Instituitonal Arrangements for Bamboo

India is different from other bamboo-producing Asian countries because bulk of bamboo consumption is not by artisans but by industries that use bamboo for paper and rayon, scaffolding, and bamboo boards. The continuous increase in the installed capacity of industrial units for paper and board, and increased demand from urban constructions for scaffolding had put an enormous pressure on bamboo forests, and sufferers have been the local people whose survival depends on these forests.

Forests, in India, being in the state list of subjects for long time, and now in the concurrent list for the last two decades, different states have diverse provisions for the use of bamboo, which is mainly the allocation to industries and local artisans and other people.

However, the main elements of these policies are similar. In the last two decades, there has been a drastic change in forest policy and the orientation of forest management in India. The 1988 forest policy of India emphasized the peoples' participation in forest management and a shift from support to industries to the right of weaker sections.

The 1988 Forest Policy of India, the second forest policy of independent India, is a clear departure from its first forest policy of 1952. The policy has very clear directions on these three main issues: the rights of the local forest-dependent people, involvement of the people in forest management, and supply of raw material to forest industries.

The policy recognizes that the life of tribals and other poor people living within and near forests revolves around forests, and, hence, the rights and concessions enjoyed by them should be fully protected. The domestic requirements of these groups of fuel wood, fodder, minor forest produce, and construction timber should be the first charge on forest produce. These and substitute materials should be made available through conveniently located depots at reasonable prices.

In addition, these holders of customary rights and concessions in forest areas should be motivated to identify themselves with the protection and development of forests from which they derive benefits. The rights and concessions from forests should primarily be the bonafide use of the communities living within and around forest areas, specifically the tribals.

On the industrial raw material end, policy states that the practice of supply of forest produce to industry at concessional rates should cease. A forest-based industry should raise the raw material needed for meeting its own requirements. It should, preferably, be done by establishment of direct relationship between factory and the individuals who can grow the material by supporting the individuals with inputs including credit, constant technical service, and finally harvesting and transport services.

In the 1988 Forest policy, the emphasis was on the motivation of people, holders of customary rights and concessions, to associate themselves with the protection and development of forests. The Government of India, in its order of June 1 1990 as a follow up of the 1988 forest policy, emphasized that the areas to be selected for the program should be free from the claims (including existing rights, privileges, concessions) of any person who is not a beneficiary under the scheme.

In this order no where it was mentioned that only degraded forestland should be selected for the involvement of village communities, however, the subject of the order was the involvement of village communities and voluntary agencies for regeneration of degraded forestlands. As a follow up of the GOI order, more than 20 states have issued the government orders about involvement of village communities in forest management. However, these state governments took the stand that the involvement of village communities is limited only to the degraded forests.

As a consequence, the government orders of seventeen states have explicitly limited the provisions of joint forest management to degraded forestlands. However, there are three exceptions - Punjab, Nagaland, and Uttar Pradesh. In the state of Punjab, all government, private, and community forests are included; in Nagaland, non-government land that can be put to forestry/virgin forests and government lands are included. In the case of Uttar Pradesh, only village forests that are not governed by U.P. Panchyat Forest Rules 1976 are included.

Hence, the state government orders, in general, have not followed the spirit of the 1988 Forest Policy of involving the forest dependent people in forest management, but the focus has become on using the local people for the protection and rehabilitation of degraded forests.

Forests are classified degraded on the basis of canopy cover. Since most of the species of bamboo are clump-forming, and only few culms are harvested from a bamboo clump at a time. Normally, forests containing bamboo does not fall under the category of degraded forests even when the condition of bamboo clumps may be bad due to past mismanagement of these forests. Hence, due to the limitation of JFM to degraded forestlands, bamboo areas have almost been excluded from the involvement of local communities in forest management. Therefore, the provisions of the 1988 Forest Policy have not been extended, in general, to bamboo forests.

Other provision of these JFM state government orders related to bamboo is the distribution of benefits to the community members. Even though, these provisions have wide variation across the states. But, one of the common features is the distribution of non-timber forest products, normally free of cost or in some states at very nominal prices. But, most of the state government orders, except Madhya Pradesh and Rajasthan, are not clear on the issue of inclusion of bamboo in the category of non-timber forest products.

The JFM Government Order (GO) of Madhya Pradesh, issued in 1991 and amended in 1998, clearly mentions that community members will be entitled for all non-nationalized non-timber forest products including bamboo free of cost, collection rights for nationalized NTFPs, and 30 per cent income from fuel-wood obtained from main fellings. Similarly, the G.O. of Rajasthan, issued in 1991, is explicit that community members are entitled of all NTFPs except bamboo free of cost.

In other states, forest managers, normally, follow their conservative approach, and exclude bamboo from NTFPs for the purpose of joint forest management. Hence, the spirit of the National Forest Policy of 1988 regarding the first right of local people on forest products, specifically bamboo, is not being followed in forest areas which have been brought under joint forest management.

In addition to these broader institutions of the forest sector, the state government institutional arrangements regarding the distribution of bamboo to different user groups are also important for the analysis of bamboo sector. Hence, these institutions for the four major bamboo growing states, namely, Madhya Pradesh, Maharashtra, Gujarat, and Orissa are discussed. The state government orders regarding the distribution of bamboo fall in two categories: (i) distribution to small-scale consumers - local people, bamboo artisans, right holders, and (ii) distribution to large-scale consumers - bamboo based industrial units. The state government orders for these two categories are discussed separately.

Distribution to Small-scale Consumers:

The state of Madhya Pradesh has very elaborate institutional arrangements for this category of bamboo consumers. The state government, by their order dated 16 September 1985, has classified these consumers in five groups: (i) nistari (right holders), (ii) basods, (iii) pan bareja (betel vine growers), (iv) fruit growers, building contractors, incense stick makers, and manufacturers of frames bidi (rural cigarrete) storing etc., and (v) other consumers, and has fixed the quantity of bamboo that should be given to each category of these consumers at the rates prescribed by the state government.

The forest department has established number of depots throughout the state with each depot having its fixed jurisdiction - villages attached to the depot. There are three types of depots – Nistar depot, Basod Depot, and Consumers depot. A consumer, who uses more than 500 bamboo culms of 3.70 metre length per year, has to register with the forest department by paying the fixed registration fee. In 1998, these fees were Rs.200 for businessman, Rs.150 for building contractors, Rs.5 for basod, pan-bareja and others.

Every nistari (right holder) rural household is entitled for up to 250 bamboo/year from the depot at the rate of Rs.0.25 + actual expenditure on harvesting and transportation + forest development charge. Basods are traditional craftsman of bamboo who earns their livelihood by making articles such as baskets, mat, containers, and hand fans etc and selling those articles in the local market. A registered basod family is entitled to get 1500 bamboo per year from the depots. The rates are Rs 0.60/bamboo for the first 500 bamboos and Rs.0.75/bamboo for additional 1000 bamboos.

These rates are for bamboos from depots located within 40 km of forests, and for depots farther than 40 kms, additional transportation cost is added. Pan Bareja (Betel Vine Growers) requires shade and support to the vine, and bamboo is used for this purpose. Every Pan Bareja family is entitled a maximum of 1000 bamboos at the rate of Rs1.50/bamboo+ extraction and transportation cost + taxes. But, bamboos are made available to Pan Bareja families only when the demands of nistari people and basod families are met.

Fruit growers, building contractors, incense stick makers, and manufacturers of frames for bidi (rural cigarrete) storing etc are entitled for industrial bamboo up to maximum of 5 notional tons/year of length varying from 1m to 2m, on producing the certificate from Block Development Officer or Assistant Director Industries. In 1994, the price of industrial bamboo was Rs 1115/notional ton. Other villagers who do not fall in these categories may purchase bamboo from forest depots. Each family is entitled up to a maximum of 50 bamboo per year. Prices of bamboo for these other consumers vary according to the size of bamboo. In 1994-95, these prices were Rs.7.70 for 4.6 m, Rs.9.65 for 5.5m, Rs.11.70 for 6.5m, and Rs.13.75 for 7.3m bamboo. The state government fixes only the base-price for different categories of consumers, and the actual rates depend upon the associated costs such as transportation costs. Hence, the actual prices are fixed by the Conservator of Forests (CF) of the concerned forest area.

In Gujarat, Kotwalias/ Bansfodias are the two communities who depend on bamboo working for their livelihood. The entitlement of different categories of these two groups for bamboo was fixed by the government order of 1988. In subsequent years only prices are revised. According to 1988 order, each family of Kotwalias and Bansfodias, living inside the forest area, is entitled for 800 bamboos at the rate of Rs 66 per 100 bamboos (inclusive of cutting charges).

Every family of Kotwalias and Bansfodias, living outside the forest area, who traditionally survive solely on bamboo works for generations and who are members of registered industrial co-operative societies or societies registered under the Society Act, are entitled for 125 bamboos per year at the rate of Rs 81 per 100 bamboos (inclusive of cutting charges). However, the supply to the families living outside forests will be subject to the following conditions.

First, bamboos are to be given to the registered co-operative societies or to the societies registered under the Co-operative Act who will then distribute them to the members who traditionally survive on bamboo work. Second, bamboos are to be given as per the availability of bamboos with the forest department. Third, in the case of shortage of availability of bamboos with the forest department, the department will distribute bamboos as per the following priority order: the co-operative societies of the district where the bamboos are available, the co-operative societies of the neighboring district where the bamboos are available, and the co-operative societies of other districts. Fourth, if the Kotwalias or Bansfodias are prepared to work as laborers at the time of cutting of bamboos, then they will have to cut bamboos under the supervision of the forest department.

Fifth, since it is difficult to meet the demand of all the societies, the following norms will be followed: 200 bamboo per member for those who live within 25 KM of the forest area, 100 bamboo per member for those living within 25 to 50 KM from the forest area, and 50 bamboos per member for those living outside the 50 KM range.

In Orissa, as per the government order of 1990, the domestic requirement of fuel wood, timber and bamboos should be the first charge on forest produce. Supply of fuel wood to industrial units will however, be considered only in case of surplus of fuel wood. The Orissa Forest Corporation (OFC) will establish at least one bamboo depot in each bamboo coupe in the nistar (cess paying) areas. Each tenant will be supplied 50 bamboos per annum, from these depots, on first come first serve basis subject to availability. Salia bamboo will be sold to the tenants at the rate of Rs.1.50 per piece for bigger (long) and thicker size and Rs.1/ per piece for thinner size bamboos, and these rates are inclusive of the royalty applicable to the district.

In April 1991, the government of Orissa extended these provisions to the protected (Khesra) forests. According to the order of 1991, permits for removal of bamboos, maximum 50 bamboos per annum per tenant, may be issued in favor of Nistar Cess paying tenants on first come first serve basis subject to availability from Khesra forests in Ex-state areas which are not worked under any Working Plan or Working Scheme through the Orissa Forest Development Corporation, consequent on nationalization of bamboos. This government order also clarified, that in the case of conflicts between the villagers constituting the village level protection committee and the villagers within 10 Kms belt, the first charge of the produce of the forests protected by the protection committees regarding enjoyment of usufructs would be of the villagers constituting such committee. Only when there is surplus after meeting the genuine domestic needs of the villagers constituting the forest protection committee, the same may be given by issue of permit to the villagers within 10 km belt.

In Maharashtra, Nistar rights for bamboo are limited only to Chandrapur area. As per the government order of 1997, every Burud (bamboo-dependent tribe) family is entitled for 1500 bamboos, at a price not to exceed half of the market price), per year. But, in the field, we found that the common practice was to give 30 bamboos per month per family, hence restricting to only 360 bamboo/year. In last few years, these commitments are not being fully met due to fall in production of bamboo in nistar areas. In other areas, buruds buy bamboo from local agents, who buy in bulk from the forest department auctions and sell it in 1-2 pieces to buruds.

Hence, all the four states recognize the need of making bamboo available to bamboo-dependent user groups, but only the state of Madhya Pradesh and Gujarat have elaborate provisions for different user groups. The state of Madhya Paradesh distinguishes between user groups based on their occupation such as basod, pan bareja etc., while the state of Gujarat distinguishes only on the basis of the distance of habitations of user groups from forests. In the case of Gujarat, prices are the same for all user groups, and only quantity entitlements vary according to the distance. In the case of Madhya Pardesh, prices and quantities both vary across the user groups. There seems to be some rational for higher prices for higher income group users such as pan bareja compared to basod. But prices also increase with the quantity which is against the normal economic pricing mechanism in open market (quantity discounts). Higher prices for larger quantity may be rational from bamboo conservation perspective, but they are irrational from the bamboo dependence perspective. Because, a bamboo-worker, who do not has any other productive asset, and is totally dependent on bamboo products will require large quantities of bamboo. But, as per the present provisions, he will have to pay higher prices as compared to the bamboo-workers, who have other assets, and require only small quantities of bamboo to supplement their income from other source.

In all these four states, these arrangements have been in operation even before the Forest Policy of 1988, and in none of the states the requirements of different local user groups have been met to a significant extent. In fact, over the years, the proportion of demand of local user groups fulfilled by the supply of bamboo has been decreasing. No state government has changed its provisions of supply of bamboo to local user groups after 1988 Forest Policy. Hence, no attempt has been made to implement the provision of forest policy that the domestic requirements of local groups should be the first charge on forest produce.

 Distribution to Large-scale Consumers (Industrial Units)

In Madhya Pradesh, the forest department has been supplying bamboo to two paper mills - Nepa Paper Mills, Nepa Nager situated in Hoshangabad district and Orient Paper Mill, Amalai, Shedol district under long-term supply agreements. The Nepa Paper Mill produces 80,000 metric tonnes of paper from 1.2 lakh tonnes of industrial bamboo. The Nepa paper Mill was supplied bamboo on the basis of annual agreements up to year 1984. In 1985, the government of Madhya Pradesh entered into a twelve years agreement with Nepa Paper Mill for supply of bamboo. This agreement has many provisions regarding schedule of bamboo supply, price of bamboo, interest rates, penalties, payment schedules, and management, felling, and transportation of bamboo.

However, the main provisions, in the context of this project, are quantity of bamboo to be supplied and pricing mechanisms. The government agreed to supply approximately one lakh (0.1 million) sale units of bamboo (equivalent of 2400 RM), and directed the mill to use the supplied bamboo only for the purpose of manufacturing newsprint, paper, and allied products at the paper mill of the company.

The initial price, in 1985, was fixed at Rs 510/ sale unit for the first year. This price included the expenses incurred by the Forest Department in making supplies at the depots. The pricing mechanism for subsequent years included that the price shall be revised at the end of every four years from the date of commencement of the agreement, and the price thus revised shall be final and binding on the company. For each of the subsequent years in a block of four years, the price payable by the purchaser shall be fixed at eight percent above the price fixed for preceding year. In addition the company will pay sales tax and any penalty due to default of the company, and 18per cent interest on delayed payments. The agreement ended in 1997.

The Orient paper mill, in the beginning, had a fifty years agreement that expired in 1973, and the government of Madhya Pradesh signed a new twelve years agreement with the Orient Paper Mill. The agreement was extended on the similar grounds for another period of twelve years ending in 1997. According to this agreement, the state will supply approximately about one lakh metric tonnes of bamboo to the company. But, the total quantity supplied will not exceed 70 per cent of raw material requirement of the company, and the company will use 30 per cent of other material for its production process.

The price of bamboo included three components.

First, the price of standing bamboo at the rate of Rs 55 for notional tonnes, comprising of 2400 running meters. In the case of supply of only lops and tops from bamboo cut for commercial use, the running length per notional tonne will be determined on the basis of field experiments.

Second, the actual cost incurred in respect of cutting, billeting, bundling, removal to the extraction paths, stacking, maintenance and construction of extraction paths, roads, etc.

Third, actual cost of transportation of these bamboos stacked along the extraction paths to the specified depots or railheads. The actual expenditure in the second and third item includes full supervision and establishment charges and all other expenditures incurred in this connection by the forest department. The pricing mechanism included the revision of the base price of Rs 55 per notional tonne at the end of every four years, and the process of revision of the base price. The revision process included an increase of 25per cent over the rate of bamboo fixed for the previous slab of four years or a rate equivalent to the price of bamboo worked out from sale price of a standard tonne of paper on the basis of the weighted average according to the company's product-mix, whichever is higher for the period under review. The company will also pay a compound interest at the rate of 12per cent per annum for the first year and 18per cent per annum for more than one year if payments are not made at the due date. The company will also pay sales tax.

In addition, to these provisions of quantity and prices, this agreement also has the provision that the company will also supply against orders in writing for use of the State Government up to 8per cent of its total production of all grades of printing and writing paper in a year. The price to be paid for paper supplied shall be the Civil Selling price ruling at the time of placement of orders.

The government of Madhya Pradesh took a policy decision in 1994 that no new agreements will be signed with any industrial units in pursuance of the provision of the 1988 Forest Policy. Hence, the government of Madhya Pradesh did not sign any new agreement with these two paper mills on the expiry of their agreements in 1997. Now, these paper mills have to compete in open auctions of bamboo with other competitors in the market. In the following years, the forest department of Madhya Pradesh has been following the open auction system for the sale of bamboo.

The opening of bamboo market attracted some outside buyers from the states of Andhra Pradesh and Karnataka to Madhya Pradesh. But, in late nineties (1998 to the end of century), many paper mills faced financial crunch. Hence, the forest department has not been able to sale bamboo from their depots, and large stocks of bamboo have been lying in forest depots.

In Maharashtra, industrial bamboo has been supplied to Ms Ballarpur Industries Limited (BILT) under agreements signed in 1947 and 1968. Now, they have annual agreements, and annual revision of agreements is done under Maharashtra Supply of Forest Produce by Government (Revision of Agreements) Act 1982. In annual revisions, normally, only the quantity and prices are fixed for the current year while other provisions remain the same. In the determination of annual price three factors are considered.

First, the sale price in the open and negotiated sales of such forest produce within the state during a period of 12 months preceding six months prior to the date of commencement of the supply year. If enough sale data is not available in six months period, sale data for 24 months is considered. In the calculation of average sale price on the basis of these sale data, weightage is given to the quantities involved in the sales.

Second, the general trend in the price of the forest produce since the dates of sales referred above is considered.

Third, if no sale data is available within the state, open and negotiated sales effected in one or more of the states adjoining the state of Maharashtra are considered. Last ten years data of bamboo prices fixed by the state indicates that normally there has been an annual increase of 10%. In addition to this base price, BILT also pays 10per cent Forest Development Tax. The bamboo price for 1997-98 and 1998-1999 were Rs 708.62 and Rs 779.48/metric tonne, respectively

In the state of Gujarat and Orissa, there is no impact of 1988 Forest Policy on supply of bamboo to forest industries. In Gujarat, industrial bamboo is allotted to the Central Paper Mill at the rate fixed by the state government. Harvesting operations are done by the mill, and mill gives a pre-fixed amount of full bamboos to the forest department which sales these bamboos to local bamboo user groups and registered cooperative societies. In the state of Orissa, the forest department appointed Orissa Forest Development Corporation (OFDC) as an agent for bamboo working in 1988.

The OFDC has appointed three paper mills - J. K. Corporation, Orient Paper Mill, and Ballarpur Industries Limited - as their labor contractors for bamboo working in different areas of Orissa since 1993, even against the directions of the Ministry of Environment and Forests, Government of India. In these two states, not only bamboo is allotted to the industries but paper mills being labor contractors in bamboo forests, local workers involved in bamboo harvesting and transportation etc. are also at the mercy of these paper mills. The paper mills pay the price of bamboo to the OFDC, and the OFDC pays the royalty to the forest department. There has been a strong opposition of this practice at the state level, and public-interest litigation has been filed in 1995 in the High Court of Orissa against the paper industries working as a labor agent to the OFDC.

Hence, the impact of 1988 Forest policy on supply of bamboo as a raw material to industrial units has varied across the states. In the case of these four states, only Madhya Pradesh has followed the policy directions while all other three states have been continuing their old practices, and Orissa has gone a step-ahead by appointing paper mills as labor agents.