ITC Paperboards and Specialty Papers Division - Tree-farming yields bumper harvest

Tree-farming yields bumper harvest

Mar 31 2011

Tree-farming yields bumper harvest

The year was 1980. ITC, the tobacco major, through its subsidiary ITC Bhadrachalam and Paperboards (since merged with the parent company), had just commissioned a 40,000-tonne integrated pulp and paper mill - India's largest - at Bhadrachalam in Andhra Pradesh, 350 km east of Hyderabad. The location fitted in perfectly with the company's plan to make the unit the core for its paper business and attain global scale. It was close to the Godavari river (paper manufacturing is a water-intensive process), while Singareni Collieries was just 40 km away - coal is an important feed stock. The Andhra Pradesh government had also assured supply of wood from bamboo forests nearby. Then, the unexpected happened.

The Forest (Conservation) Act aimed at checking deforestation was enacted in October 1980. The Act sought to regulate the use of forest lands and ensure these are no longer exploited indiscriminately for raw materials.

As a result, in 1982 the Andhra Pradesh government went back on its commitment to ITC for assured supply of wood from the state forests. The unit by then was consuming about 1,50,000 tonnes of wood (eucalyptus/casuarina) annually. Though the company managed to continue production by entering into a temporary arrangement with the state government for extraction of bamboo, the writing on the wall was clear: it had to act quickly to ensure sustained raw material supply or cut back production."We had two options before us: import pulp from Brazil and Indonesia or put up pulping capacities in other countries where abundant raw material was available. Both moves would amount to exporting jobs to other countries. We were also keen to build a natural resource base. So we decided to take a third, most difficult route - that of farm forestry,'' says Pradeep Dhobale, Executive Director of ITC. The company decided to approach the farmers of Khammam district - in which the town of Bhadrachalam lies - for its raw material needs, and started a plantation department in 1982.

ITC's bold move to source its raw materials from farmers by getting them to grow eucalyptus/casuarinas met with much resistance. Between 1982 and 1989 the company could get eucalyptus/casuarina plantations going on only about 2,000 hectares.

"The farmers were reluctant for many reasons. The crop cycle of eucalyptus varieties that were available then was seven years and farmers were not financially strong enough to handle such a long cycle. Also, productivity was low at six to 10 tonnes per hectare. The plants had a low 40 per cent survival rate due to their low resistance to pests, drought or floods,'' says H.D. Kulkarni, Vice President for Plantations at ITC.

By then the Bhadrachalam unit's raw material requirement had increased to 1,80,000 tonnes. The idea of farm forestry was also increasingly beginning to be questioned within the organisation.

ITC, nevertheless, held its course. It still saw an opportunity. It was aware people in the region were looking for alternative crops that would be pest and flood resistant, offer better income and require less looking after - the region had a large share of absentee landlords and wasteland. It believed an improved eucalyptus crop could meet these needs.

Registered Office: ITC LIMITED, 37 J. L. Nehru Road, Kolkata - 700071, India Ph: +91-33-22889371 | Corporate Identity Number: L16005WB1910PLC001985