Innovation

ITC’s Social and Farm Forestry Initiative is a story of business innovation and inclusive growth. ITC’s paper and paperboards business is in constant need of a cost-effective and sustainable raw material base. Linking this need to the socio-economic requirements of the catchment area, ITC developed its Social and Farm Forestry initiative. Programs under this initiative provide sustainable livelihood opportunities to rural wasteland owners by assisting them to convert their wastelands into pulpwood plantations. To ensure the commercial viability of these plantations, ITC’s R&D developed high-yielding clonal stock with shorter harvesting cycles - 4 years against 7 years for standard saplings.

Today, this programme covers over 1,98,000 hectares and has provided over 89 million person-days of employment, apart from supplying about 59% of ITC’s total pulpwood requirements - contributing significantly to the competitiveness of ITC’s paper and paperboards business. In addition, the plantations have also sequestered over 3,690 KT of CO2 and played a major role in maintaining ITC’s carbon positive status over the past 10 years. This model of responsible forestry has also garnered for ITC the membership of the prestigious Global Forest Trade Network of the WWF.

The company’s paperboards and speciality papers division, which caters to a wide spectrum of packaging, writing and printing paper requirements, has four manufacturing units at present, with a total capacity of 5.5 lakh tonnes per annum. A decade and a half ago, ITC was constrained from scaling up its business to achieve economic scales for want of cost effective access to fibre. Since then it had decided to focus on social forestry.

ITC's social & Farm forestry program emerged in response to its challenge to source effective pulp wood from sustainable sources to enhance its competitiveness. Instead of taking easier route to importing pulp, ITC innovatively leveraged it's pulpwood requirements to provide sustainable livelihood opportunities to poor and tribal marginal farmers, by assisting them to convert their private wastelands into productive pulpwood plantations. High yielding, disease resistant and site specific clones are developed in ITC's research center.

This program has not only created sustainable source of livelihood for a large no. of disadvantaged sections of society but has also bought in a multiplicity of benefits by creating a large green cover that contributes significantly to groundwater recharge, soil conservation and carbon sequestration. This initiative has helped create green cover for carbon sequestration, ground water recharge, regeneration of biomass and in nurturing of depleted soils. What started as a small initiative by the diversified ITC Ltd. several years ago, to change the way farmers cultivate and improve yields, has now spread to about eight districts in Andhra Pradesh, virtually converting the State into a pulpwood bowl. Andhra Pradesh's contribution of about 25 lakh tonnes, works out to about a fourth of the country's total pulpwood output of 100 lakh tonnes per annum.

Pulpwood is a key raw material in the paper manufacturing industry. Significantly, the yield from Eucalyptus, Subabul and Casuarina is now working out to nearly Rs. 5,000 to Rs. 8,000 more per hectare than paddy crop cultivation in rain-fed parts of the State, Mr. Pradeep Dhobale, Chief Executive of Paperboards & Specialty Papers Division, ITC Ltd, told Business Line. These humble beginnings, supported by research and development teams at ITC, have resulted in carving out a major social farm forestry programme for sustainable livelihoods. By encouraging farmers to take up cultivation of fallow lands, ITC has played a catalytic role in covering over one lakh hectares.

The green cover created has enabled ITC to achieve a unique distinction of being a carbon positive company for four consecutive years. The company has helped plant 358 million plants and has also played a role in transforming over one lakh hectares of land, where 70,000 farmers are engaged. The green cover will also help in generating carbon credits. This will be first such project to be approved for consideration. Significantly, such recognition will also add to the farmer's income.

The R&D centre was established to carry out study on pulpwood trees improvement programme for production of quality planting stock. This resulted in clonal saplings of Eucalyptus and Casuarina, which were distributed to farmers. Several families, faced with resource constraints, were encouraged to take up cultivation. The wastelands were converted into viable forests and this also helped meet ITC's requirements.

The forestry programme is divided into social and farm forestry. In case of farm forestry, farmers put in their own money, which ITC does not subsidize while they provide only inputs. Farmers buy high-yielding clones or saplings from ITC. But as part of CSR, they are giving the saplings free to poor and tribal farmers. Out of 1.5-lakh hectare, more than 20,000 hectare would be social forestry and rest would be farm forestry.

Seeing the benefit of the scheme, then the government started to develop fields through resources from National Rural Employee Guarantee Act (NREGA) programme, watershed programme and state government tribal development scheme. Then we started providing only the saplings to farmers. The government took up the cost of developing the field. The key for the forestry scheme was that market was readily available. The biggest drawback for poor farmers was marketing. Now the contractors would come and the rate is fixed for the tree so that nobody tries to cheat them. The entire wood is brought for their paper mill located at Bhadrachalam in Andhra Pradesh. The farmers’ field was earlier barren. We provided technical advise and assured them we will buy the wood.

The initiative also indirectly increases the country’s forest cover. It helps in recharging ground water. It has also discouraged people from going to forest for fuel woods. Lots of fuel supplies in villages come from these trees. At present, all the wood requirement for the paper manufacturing comes from ITC’s forestry scheme. Not a single piece of wood from the natural forest. For the existing pulp mill the company would need about 9 lakh tonne of wood annually. In a four-year cycle they need only 40,000 hectare and we have already created 1.15-lakh hectare. Every year we will grow an additional 10,000-hectare of forest. Besides Andhra Pradesh, we have taken up forestry programme in Madhya Pradesh and Maharashtra. Now, we are helping farmers in Tamil Nadu too.

As against 8-9 kg per head per annum of paper consumption at present in the country, China's per capita consumption is at 45 kg per head per annum. It’s a cyclic business. The demand for paper would be rising in coming years. ITC is going to put up another pulp mill in Bhadrachalam. They are preparing for an investment of Rs. 3,000 crore in another three or four years.

Inspiration

Forecast for paper production by 2021 is projected as 521 million tons per annum worldwide. In India per capita consumption is 9.3kg & the demand is driven by GDP growth. Indian pulp & paper Industry mirrors the impressive growth rates in GDP at 8% CAGR. It will need 2 million tons of production & 17 kg per capita consumption. Covering 22.8% of total geographical area, India has forest area of 75 million ha. In the National Forest Policy 1988, wood based industries have been advised to encourage agro-forestry. Pulp & paper industry consumes 3% of the total national wood requirement.

ITC paperboard & specialty paper division, one of the leading paper & pulp manufacturing company in India launched tree improvement research. ITC devised the strategy to raise pulpwood plantations commensurate with wood consumption & also to fulfill social responsibility towards rural population. The plantation programme introduced an alternate source of livelihood.

Overall impact

The project resulted in growing renewable plantations that simultaneously provide a viable livelihood option for wasteland owners, create a sustainable raw material source for ITC’s Paper & Paperboards Business and bring multiple environmental benefits. The programme played an instrumental role in bringing the tribal wasteland owners out of the vicious cycle of poverty. ITC benefited from the renewable and secure source of pulpwood for its Paper & Paperboards Business which in turn provided strategic sourcing to its packaging and other FMCG businesses. The programme has also contributed to the Company’s carbon positive status. They became pioneer in manufacturing Elemental Chlorine Free (ECF) pulp in India ensuring that the levels of dioxins and furans in the pulp are less than 1 PPT (parts per trillion).

The program enhanced farm incomes and generate sustainable employment of 1.2 million people through incremental employment. It increased the country’s forest cover and has also discouraged people from going to forest for fuel woods. This has ensured that not even a single piece of wood came from the natural forest.

The difficult option of mobilizing tribals and marginal farmers which involved long gestation and substantial investment exposure have helped ITC in reducing the pulp imports in the long run.

ITC has introduced an agro-forestry model that combines tree growing with crop production. This model ensures both food and wood security and helps in the conservation of precious natural resources. ITC’s afforestation program has been conferred the Forest Management certification from the Forest Stewardship Council, in line with ITC’s commitment to achieving internationally benchmarked standards for responsible wood sourcing.

The increase in employment days is an evidence for their success. It has increased from 51.1 million to 89 million person-days since its inception. The farmland developed has increased from 114,000 hectares to 198,363 hectares now. The number of saplings planted has also increased from 467 million to 969 million.

Business benefit

The paper industry is highly raw material intensive. Procurement of good quality fiber was a serious concern for the company. Dependence on imports for the same were driving up their procurement and logistics cost. The program resulted in high-yielding, disease free clonal planting stock developed through Tree Improvement research at its Bhadrachalam unit. ITC earlier used to depend hugely on imports due to lack of sufficient raw materials procured locally. After this program became successful, ITC was able to reduce its import dependence significantly. ITC now has managed to ensure a dedicated supply base for its paper and paperboard business. ITC was able to establish long term relationships with the farmers thereby ensuring a steady supply base. This business engagement has resulted in a mutually beneficial outcomes for both parties involved. This has also resulted in sustainable sourcing with more than 70% of total fibre requirements being met from this project. They are able to procure materials of similar quality at a larger scale.

Social and environmental benefit

The Plantation program has introduced an alternative means of livelihood for the rural community. The average net income to farmer from clonal plantation is about Rs 30000 /ha/yr under rain-fed condition and Rs 48000/ha/yr with irrigation on a four year rotation cycle. This is significantly higher compared to traditional crops grown in the operational area and at much lower risks.

Plantations are playing an increasingly important role in rural economic development and poverty alleviation in company's catchment area. Since employment generation for farm labors is important for reducing poverty, the 198,363 ha of plantations provide an estimated 89 million person days of employment from tasks such as nursery, planting, logging and maintenance operations. Social and farm forestry have already contributed greatly to rural livelihood and created more jobs for local people. Farmers kept aside a portion of their earnings in a separate community fund for development of village infrastructure like roads and schools. With the rest, the farmers try to buy more land.

India has been experiencing a steady decline in its forest cover over the last few decades due to the incessant and indiscriminate felling of trees. No concern had been given at ensuring the sustainability of the green cover on a large scale by big businesses. This initiative has managed to bring about a positive impact in this scene. Barren wastelands have been turned into plantation sites. In addition to making the country greener by improving forest cover this has also managed to improve incomes of farmers. In very dry- rain fed areas, there is a lot of such wastelands where no other cultivation is possible apart from plantations and they mostly belong to the tribal people, mostly the Particularly Vulnerable Tribal Group (PVTG). This can have various other trickle down effects like increase in income, reduction in distress migration etc. There is no restriction on these farmers on whom they can sell their produce to. It is not mandatory that they should sell it to ITC. They can sell it to whoever offers the highest bid. This ensures their independence and also helps them in flourishing economically irrespective of their business dealings with ITC.

Clonal plantations have additionally been able to mitigate environmental degradation on a large scale greening efforts. It is estimated that plantations have an estimated potential to sequester 93.28 million tonnes of carbon by reducing 171 million tonnes of CO2. By promoting plantations on such a large scale, the project has increased the green cover in the country. Clonal plantation directly contributes to insitu moisture conservation, groundwater recharge and significant reduction in topsoil losses due to wind and water erosion and help in conservation of natural forest resources. In near future increasing in soil fertility will decline fertilizer and pesticide consumption thus reducing pollution of ground water resources.

Interview

Anil Bajaj, Manufacturing Executive