0228-B1

Status, Trends and Demand for Forest Products in India

D.P. Malik^[1] and Sunil Dhanda

ABSTRACT

Forests play an important role in the socio-economic development of a country like India. They are rich sources of energy, housing, firewood, timber and fodder and they provide employment to a large section of the rural population. Demand for forest products and services in the country is increasing with rapid economic growth, industrialization and increase in population.

The recorded forest area in India is about 76.5 million ha (23% of total land mass). However, the actual forest/tree cover is just about 19% of the total geographical area. The per capita forest area in the country is 0.08 ha as compared to the world average of 0.64 ha. The total removal of fuelwood from forestland is estimated at 270 million tonnes annually. During the last two decades, India has witnessed annual depletion of forest cover at a rate of 235 km². The consumption of fuelwood and timber in the country was 23.5 and 40 million m³, respectively against the availability of 40 million m³ and 15 million m³ from the forests.

A study was carried out to: i) assess the status of forests in India, ii) analyse the trends in production and consumption of forest products and iii) estimate demand and supply of forest products in future.

The results of the study reveal that the area under forests registered a decline over the period. The inter-state distribution of forest area per capita indicates that Arunachal Pradesh state ranked first with 7.93 ha of forest per person. The trend in relation to production of forest products exhibited a slower growth rate than its consumption. The forecasts of demand and supply showed a deficit of all forest products except for wrapping, packaging paper and paper board. Thus, there is a need for an increase in area under forest of up to one third of total geographical area as recommended by the Indian Forest Policy to meet the requirement of forest products as well as the protection of ecological assets.

Introduction

For developing countries like India, forests are sustenance and survival for a large populace. Forests are renewable resource and contribute towards economic development. Forests occupied a share of 1.7 percent to gross domestic product (Singh and Beniwal, 1995). At present a large section of population depends upon forests for their livelihood. Forests fulfill the needs of fuel, fooder, energy, housing, timber, raw material for artisans and industries and employment. The minor forests products including fruits, flowers, seeds, grasses, dyeing and tanning agents, natural gums, resins etc. also contribute to the economy. The role of forests in ecological balance, bio-diversity conservation, food security, protection of soil and water resources, mitigation of global warming, combating desertification and sustainable development has been widely accepted.

The increased demand for forest products, fast population growth, urbansiation, higher rate of economic growth and trade liberalization are putting pressure on all resources including forests. The demand for food to feed in creasing population causing extension in agriculture and shifting cultivation resulted into decline in area under forests.. During last two decades, India witnessed annual depletion of forest cover at rate of 253 square kilometres (Anon., 1999)

The most obvious challenge within forestry sector is that to meet growing demand for forest products and enhance the quality of environment. With these and associated considerations, the following objectives were framed. i) to assess status of forests in India ii) to analyse the trends in production and consumption of forest products iii) to estimate demand and supply of forest products in future.

Methods and Materials

The information pertaining to production, imports and exports of major forest products was scanned from published sources in order to analyse trend behaviour of production and consumption. The data with regards to different aspects of forest products were collected from FAO Year Books of Forest Products, Forest Survey of India, Dehradun and Ministry of Environment and Forests, Govt. of India, New Delhi for the period 1970-2000. The compound growth rates of production and consumption were computed using log linear function i.e. LnY = a + bt, where ‘Y’ denotes production/consumption and ‘t’ represents the time variable.

In order to make decision about investment in forest sector, it is necessary to have forecasts of future requirement of forest products. To project future forest products demand or consumption in India, a few relevant studies (Rai,et al.,1983,Guleria,1988 and Kalla,1988) were conducted using the available information as productuion, imports and exports and regression analysis of relationship between the derived consumption and the national income of the same period. For the present study, The model using trend elasticity and time co-efficients was employed

Format of Model

Where

Z_it = consumption of i th product (production plus imports minus exports) in ‘t’ time period.

X_t = gross domestic product (GDP) at time ‘t’ in crore rupees measured at 1980-81constant prices.

Y_it = Quantity of ith product in ‘t’ time period

CF_t = Gross capital formation in forestry and logging sector in crore rupees measured at 1980-81 constant prices.

L & B parameters to be estimated. Uit &Vit are the error terms.

Finally, demand and supply functions for all the products were estimated employing Ordinary Least Square Model (OLS). For determining the demand -supply imbalances (DSI) in percentage, the formula used was:

Results and Discussion

1. Status of forests: India occupies 2.5 percent of world geographic area supporting 17 percent of human population and 18 percent livestocks (Oberai, 2000) of the world. The forest cover in the country is about 76.5 million hectares (23% of total land mass). The dense forests (crown density more than 40%), open forests (crown density 10% less than 40%) and scrub including mangrove forests (tree land with less than 10% crown density) accounted for 48,34 and 18 percent of forest area, respectively. On average about 1.2 million ha.(hectare) area is taken up for plantation which generates 144 million mandays of employment per annum.

The productivity of forests is extremely low as 0.7 cum (Cubic metre) as against the world average 2.1 cum/ha./year (Lal, 1989) and along with this, the average growing stock is 32 cum per ha. as compared to world average of 110cum. Achieving the potential of world productivity i.e. three times would brig conservable improvement in economic environmental well-being of land and people in the country.

The biotic pressure on forests had always been causing a continuous decline in forest area over time. The decline in area of dense forests in India is recorded from 46.42 to 36.37 million ha. during the time period 1972-1997(deforestation @ 0.6 million ha. per annum, FAO, 1998). due to loss of natural forests. A sharp reduction in forest area was observed in all states during last two decades. The forest area is declining more rapidly in Haryana, Rajasthan and Himachal Pradesh states of Indian Unions. The area under forests registered fluctuating trend since 1980-81. The forest area increased by about 0.8 percent in 1990-91,but a sudden decline i.e. 0.3 percent is reported in 1992-93 and than slight increase during subsequent years. The inter-states distribution of forest area per capita indicates that Arunachal Pradesh state ranked first i.e. 7.93 ha. While Madhya Pradesh state having highest forest area constituented 21.19 percent of total area under forests.

2. Trends in production and consumption of forest products

2.1. Production of forest products: Total wood production (roundwood) has increased from 199.17 million cum in 1970-80 to 248.52 million cum in 1981-2000 registering a compound growth rate of 2.03 percent for the time period 1970-2000 (Table-1). The production of fuel wood and charcoal witnessed increase at rate of 1.98 percent per annum. The industrial use of wood and production of sawnwood recorded increased at 2.84 and 6.54 percent for the period 1970-2000, respectively. The production of wood-based panels more than doubled in 1981-2000 over 1970-80 and average annual growth rate stood at 5.49 percent.

Table 1: Production and growth rates of forest products in India: 1970-2000

* Data available for the time period 1970-94

Under wood -based category, plywood account for more than 80 percent of total wood based panels in 1981-2000 over 1970-80 indicating the highest growth rate (5.65%) followed by particleboard (5.45%). The annual growth in production of woodpulp, paper and paperboard and newsprint was 8.98,5.27 and 11.81 percent in time period 1970-2000, respectively. The results of compound growth rates during sub periods show that annual percent increase for most of the forest products was higher in 1970-80 compared to 1981-2000 except for ply wood, fibreboard newsprint, other paper and paper board and wrapping and packaging paper and paper board.

2.2. Consumption of forest products. Forest products consumption in India experienced a considerable growth in last two decades. Round wood consumption increased from 199.14 million cum in 1970-80 to 248.58 million cum in 1981-2000 (Table-2). The substantial increase in consumption of industrial roundwood indicating 47 percent in period 1981-2000 over 1970-80. The fuel wood and charcoal and sawnwood consumption grew at compound growth rate of 2.18 and 6.46 percent for the period 1970-2000, repectively. The share of industrial roundwood in total wood consumption exhibited increase from 8 to 9 percent between two time periods. The relative share of fuelwood and charcoal contracted from 92 to 91 percent during the same periods. The expansion in consumption of sawnwood, wood-based panels, wood pulp and paper and paperboard recorded. Consumption growth rate has been particularly significant in plywood. The rapid growth in consumption of wood pulp was observed with annual increase of 8.32 percent during 1970-2000. The consumption of paper and paperwood, wrapping, packaging paper and paperboard increase substantially over the period. The comparison of actual production and consumption over two periods shows that growth in consumption of most of forest products is higher than production growth creating demand -supply imbalances.

Table 2: Consumption and growth rates of forest products in India: 1970-2000

* Data available for the time period 1970-94

3. Forecasts of future demand and supply of forest products

Despite overall economic growth, poverty, hunger and malnutrition persists in parts of the world and among various sectors of population due to uneven distribution of wealth and access to resources. About 100 million forest dwellers and another 275 million people are dependents on forestland (Lynch, 1992) for their livelihood. Forests do and will continue to play an important role in providing products and income for these peoples. Competing demands for forests to continue to provide for local needs and to meet the increasing national demands for industrial forest products, which will be stimulated by rising income levels, may well intensify. The combined effect of economic growth and increasing population size on demand for forest products is likely to be significant, particularly so since per capita consumption of industrial forest products is especially responsive to income change at low levels of income. Further, to make decision about investment in forest sector, it is desirable to estimate the requirement of forest products in future.

3.1. Prediction of demand: The projection of demand for forest products comparing the results of both statistical approaches were estimated using elasticity and time trend co-efficient model. In order to test the validity of projections, the actual production/consumption figures were compared with predicted figures for a particular period. The little difference between predicted and observed values for all the products supports the methods of estimation employed for the projections of demand and supply of forest products at national level.

The total roundwood demand is expected to increase to the level of 376.43 million cum by the year 2010 (Table-3). The fuel wood and charcoal requirement are expected to rise from 261.14 million cum in 1998-2000 to 334.51 million cum for the above said period. The consumption of fuel wood is highly supply elastic. Most of sawn wood is used in construction activity and is expected to increase in future witnessing increase in annual consumption from present level of 16.29 to 66.17 million cum in next 10 years. Plywood constituented about 80 percent of total wood-based panels in 1980-82 crops due its use in building, construction and furniture activities but its share declined sharply in next period because ply boards are manufactured using bye-products of crops. The demand projections resulted in annual consumption of wood-based panels increasing by more than six times. Wood based panels consumption increased little up to 1980-82 but a progressive increase in consumption in 1998-2000 leading yearly consumption of 0.54 million cum in 2010.

Table 3: Actual and projected consumption of forest products in India: 1970-2010

* Projections were made on data available for 1970-1994

The paper and paperboard groups comprising three distinct products categories i.e. newsprint, printing and writing paper, other paper and paperboard registered significant increase in consumption during the period 1998-2000. The total requirement of constituents of this group is estimated 8.57 million tonnes in the year 2010 showing acceleration in consumption. The consumption of forest products may be reduced through popularizing the wood substitute in construction, furniture and paneling sectors, promoting the use of secondary timber and plantation species. The reduction in consumption of firewood will be done through use of solar energy and “gobar gas” technologies

3.2. Supply potential: Significant growth in the supply is expected for all forest products in the country. The supply potential of roundwood will increase from present level of 282.52 million cum to 366.48 million cum by 2010 (Table-4). The shortage of roundwood in the country suggests that Govt. should intend to create new forest resources or substitute of this product or timely import of wood. This indicates that question of comparative advantages and policy implication should be analysed properly. The supply of sawnwood is expected to reach up to the level of 37.23 million cum by the year 2010. The production of wood -based panels is projected to increase to 0.45 million cum in same period. The supply of wood pulp will be increased more than 300 percent over the current supply through popularity of eucalyptus among farmers. The production potentials of other forest products are also expected to increase in the future. The analysis of demand and supply estimates indicates that requirement for most of the products is expected to increase at faster growth rate than production and will exist gap between demand and supply. So, supply potential of forest products is to be enhanced by the use of improved seeds, genetically superior planting material and technological interventions.

Table 4: Actual and projected supply of forest products in India: 1970-2010

* Projections were made on data available for 1970-1994

3.3. Estimation of gap between demand and supply: The knowledge about future requirement of the country for each of the forest products and estimated production will help to work out amount of products need. The average requirement of most forest products in future is expected to increase at much faster rate than supply. The supply of most of the products was higher than demand during 1970-72 but imbalances increased thereafter and demand exceeded the supply during 1980-82,expect for newsprint, packaging paper and paperboard which would have surplus production. The growth in demand is projected to outstrip supply potential for all most forest products in 2005 and 2010 except fibreboard, newsprint, other paper and paperboard, wrapping and packaging paper and paperboard leading to fast growth in imports by the year 2010. Since the supply of forest products is constrained by forest area, concentrated efforts to increase forest area to the level of one-third of geographical area (Indian Forest Policy, 1988) become an urgent economic activity.

Table 5: Projected demand-supply imbalances for forest products in India: 2005-10

* Projections were made on data available for 1970-1994

Conclusions

Foregone analysis, it was concluded that growth raters for production and consumption of most of the forest products during the time period 1981-2000 was observed slower than for 1970-80.The production of most of forest products grew slightly at lower growth rate than their consumption. The consumption and production of sawnwood, wood-based panels, pulp and other paper commodities witnessed increase much faster than fuelwood and charcoal. The requirement of forest products are growing and will continue to increase due to population growth and continuing economic growth. Demand and supply projections reveals that there will be deficit of most of forest products if area under forest is not increased as suggested by Forest Policy. Although the requirement for forest products is likely to rise from present levels but the rate of increase to be lower than in past. Demand-supply balance situation is distriurbing and will be improved through adoption of positive policies. Efforts should be made to increase the area under forests cover by afforesting wastelands through social and agro-forestry involving people’s participation. Financial assistance should be provided because of more time lag between investment and returns in case of forestry.

Literature cited

Anonymous. 1998&1999. Forest Survey of India. Ministry of Environment and Forests, Govt. of India, Dehruden, India.

Guleria, A.S.1988. Current production and future requirement of wood products in India. Indian J. Agric. Econ., 43 (3): 270-76.

Kalla, J.C. 1988. Forestry and economics development. Indian J. Agric. Econ., 34 (3): 237-57.

La, J.B. 1989. India’s forests-myth and reality. Natraj publishers, Dehruden, India: 214

Lynch, O.J.1995.Joint forest management: superior property rights. Econ. and Pol. Weeky, 30 (30).1933-38.

Oberia, C.P.2000. Forests for new millennium. Employment News. Ministry of Information and Broadcasting, Govt. of India, New Delhi, 24 (51):1-3

Rai, K.N. Shri Niwas and R.K. Khatkar. 1983. Demand and supply analysis of forest products in India. Indian J. Agric. Econ., 34 (3): 51-60.

Singh, K. and S.K. Beniwal. 1995. Socio- economic development through community forestry. Seminar on community forestry: biodiversity. ISTL, Solan, India. May 2-3