LE Dialogue: Industry Perspectives on the Forest Economy
On December 21, 2022, ISB organised the first dialogue of the Learning Exchange on Forest Economy, titled “Industry Perspectives on the Forest Economy,” to understand the current industry trends and potential opportunities that can be created through forest-based value chains. The industrialists shared their experiences with alternative raw materials for goods and fuel and the need for procuring SFPs.
Everyone on the panel agreed that industries need forests for raw materials. The major challenges for procurement are legal partnerships with the community, consistent supply at large scales, and efficient estimation of inventory. With the input of technology and the government, ISB is efficiently trying to solve these concerns.
Key takeaways from the four major industries that are currently the buyers of seasonal forest produce as raw materials are given below.
Paper and Pulp Industry: Once bamboo was nationalized, Bilt Graphic Paper Products Limited (BGPPL) started working with the local communities that secured CFR titles. SFP supply chains will always be difficult to manage because of long gestation periods owing to the seasonality of the produce. BGPPL worked directly with Gram Sabhas on their capacity building, harvesting control, and transparent pricing. For BGPPL, the relationship with local communities is not short-term, and the company invests in empowering communities to independently conduct the sale of bamboo. Currently, BGPPL is working with 54-gram Sabhas and has plans to expand to Odisha and Gujarat. They expect to connect with 70 Gram Sabhas in the next two years. Contrary to popular belief, the paper industry is harmful to the environment; it helps in afforestation to sustain their supply mostly by harvesting from Trees Outside Forest (ToF) areas. This can conserve protected and densely covered forest areas that are crucial for biodiversity and wildlife. The ToF areas are also potential wildlife corridors that the local community can regularly maintain.
Oil and Fat Industry: AAK as a company is new to India but has a 140-year history of working with SFPs and forest communities across the world. The company has met with huge success working with women shea seed collectors in West Africa, which is a challenging geopolitical area to work in. It took decades for them to establish the supply chain, and currently, 33% of their tribal women collectors are registered by the company. AAK has partnered with the local community, trained them, and brought in machinery for the first level of processing.
The Shea programme has been appreciated by both corporate and civil society, and the company wants to replicate the success with Sal seed collectors in India. AAK has committed to a 100% deforestation-free supply chain by 2025 and is ready to work with stakeholders to establish a sustainable and equitable supply chain for not just Sal but all other tree-borne oil seeds. Production of Sal seed is estimated to be around 10 lakh metric tonnes in the country. However, only a small fraction of it is collected. Scalability is the biggest challenge in the forest economy. Mechanization is the solution for achieving scale.
Cement Industry: Cement and steel are two of the most energy-intensive industries, rightly categorized as hard to abate sectors” in carbon emission lingo. The cement industry is cognizant of this predicament and is considering alternatives to decarbonize the sector. Biomass is a solution, but the required volume is unavailable on the market. Shree Cement has taken baby steps to directly source from farmers and is on a learning curve of establishing plant-based fuel as a sustainable alternative.
Shree Cement has expectations from bamboo as an alternate fuel as it has high calorific value, unlike other substitutes, which cannot match the calorific value of coal. The biomass demand for the company is up to 10–20 thousand tonnes per day, and delivering this enormous demand is impossible without community participation. Quickness and transparency in payment mechanisms are essential to garner farmers’ trust. Farmer groups need to be supported at every step so that they can reliably and equitably be part of this potential biomass supply chain.
Biofuel: More than 200 million tonnes of biomass residue are either wasted or burned. The National Mission on Biofuel mandated the utilization of biofuel in a phased manner. Even if we take one company, like NTPC, a minimum of 7% of the mandate will require 35,000 tonnes of coal substitute daily.
The forest-based economy is an enormous opportunity to meet the country’s needs. All the stakeholders must interact so that the demand matches the supply. It needs to be looked at how simple technological solutions and minimal capital can support the community’s routine work and enhance their capacity for aggregation, storage, and processing activities. These processes can individually turn into viable community-led enterprises within the SFP supply chains.
Panellists:
- Tushar Lowalekar, Chief Business Officer, Biofuel Circle
- Dr. Deepak Khare, Vice-President, Raw Materials Procurement, BILT Graphic Paper & Products
- Anubhav Shrivastava, Director, AAK India
- Arpit Dixit, Assistant Vice President & Corporate Head, Alternative Fuels & Raw Materials, Shree Cement
