Building Sustainable Forest Enterprises: A Partnership Approach to Link Communities with Industry
The Initiative on Forest Economy (IoFE) at the Indian School of Business (ISB) believes that creating formal connections between community-owned enterprises and the market is crucial for securing forest-based livelihoods. ISB conducted the research to identify large buyers of selected priority Seasonal Forest Products in Odisha, Jharkhand, and Himachal Pradesh. The research so far has identified several large buyers for select forest produce in the pilot areas of project implementation. It is pertinent to share the experience of building market linkages to establish evidence of efforts made by all the stakeholders of the forest economy and the urgent need to forge partnerships between them.
Here is a brief account of our experience in attempting to connect communities with industries and catalysing a formal supplier–buyer relationship between the two.
In Jharkhand, Shorea Robusta, or Sal, is the most common tree species. Its presence is evenly distributed across the eastern half of the Central Indian landscape. The seeds of the Sal trees are collected by local communities, especially women, and serve as an important source of income. The collection process is arduous, and the returns per unit effort are low since the collectors receive very little price in local markets. ISB had established communication with Manorama Industries and other companies that were known to process Sal seeds, including Paras Industries and Progressive Industries. The latter two companies were intermediaries and helped connect ISB with two large direct buyers: AAK India and 3F Industries. AAK India committed to procuring 25,000 metric tons of Sal seeds annually for the next two years and expressed interest in investing in the capacity-building of local communities. 3F Industries also plans to establish similar partnerships with ISB and local communities in pilot areas in Odisha.
In Odisha, the focus was to secure tenure for the collective sale of bamboo. Meanwhile, ISB built a partnership with the leadership of BGPPL, one of the largest companies in the paper and pulp sector. BGPPL committed to sourcing 25,000 metric tons of bamboo harvested from community-owned forests in Malkangiri district. ISB conducted a roundtable in July 2022, wherein 85% of companies in the paper and pulp sector were represented, along with stakeholders in the bamboo economy. The participants were senior representatives from large companies in the sectors of pulp and paper (BGPPL, ITC Paper, Orient Paper, and others), packaging (Bambrew), incense sticks (ITC Agarbattis), and alternate fuel (Biofuel Circle) in addition to the National Bamboo Mission. They discussed the important role of secure tenure for communities in procuring bamboo as raw material for their respective industries.
In Himachal Pradesh, there is a huge market for forest-based aromatic and medicinal plants as industrial raw materials. These plants are collected in smaller quantities than bamboo and Sal, making it more challenging to trace the value chain. Most of the trade in medicinal plants is channeled through illegal routes, adding to the complexity of tracing the large buyers. ISB managed to trace the links to wholesale markets where large volumes of medicinal plants are procured by industry or exported. Large-scale exporters and traders in Delhi and Amritsar were then introduced to the idea of sourcing medicinal plants directly and formally from local communities. They were thrilled to hear that the Forest Department in Himachal Pradesh is actively working to legalize community ownership of forest lands, which will allow local communities to form enterprises for such transactions.
C-level executive representatives from different sectors of the industry participated in a two-day learning exchange on ‘Forest Economy through Secure Tenure,’ organized on the ISB campus in Hyderabad. Industry representatives from AAK India, Biofuel Circle, and BGPPL participated in a dialogue on the future of the forest economy and the role of industry in securing and sustaining tenure. During this dialogue, the panel declared their commitment to sourcing raw materials directly and formally from local communities with secure tenure. Together, communities and industries are forging a sustainable path forward for India’s forests and forest-based economies.
This article is part of a series showcasing Outstanding Success Stories from 2022 documented by the Initiative on Forest Economy (IoFE) team from BIPP, ISB.