Agroforestry: Changing the Plywood Industry Dynamics in India

Agroforestry: Changing the Plywood Industry Dynamics in India

Sajjan Bhajanka Chairman Century Plyboards (India) “Well-thought-through policy shifts in agroforestry is likely to increase the GDP by 10x for every dollar of timber produced supporting the nation’s sustainability and climate agenda; it will also drive clea...

Sajjan Bhajanka Chairman Century Plyboards (India) “Well-thought-through policy shifts in agroforestry is likely to increase the GDP by 10x for every dollar of timber produced supporting the nation’s sustainability and climate agenda; it will also drive clean power sources.” — Sajjan Bhajanka India is one of the leading producers of wood and wood products in Asia, agroforestry has emerged as a great opportunity in the country that can create huge value for the nation. By making India “Atmanirbhar”, agroforestry is being increasingly recognised from an economic standpoint. In addition, it has an immense positive contribution to the wood-based industrial sector. The country is poised for a demand boom fuelled by the government’s efforts in revitalising the real estate sector and our robust consumption story. Stable land and home prices for seven years, focus on affordable housing, increasing lifestyle standards in Tier-II, III and IV cities, maturity in the lending space and low mortgage rates are likely to create growth in the plywood industry. India consumes 90 million cu m of wood today, of which 90 per cent comes from trees outside forests. The country has the potential to become a significant player in global plywood supply impacting plywood industry dynamics in India. The sector’s growth depends on a 4x increase in raw materials, primarily composite panel products like plywood, particle boards and MDF, which in turn will require an increase of 110-115 million cu m of timber, from approximately 85 million cu m to 200 million cu m. While this growth can be supported by the current model of importing wood and timber, the key question is how can India tap this growth and boost the industry in the future. This is where agroforestry plays a vital role in uplifting the industry. In comparison to the leaders of this industry like Canada, Malaysia, and Indonesia, today our timber output is only a fraction. Having the second largest arable land resource in the world and diverse climatic and geographic systems, India is at an advantage because of its unmatched scale and diversity. Hence, with the right mindset of improving acreage and productivity, India can become “Atmanirbhar” – self-reliant in the sector and can completely change the dynamics of the industry for good. Countries like China have shown significant growth in agroforestry through their favourable policy framework. This helped them to unlock growth and allowed them to clock 2.6x growth in the interior wood products sector in the last decade. There is no doubt that agroforestry has helped attain a noteworthy growth in the plywood industry in India boosting socio-economic growth and sustainability. The government and many industries in India have enthusiastically adopted agroforestry, which has helped the wood-based industry by improving socio-economic conditions, changing the mindset of the rural people who are exposed to new technologies and market dynamics, and new financial systems. However, to maintain and increase the growth of this industry, a future-looking approach is required. A 5 per cent shift of agricultural land is required, which moves from cash crops to timber plantations through incentives. To enhance the ease of doing business for consumers of timber, the removal of licensing is required for wood-based units and all other industries that primarily use ‘farm wood’ and its produce as raw materials. This will encourage local producers and other users of farm wood to build sustainable businesses at the plantation sites and generate employment and livelihood opportunities. The formation of the National Wood Council as a nodal agency for wood-based industries can be another positive step towards the future with representation from the Ministry of Forestry and Agriculture Departments to ensure convergence of sectorial and inter-ministerial assistance. If we consider all of the well-thought-through policy shifts in agroforestry, there is tremendous potential to drive new employment and become self-reliant in import substitution. This is likely to significantly increase the GDP by 10x for every dollar of timber produced supporting the nation’s sustainability and climate agenda, it will also drive clean power sources. About the author Sajjan Bhajanka, Chairman, Century Plyboards (India), is the founder of the company and has been leading the company for the last 36 years as its Chairman. He oversees the overall management of the group.

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