AP RoundTable: Bamboo Forest Landscapes Sustainable Thriving Forest Economy through Security of Tenure

The Indian School of Business (ISB) in collaboration with the Government of Andhra Pradesh hosted a Round Table on October 30th, 2023, at ISB, Hyderabad. This event focused on developing opportunities within Andhra Pradesh’s bamboo forest landscapes.

This Round Table is a part of ISB’s Initiative on the Forest Economy, aiming to facilitate Radical Forest Futures – a vision of a thriving, robust, and sustainable forest economy beneficial to profits, the planet, and people.

The Round Table, chaired by Shri Neerabh Kumar Prasad, IAS, Special Chief Secretary, Environment, Forest, Science & Technology Department, Government of Andhra Pradesh, and co-moderated by Prof. Ashwini Chhatre, Executive Director of the Bharti Institute of Public Policy, ISB, and Mr. Madhusudhana Reddy, IFS, PCCF-HoFF (Principal Chief Conservator of Forests – Head of Forest Force), convened a diverse array of stakeholders – including senior government officials, private sector leaders, finance organizations, and academic institutions – to deliberate on exploiting the forest economy potential in AP’s bamboo forest landscapes.

Roundtable Discussion Context

The Round Table began by defining the bamboo forests’ opportunity landscape, alongside the current challenges and limitations. It highlighted the historical changes in bamboo usage and presented the opportunity that lies in Andhra Pradesh’s forests, which are abundant in bamboo, necessitating regular and sustainable management and harvesting. Discussion points included the limitations in current extraction policies, issues with bidding systems, the lack of long-term contracts, and inefficiencies in transport and logistics systems. The potential for these bamboo forest landscapes to contribute positively to the climate was also discussed.

The session then shifted focus to the community aspect, discussing Andhra Pradesh’s Vana Samrakshana Samities (VSS). Although these committees have been dormant, their reactivation was seen as an opportunity for fostering community-led participation in sustainable business and forest management practices. The discussion recognized that for the forest landscapes to contribute to a sustainable economy, an integration of production and marketing is essential. Opportunities in sectors such as biofuel, textiles, pulp, and furniture were also identified.

The Forest Economy Opportunity and Model

The Round Table then examined the necessary policy framework for a thriving forest economy model, emphasizing the need for convergence and integration. It noted the increasing demand for bamboo across various sectors and the support of emerging viable technologies for bringing in the necessary efficiencies.

Particularly highlighted was India’s E20 mandate (a blend of 20% ethanol with petrol) by 2025, which necessitates a rapid scaling of ethanol production capacity. Since traditional raw materials like sugarcane and rice are insufficient for this mandate without impacting agricultural land and food security, forests emerge as a valuable source for ethanol production.

The discussion traced the history of forest exploitation in the 1970s and the subsequent regulations imposed on industry access to forests. Since the mid-1990s, there has been experimentation with measured economic activity from forests, with several checks and balances aimed at regeneration and motivating various stakeholders (both community and industry) for forest protection. A synergy between regeneration and livelihoods was identified as key to tapping into the forest economy opportunity. The past 30 years have provided sufficient evidence and confidence that this opportunity is viable.

Three major levers for harnessing this opportunity were identified:

• Security of Tenure: Security of tenure was recognized as crucial, providing ownership incentives to communities for long-term sustainable management of forest landscapes and economic and legal ownership for managing forest resources. This security would enable formal, secure, transparent, and economically viable engagements between communities and industry, ensuring sustainable management of forest landscapes. Examples of security of tenure from different parts of the world and multiway partnerships were shared.

• Economies of Scale from Technology: The introduction of technology for first-mile raw material and product processing was seen as a significant enhancer of efficiency. For instance, a bamboo splitter that vertically splits bamboo poles into 4-6 strips at the point of harvesting can double the tonnage per truck. Such investments in technology become feasible when operations scale beyond the household level to community-owned enterprises that amalgamate several villages into a single business unit. Other examples included simple efficiency devices like measuring devices for the Gross Calorific Value of raw materials (critical for the energy sector) and moisture meters for assessing raw material moisture at the source.

• Market Linkage: Industry & Community-owned Enterprises: The importance of community-owned enterprises in directly finding large buyers from various sectors was stressed. A well-constructed ecosystem could foster synergies among different industries using forest-sourced raw material/bamboo and its processing. For example, bamboo pulp could be utilized by the textile and paper sector, and for ethanol production, while the silica-rich outer rim of bamboo could be used in the agarbatti and cosmetic industries. It was suggested that the industry should invest in community-owned enterprises/Farmer Producer Organizations (FPOs) as long-term secure and competitive suppliers. The necessity of building investments and value chains based on economic opportunity rather than charity was emphasized, ensuring long-term profitability and sustainability for both suppliers and buyers. In this model, the industry also stands to contribute directly to biodiversity conservation, women’s empowerment, and carbon sequestration. Technology would play a key role in accurately measuring and attributing the benefits of carbon sequestration and other outcomes to the industry.

Two additional aspects were highlighted: a) The current absence of one of the key stakeholders in the model at the roundtable discussion – the communities. It was projected that in 5-10 years, leadership and capacity at the community enterprises would enable active community participation in such meetings. b) The development of novel models like the forest economy model requires ongoing dialogue, regular collaboration over extended periods for trust building, and harnessing bilateral synergies. The cohort aimed to discuss a system or protocols by the end of the roundtable for building new business models that would benefit communities, the industry, and the forests.

The Round Table discussed the dual nature of forests as conservation and commercial opportunities. Historically, forests have not significantly contributed to revenue, focusing only on protection. This has also put investments in production and protection at risk due to the lack of measurable returns on investment.

Furthermore, inadequate maintenance levels make harvesting bamboo difficult, exacerbating the poor upkeep of the health of the bamboo landscapes. The discussion underlined the need for 23% of the state’s geographical area, which is forested, to become a significant contributor to the national economy. This would ensure the sustained management of forest landscapes. It was agreed that regular bamboo harvesting is essential to ensure sustainable management of bamboo landscapes, prevent gregarious flowering, manage resources well, avoid fire hazards, and improve light penetration on the land.

Industry

The Round Table then focused on the use of bamboo as a raw material source for several sectors. Despite being the world’s second-largest source of bamboo, India still imports bamboo for various industrial purposes, including agarbatti production. While India is home to more than 300 species of bamboo, only specific species are efficiently used by the agarbatti industry. The limitations of subsidized machinery, which do not lead to sustainable operations due to challenges in accessing raw materials, were discussed. 95% of the bamboo sourced is not used by the agarbatti industry; only the top green skin is used for agarbatti making, and the rest needs disposal. The discussion pointed out how China has created an ecosystem where several related industries come together to use different parts of bamboo for their specific purposes. The need and opportunity for segmented uses of bamboo were discussed in depth. Addressing the availability of specific species and establishing ecosystems for consuming the rest of the 95% of the raw material was identified as a key need.

As a coal replacement, the price of bamboo, in comparison to coal, becomes a prime consideration for industries such as cement. Bamboo’s high gross calorific value (GCV) makes it an attractive and lucrative option. The cement industry is prepared for trials at scale, with the advantage that cement kilns accept any size of bamboo chips smaller than 40mm, simplifying first-mile processing. The discussion noted that investments worth several thousands of crores in feeding agriculture and other bio-waste as a replacement for coal have not been recoverable, given the high costs and challenges in collecting agricultural waste. Access to large sources of competitively priced bamboo presents a significant opportunity for the industry to develop sustainable sources of coal replacement. Compared to RDF (refuse-derived fuel) – produced from domestic and business waste, which includes biodegradable material), bamboo is more sustainable as it not only replaces coal but also integrates carbon dioxide into circularity.

At this stage, two other important aspects were re-emphasized: a) Subsidy-Free Models: The stakeholders can collaborate to build models free of subsidies and charity. There is ample capital available, but what is required is the development of management skills at the community level and convergence, i.e., the coming together of various stakeholders to build novel business models. b) Government as Enabler and Regulator: The government’s role as an enabler and regulator was emphasized, with the expectation that it should not participate directly in the business models.

The large and readily available market for biofuel was pointed out, with a broad thumb rule of Rs. 2 per Gross Calorific Value (GCV) being a current sustainable and good price for alternative sources of coal. There is an opportunity to further process bamboo to enhance the GCV (through biochar/torrefaction). In addition, the industry can earn carbon credits from sourcing sustainably from forest landscapes. Technology is viable only at scale and can also aid in building traceability in value chains.

It was mentioned that the industry should not be given direct control over forest landscapes.

Bamboo’s role as a multifaceted solution for energy needs was underscored. It’s notably utilized in the thermal power industry, and beyond its energy contributions, bamboo enhances ecological health, such as improving the water table where it thrives. The sector’s substantial demand cannot be fulfilled by agricultural residue alone due to the high costs of raw material procurement and the fixed rates of power, limiting the ability to adjust raw material costs.

The potential of CBG (compressed biogas), with bamboo as a primary feedstock, was also explored. In this process, extracting methane leaves a residue that can be transformed into bio-fertilizers, adding another dimension to bamboo’s utility.

For industries, three critical factors – quantity, quality, and price – dictate investment decisions. Industries are poised to invest in areas where these factors align with business models, indicating a readiness to infuse capital into viable projects.

In the realm of handicrafts, technology’s significance in enhancing efficiency and scale even in smaller sectors like bamboo handicrafts was acknowledged. Combining machine production with artisanal finesse creates competitive handicraft products.

The discussion also touched on the importance of resource mapping, which involves cataloging bamboo availability and species to align industry demand with supply.

A convergence opportunity was identified, with the Department of Forests facilitating sustainable management practices. This involves industries procuring raw materials at scale from community-owned enterprises underpinned by secure tenure. The Indian Institute of Forest Management is set to provide necessary community training and capacity building for managing forest landscapes, with stakeholders collaboratively developing indicators to ensure long-term forest health. Certifications for sustainable and secure raw material sourcing will be pivotal.

In the financial domain, the presence of various financing options and priority sector lending to support projects in this sector was highlighted by finance organizations.

Looking ahead, the group resolved to initiate three pilot projects by the end of November 2023. These projects, representing unique district-industry combinations, will start with industry needs and requirements shaping the necessary value chains, encompassing technology, finance, community ownership, and capacity building. Multi-partite collaborations will be established between VSS with security of tenure, Industry, Andhra Pradesh Forest Department, Government of Andhra Pradesh, and stakeholders in technology and finance. These pilots will be grounded in viable business models and secure supply chains, not reliant on subsidies or charity.

Following the initial planning phase, dedicated teams for each pilot will meet regularly to develop detailed rollout plans. These project groups, comprising industry, AP Forest Department, Government of AP, ISB, IIFM, technology, and finance teams, will work together to refine each pilot’s specifics.

Additionally, the pilots will include strategies for transitioning VSS populations into Community Forest Resource Rights (CFRR) under the Forest Rights Act (FRA) and fostering community-led enterprises – essential for creating secure and viable industrial value chains.

Meanwhile, ISB and the Andhra Pradesh Forest Department are collaborating to enhance bamboo inventory estimation and establish a high-accuracy inventory model for bamboo distribution and abundance.

The roundtable marks a significant step towards transformative change in the bamboo sector, promoting sustainability, innovation, and community empowerment. This commitment to translating discussions into concrete actions paves the way for a resilient and prosperous future for India’s bamboo-based forest landscapes.