mid-1978 lization Kashmir comprising: the State authori- to dliscuss the State's (a) management of tie!s and has not as forestry develoipment existing forests; yet: appeared on the programme and to (b) infrastructure; GO1 list ofE priojects. determine what role, (c) extraction; (b)Indo-Norwegian project if any,, the Bank (d) pulp, & paper mi.ll; being set up to: mighit p]Lay :[n its (e) mechanical wood (i)develop logging development . using indus- systems; tries; (ii)study the rie- (f) research & training. generat:Lon of fir & sprucie at high altitudes; (iii) train foresters in coniferous silviculture; (c)The UNDP/FAO will Pr shortly finance a x R pulp & paper mill L, - feaLsibiLlity study 4N to be undertaken by Dr. Bhargav.a s consultancy firm. TYPE. OF LOCATION POSSIBLE CONPONENTS EST. TPC PRESENI' STATUS NEXT STEPS PROJECT UJS$ MIlLIO1___ (Point 6 cont'd.) (d)C.D. Schultz will short:ly complete their report to the GOJ&k on prospects for forestry and forest indusitriaLl pro- jects. 7.Integrated Andaman Estab.of integrated 40 The 1974 World Bank (a)GOI may ask FIO Forest Islands forest utilization Mission recommended: to undertake the Ut:iliza- compleBx comprising: (a) completion of required studies; tion (a) industrial inventory; (b)Complete inventory, plantations; (b) feasibility stuidy; photo-interpretation (b) infrastructure (c) GOI initiate and preparation of (:Lncl.roads 6, dialogue with maps. port facilities private sector & shipping); to formLlate (c) extraction industrial de- facilities; velopmernt polic y (d) mechanical wcood (d) species trialls. processing complex; (e) community de- Little action has velopment; been. taken on any of (f) training and research. these points. _ _ - _ _ _ ~ ~ ~ ~ ~ ~ ~ ~ I, .L~AL.A L; Page 1 INDIA GLoSSARY AND ABBREVIATIONS afforestation - the planting of trees in unforested areas chos - land scars formed by enormous water borne loads carried from the Shiwalik hills during the flood season. crore - 1 crore is equivalent to 10 million growing stock - current standing volume increment - the growth in height, diameter and volume of a tree .Ln reLation, to t eL L.UI lakn - 1 lakh is equivaient to i00 tnousand mean annual increment - MAI = Ya R where: Ya is the total yield (including thinnings) at rotation age per unit area and R is the rotation age in years. minor forest produce - includes: fibres and flosses; grasses, bamboos, reeds and canes; essential oils; oilseeds; tans and dyes; gums, resins and oleoresins; drugs, spices, poisons and insecticides; leaves! edible nroducts; and other products. protected forests - state owned and managed forests subject to rights of local peopl to cM fuelwood, 1 1 smal tmber fruit, flowers, roots & bamboo and to graze cattle. reforestation - the replacement of trees in cut-over forest areas. reserved forests - forests gazetted under the Forest Act which are intended to remain in perpetuity as production or protection areas. These forests are not covenanted with any rights. rotation - the period of years required to establish and grow timber crops to a specified market size. royalty - price paid to government for roundwood. sawnwood - cutwood; lumber. - 38 - ANNEX 15 Page 2 silviculture - the art and science of cultivating forest crops. skidding - movement of logs from stump to loading point. species: acacia - Acacia auriculaeformis hbahll - AAcia nilntina cashew - Anarcardium occidentale casuar-l-na C n e Asw.n 4 ea4 -t4 1 4n eucalyptus - Eucalyptus territicornis h.Iair - Acac. cat red sanders - Pterocarpus santalinus rosewood - Dalbergia latifolLa sal - Shorea robusta sandalwood - Santalum album sissu or shisham - Dalbergia sisso teak - Tectona grandis taungya - a system of controlled cultivation involving (usually) a planting of agricultural crops from 1 to 3 years for helping to establish naturally regenerated or artificial plantations, or a combination of both. unclassified forests - areas of forest lands, some with sparse tree cover, whieh ar-e ouStide state forest denartment management and are used collectively by local people. working plan - a written scheme of management aiming at the continuity of poliy controlling the treat ent of a forest taking into account the demands and needs of the people in that region. ADM - air dried metric ton AP - Andhra Pradesh ARDC - AgriculturalRefinance and Development Corporation CAD - Command Area Development FAO - Food and Agriculture Organisation FRI - Forestry Research Institute, Dehra Dun GOI - Government of India GOJ&K - Government of Jammu & Kashmir HP - Himachal Pradesh - 39 - ANNEX 15 MP - Madhya Pradesh NCA - National Commission on Agriculture NDO - World Bank's New Delhi Office SIDA - Swedish International Development Authority TPA - Tons per annum TPC - Total Project Costs UNDP - United Nations Development Program UP - Uttar Pradesh WB - West Bengal