Force multiplier of rural economic growth in India?


It is a well-known fact that strengthening our rural economy and accelerating the mission of doubling the incomes of our farmers is a vital cog in India’s sustainable growth paradigm. As measures of agricultural productivity develop, the addition of new sources of income and employment must play an equally crucial role.

Agroforestry has become a tremendous opportunity that can create substantial value and jobs in rural India, while positively impacting our balance of trade and contributing to our national climate and sustainability goals.

Here is some context. India consumes about 90 million m3 (cubic meters) of wood today, more than 90% of which comes from trees outside forests (TOF). Although some of the wood is used in the paper and pulp industry, most of it goes to furniture making as an end use. The furniture industry is heavily under-penetrated in India, with per capita consumption around $5 compared to a global average of around $235. As a result, the industry is very fragmented and mainly supplies low value-added products. One of the most critical challenges it faces is access to quality and cost-effective inputs: some raw materials, such as particle board for example, are around 25% more expensive in India, which means that our exports are 27% more expensive than those of China as a whole.

Beyond the numbers that reflect deep challenges, the industry harbors great potential. India is now poised for a demand boom fueled by government efforts to revitalize the property sector and our robust consumer history. The growth of the industry depends on a huge growth in the supply of raw materials multiplied by 4 times, mainly composite panel products like MDF, plywood and particleboard, which in turn will require an increase of 110 to 115 million m3 of wood, rising from around 85 million m3 to around 200 million m3.

Yet while this growth can be sustained by the current model of timber and timber importation, the key question is how can India harness this growth and create value for its farmers and rural entrepreneurs?

This is where agroforestry can play a central role in building our rural economy. Today, our wood production is only a fraction of global leaders like Canada, Malaysia and Indonesia, among others, and yet we have the potential to become a leader in the global wood landscape. wood supply because our unrivaled scale (2n/a largest resource of arable land in the world) and diversity (various climatic and geographic systems) give us an inherent advantage.

What does this tell us? He tells us that by focusing on improving acreage and productivity, India can easily become self-sufficient in its timber needs.

Countries like China have shown how a policy framework aligned with national contexts can help unlock growth and enable self-reliance, which has led to more than 2.5x growth in their composite panel products industry in course of the last decade.

So what should India do to ensure that ‘Aatmanirbharta’ meets its growing timber needs?

A four-pronged approach is needed. First, a 5 percent shift must be made in agricultural areas from cash crops to timber plantations through incentives. This will not only increase revenue streams from timber plantations, the land transfer will also reduce our cash crop surplus and potentially improve cash crop achievements.

Second, move agroforestry from the forestry sector to the agricultural sector. Todaytimber produced from farmland is treated as a forest product which also requires regulatory permissions, discouraging farmers from growing trees. Such a change can ensure that all the economic benefits of agriculture also accrue to farmers engaged in agroforestry.

Third, there is a need to improve the ease of doing business for consumers of wood (composite panel products) and this can be achieved by removing licensing requirements for wood-based units and all other industries that use mainly “farm wood” and its produce as raw material. Rather, it will encourage local producers and other users of farm timber to create sustainable businesses at plantation sites and create jobs and livelihood opportunities for farmers.

Fourth, the establishment of the National Timber Council with representation from the Ministry of Forestry and the Department of Agriculture and Farmers’ Welfare as an agency that can play a nodal role in streamlining the “chain of custody” for plantations and products from plantations.

Empowering our agroforestry industry for longer-term, sustainable growth can usher in significant benefits to the economy, creating jobs and value, improving our balance of trade, and ultimately helping to achieve our climate and sustainability goals. Plantations, localized primary processing units and composite panel industries together can create employment opportunities for about 2 to 2.5 million people. The complete value chain of 110 to 115 million m3 of wood (from wood to furniture) can create an added value of 150 billion dollars. An equally important benefit is carbon sequestration: increased forest cover, and that of “younger trees” have a potential to sequester carbon by 2 billion metric tons by 2050.

The agroforestry industry, if supported by the right catalysts, the right policies and the right direction, can have a truly transformative impact on our rural economy. This is an opportunity that will require the proactive intervention of many government departments and agencies, as it is an economic activity with profound implications for the entire Indian economy.



The opinions expressed above are those of the author.



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