NABARD's Model Bankable Projects

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Model Bankable Projects Forestry Wasteland Bamboo Cultivation Introduction Diminishing resources and availability of forest wood and conservation concerns have highlighted the need to identify substitutes for traditional timbers. It is in this context bamboo assumes special significance. Bamboo is a versatile, strong, renewable and environment-friendly material. It is a member of the grass family,Gramineae and the fastest growing woody plant on earth. Most bamboo species produce mature fibre in 3 years, sooner than any tree species. Some bamboos grow up to 1 metre a day, with many reaching culm lengths of 25 metres or more. Bamboo can be grown quickly and easily, and sustainably harvested in 3 to 5 years cycles. It grows on marginal and degraded land, elevated ground, along field bunds and river banks. It adapts to most climatic conditions and soil types, acting as a soil stabilizer, an effective carbon sink and helping to counter the greenhouse effect. In many areas, bamboo resources have dwindled due to overexploitation and poor management. This issue needs to be addressed through well-organised cultivation, on the lines of homestead, small-holder and plantation-based cultivation. The role of bamboo in community agroforestry as a means of generating income for the rural poor is very important. Production of bamboo is only the starting point. The real benefits accrue from value-added products. Handicrafts (mats, baskets, tools, toys and utensils) and furniture are established possibilities, produced in finished form or supplied as components to small enterprises for further processing (for example, supply of mats for production of bamboo mat board). There are emerging industrial and large-scale applications too in the manufacture of wood substitutes and composites, energy, charcol and activated carbon. Building and structural components represent vast possibility for enterprise, value addition, income and employment. Bamboo and Global Challenges Bamboo is well placed to address four major global challenges : Shelter security, through the provision of safe, secure, durable and affordable housing and community buildings. Livelihood security, through the generation of employment in planting, primary and secondary processing, construction, craft and the manufacture of value-added products. Ecological security, by conservation of forests through timber substitution, as an efficient carbon sink, and as an alternative to non-biodegradable and high-embodied energy materials such as plastics and metals. Food security through bamboo-based agro-forestry systems, by maintaining the fertility of adjoining agricultural lands, and as a direct food source example,edible bamboo shoots. Planning Commission's Focus on Bamboo Investment Credit This is a longterm refinance facility, it is intended for Investment in agriculture and allied activities Technical Services Department This division is the service provider on technical issues

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Bamboo, traditionally considered as the "poor man's timber" in India, is under consideration as a major export item by the Indian Government for a global market valued at Rs.500 billion (US$ 11.9 billion) and producing as much as 20 million tonnes of varied products a year from China alone. India almost 20 years behind China in commercial production, produces only 3 million tonnes a year. The government has lately come to regard bamboo as an easily manageable export item that provides high yields, has lots of uses and has the potential to provide employment for millions, and thus stem rural workers flight to India's teeming cities. Between them, India, China and Myanmar have 19.8 million hectares of bamboo reserves 80 percent of the world's bamboo forests. Out of this India's share is 45 percent, with nearly 125 different species of the plant, but only 4 per cent of its global market. The government would like to see its bamboo industry, concentrated in the northeast of the country, take 27 percent of the world market by 2015. By that time, the market is expected to be Rs.950 billion. India's aspirations are ambitious indeed. The government hopes to create 8 million jobs in the bamboo industry, lifting 5 million families out of poverty and earning Rs.160 billion in revenues by the end of its Tenth Plan in 2007. The government also hopes to slow the flight of rural workers to urban areas, a major problem. Job losses and low pay for day workers in national forests affect large populations, where the government forestry departments manage over 9.61 million hectares of mostly natural bamboo stands. In this backdrop the Planning Commission of India had launched the National Mission on Bamboo Technology and Trade Development. The objectives of this Mission were to launch several initiatives to place bamboo as a key species and research in the developmental agenda. The principal objectives are :To use Bamboo as a means to reclaim degraded land, conserve soil, improve environment, carry out drought proofing. Bamboo plantation could be an important ingredient in Greening India Programme aiming at raising of the forest cover to 25% by 2007 and 33% by 2012; To expand area under Bamboo plantation by 2 million ha. in the Tenth Plan (1 million ha. in forest areas and 1 million ha. in areas outside forests) and overall 6 M.ha. in the Tenth and Eleventh Plan; To improve, yield and stabilize the existing bamboo plantation; To diversify, modernize and expand the bamboo based industries and handicrafts by application of modern technology and provide policy and financial support; To use Bamboo development as an instrument of poverty alleviation and employment generation particularly in rural sector; The Planning Commission,Govt.of India took note of the market survey carried out by the Cane & Bamboo Technology Centre (CBTC), Guwahati and have accordingly focused on the following : Bamboo as food (Bamboo Shoots); Bamboo as a wood substitute (Bamboo Plywood, Bamboo Flooring, Bamboo Pulp, Bamboo Furniture, Bamboo as a building and construction material, Bamboo Housing, Bamboo in tiny and Cottage Industries, Bamboo Mats Industry etc.) Among the key initiatives launched by the National Mission on Bamboo Technology and Trade Development is "Manpower Development and Training". Human Resource Development implies upgradation of skills of craftspersons as well as growth of entrepreneurship. Bamboo Cultivation practices in India Occurrence: Bamboo belongs to the grass species and hence forms part of the same family of flowering plants viz. Gramineae to which human beings most important staple food plants, rice and wheat belong. Various estimates limit bamboos to about 1250 species under 75 genera which are thought to have made its first appearance about 200 million years ago. The plant now occurs in the tropical, subtropical and temperate zones of all regions except Europe and Western Asia. Recent findings have revealed that bamboo was prevalent in Europe some 3 million years ago but vanished sometime during the last ice age.In India the Rigveda has mentioned bamboo and hence it must be in use for 4000 years. Bamboos in India: India is blessed with very rich bamboo resources. With about 22 genera and 136 species, it is one of the largest resources of bamboos, next only to China with 26 genera ad 300 species. The areas particularly rich in bamboo are the North Eastern States, the Western Ghats, Chattisgarh,M.P. and Andaman Nicobar Islands. The important genera are Arundinaria, Bambusa, Cephalostachyum, Dendrochalamus, Dinochloa, Gigantochloa, Melocanna, Ochlandra, Oxytenanhthera, Phyllostachys, Pseudostachyum

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etc. Of nearly 136 species, at present only about 10 are being commercially exploited today. These are: Bambusa arundinacea, B.affinis, B.balcooa, B.tulda, Dendrocalamus strictus, D.hamiltoni,D.asper, Oxytenanthera stocksii and O.travancorica. Bamboo production in North Eastern India on commercial lines would be an excellent tool for poverty alleviation and employment generation.

Growth and biomass: Bamboo has two main growth forms due to different types of rhizomes: the leptomorph type with single stem, (monopodial) mainly in temperate region and the pachymorph type as dense clump stands, (sympodial) mainly in the warm regions. In India majority of bamboos are clump type e.g. Dendrocalamus and Bambusa. However in the north eastern regions, some non clump forming species are present, e.g. Melocanna baccifera with creeping rhizomes. Bamboo, being a grass produces only one stem without any later secondary growth in height and diameter, as most trees do. Its full length of 15-20 mts,( up to 40 mts in Dendrocalamus giganteus, the largest bamboo species ) is attained within a period of 3-4 months. Thereafter,only branch development continues.Thus, bamboo, being very fast in growth produces an enormous amount of biomass within a very short time. It is estimated that in 35 years, a bamboo plant can produce up to 15 km of usable pole of 30 cm diameter. Its light weight , high elasticity and rupture make bamboo an ideal material for housing construction in areas prone to natural calamities such as earthquakes and hurricanes. The tensile strength of bamboo is greater than steel. Such growth has resulted in high expectations in the world especially to store CO2 and to produce larger amount of material and energy. However there is a limitation. Whereas fast growing trees like Eucalyptus, Acacia, Albizzia and Radiata pine (Pinus radiata) produce their biomass continuously for many decades, a bamboo ceases leafy growth after its stem elongation within 3-4 months. The new biomass comes only in the next year when new shoots (culms) are produced. Commercially important species usually mature in 4-5 years and thereafter harvesting is possible every alternate years. Most of the bamboos have hollow stems, except few which are almost solid viz. D. strictus and B. affinis. Yield and Harvesting: The annual yield in tonnes/ ha depends on the environment as well as the species. It is generally 3-4 tons/ha as understory in forest and 5-12 tons/ ha from plantations. In the drier parts of India, well managed and technology based D.strictus plantations give yield of 10 tons/ha. Melocanna bambusoides in moist Bangladesh has produce 10-13 t/ha yield. Well managed monoculture bamboo plantations in China yield up to 50 ton per/ha/year. It is estimated that almost 25% of the biomass in the tropics and 20% in the subtropics, come from bamboo. Cultivation: Bamboos are generally propagated vegetatively, although they are best raised through seeds. Seedlings are raised in nursery beds and allowed to develop for a year in poly pots after which they are transplanted in the field. As bamboo seeds are rarely available, they are propagated through rhizomes or culm cuttings. In rhizome planting, one year old culms with roots are dug up, cut to about a metre high and planted during rainy seasons. Vegetative propagation of bamboos is an age old method and is practised everywhere. While planting the rhizomes, the workers should take extra care not to injure the junction of the culm and the rhizome. Irrigation is necessary after planting. Projects approved/ sanctioned Today thousands of hectares of forest land are being planted with bamboo by Forest Development Corporations and Forest Departments in all Indian States. NABARD in 2003 sanctioned a very big bamboo plantation project to Andhra Pradesh Forest Development Corporation for development of degraded forest lands.In 2004 it sanctioned 2 bamboo plantation projects for production of pulpwood in Assam for development of non-forest wastelands. International agencies like INBAR is engaged in promoting bamboo plantation and bamboo industrial projects in many Indian states. Bamboo flowering: Most bamboos flower only once in their lifetime, and die soon after. Bamboo flowering is a mystery to scientists. Probably they have an in built alarm clock set to go off at a particular time with all populations of a species raised from a single seed source flowering simultaneously no matter where situated. Melocanna flowered in 1961 simultaneously in Assam and Dehradun, 2000 kms apart. The flowering cycle generally varies from 7-120 years and in some the interval is 3 years and a few may even flower annually. Some bamboos however have never been observed to flower e.g. (B.vulgaris).B. nutans having the longest flowering cycle of 120 years need promotion for planting. Opportunities: Demand- Supply scenario Indias bamboo based industries are likely to make a quantum jump if proper policies are put in place and implementation procedures are streamlined. Countrys bamboo economy is expected to grow by over 15% to touch Rs. 260,000 million by2015. The National Mission on Bamboo Technology and Trade Development under the Planning Commission, has estimated that if proper encouragement is given to bamboo cultivation and its use, it can replace the projected import of timber to the tune of Rs.300,000 million in the next 20 years

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i.e 2025.The market size for bamboo plywood is to grow to Rs. 5000 million from Rs. 2000 million in 2001.The country exports about Rs. 1000 million bamboo flooring materials and another flooring materials of Rs. 1000 million is used domestically. It has been estimated that the total market size of bamboo flooring materials will rise to Rs. 19500 million by 2015. The demand for bamboo pulp is expected to grow to Rs. 20880 million by 2015 from Rs. 1000 million in 2001. The demand for bamboo furniture is expected to grow to Rs.32650 million in 2015 from Rs.3800 million in 2001.By 2015 bamboo scaffolding requirement will rise to Rs.8610 million and for housing purposes the demand will rise to Rs.11630 million. The demand for road construction will rise to Rs.2740 million and for bamboo grids the demand will be Rs. 1000 million.The demand for miscellaneous industry viz, ice cream sticks,fire crackers,bamboo lathis and ladders will rise to Rs. 6000 million by 2004. Bamboo shoot production The planning commission has estimated that the Indian bamboo shoots industry has the potential to grow at the rate of 25% per annum and capture a market worth Rs. 3000 million from the current level of Rs. 48 million.A large potential export market exists for shoots in Japan, Hong Kong, Singapore and Thailand.The International Network for Bamboo and Rattan (INBAR) has selected 6 species which are most suited for development of bamboo shoot industry in India. These are: Bamboosa balcooa, Dendrocalamus giganteus, D. hamiltonii, D. strictus and Melocanna bambusoides. China is the largest exporter of bamboo shoots and Phyllostachys pubescens is the common species for shoot production, while in Thailand Dendrocalamus asper is the main species for bamboo shoot production. Model Bamboo Plantation Scheme For North-East India: Soil: Most Bamboos are found in sandy loamy to loamy clay soil, derived form river alluvium or underlying rock. Although bamboos prefer a well drained soil, it is observed to grow even in swampy soils. The soils of Barak valley vary from clay to clay loam to sandy loam and soil reaction is acidic with ph of 4..5 to 6.0 A luxurious growth of bamboo is a common feature and therefore, the soil and climatic conditions are best suited for cultivation of bamboo. Species: The north east region hosts 58 species belonging to 10 genera. The common bamboo in Barak Valley is muli bamboo (Melocanna bambusoides) and jati bamboo (Bambusa tulda). Presently, the bamboo which procured by the paper mill now proposes to raise the nursery using the species, Bambusa bambos and Dendrocalamus strictus. The reason for preference of these species is non availability of seed of Bambusa tulda. The required seedlings for the first year programme of 750 acre is already available in the nursery of Cachar Paper Mill. Planting : There are various methods of propagating bamboo through seed and vegetative methods. The vegetative method is mainly through rhizome. Although, for early income generation, rhizome as planting material is desirable, due to non availabililty of rhizome in large quantity for developing as high as 1000 hectare is a constraint. Therefore, seedlings will be used as planting material in the present project. The planting will be taken up with the onset of monsoon. Pits of 60 cm X 60 cm will be dug and the seedlings will be planted at a spacing of 5m x 4m. The number of plants per acre is 200. A provision has been made for casualty replacement to the extent of 20%. Intercropping :The gestation period in bamboo plantation is five years. During the first three years, it is possible to cultivate profitable intercrops such as turmeric, ginger, chillies etc. and various shade loving medicinal and aromatic plants. Fertilisation: The application of fertiliser is most important during transplantation from nursery to main field. Bamboo is a heavy feeder and therefore, even a rich soil might become depleted after a few years if no fertiliser is added. The fertilisers although may be applied at any time in a year, it is preferred to apply after harvest and before irrigations. It should be noted that rhizomes continue to be active (growing)except in the coldest part of the year. It is therefore proper to apply small quantities of fertilisers round the year thanone/two large doses. Bamboo responds well to nitrogen and potassium which are found in compost, green manure, wood ash and chemical fertilisers. Lime is often applied to neutralise soil acidity. Harvesting and yield :The annual yield of a bamboo clump depends on the number of new culms produced each year. This in turn is related to the production of young culms. Culms become mature after two to three years. To maximise shoot output some shoots must be left each year to develop into leafy young culms. It is reported that bamboo clump on an average produce 10 culms in a year under good growing conditions. Considering a 30 year of life cycle one clump may produce 300 culms on the whole. The harvesting can be done from fifth year onwards, however, for commercial production, harvesting will start from sixth year. In the first year of harvest i.e. sixth year, 6 culms per clump will be harvested followed by 7 in seventh year, 8 in eighth year and 9 from ninth year onwards. The culms which are one or two year old are generally left for regeneration. Considering the average weight of a culm at 10 kg, the yield in the first year of harvest is 9.6 tonnes per acre, which will stabilize at 14.4 ton by ninth year.

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Financial aspects: Unit cost: The unit cost for one acre of plantation is Rs. 9400 spread over a period of five years. The various estimates for arriving at the unit cost are given below ( Table 1). Table 1:Unit cost for raising 1 acre bamboo plantation on wastelands

S.No

Items

Units

1 II III IV V Total year year year year year

Material Planting material including 20% 200 mortality replacement in second year Manure and fertilizers Plant protection LS Rs. 400 per irrign Rs. 6 per rm 320 100

40

240

2 3

320 320 320 320 100 100 100 100

1600 500

Irrigation thrice a year

1200 1200

2400

Fencing Sub total Labour

960 2780 1660 420 420 420

960 5700 0

mandays 5 250

Land preparation Digging of pits , refilling of pits @ 15pits/manday Planting and staking Plant protection Weeding(thrice in first year and twice in second year - 4 MD per weeding) Pruning from third year Soil working and others Harvesting - 10MD in 6th and 7th year, 12MD 8th year onwards Sub total Contingency

250

10

500

100

600

3 4

5 2

250 100

50 100 100 100 100

300 500

250

167

417

6 7

5 2

0 100

250 250 250 500

100 100 100 100

10

1450 517 450 450 450 5% 212 109 44 44 44

3317 451

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Grand total Say Income

4442 2286 914 914 914 4400 2300 900 900 900

9468 9400

Harvesting commencesfrom sixth year onwards. The sale price per tonne of green bamboo is considered at Rs. 550 (present rate). The income details are given below(Table 2) Table-2:Yield and Income of bamboo plantations Year VI VII VIII IX onwards Financial analysis The project is financially viable at the above expenditure and income levels. The financial indicators for one acre bamboo plantation are given below(Table 3) Table-3 - Financial analysis for cultivation of bamboo in one acre Yield (Metric Ton) 9.6 11.2 12.8 14.4 Income(Rs) 5280 6160 7040 7920

NPV BCR IRR: 26%

: Rs.6890 : 1.64

Repayment period/Interest rates The bank loan is considered at 90% of the unit cost i.e. Rs. 8,460/- since 10% of the cost shouldbe borne by the farmers.Income generation from the activity commences from sixth year onwards. The interest accrued during the gestation period will be deferred.The rate of interest to the ultimate borrowers will be decided by the financing banks which is subjected to revision by RBI/NABARD from time to time. The repayment of principal with deferred interest will be for four years i.e 7-1Oth year of plantation (Table 4). Table 4: Repayment schedule for 1 acre bamboo plantation

Model Bamboo plantation scheme for Tripura Table 5:Cost of cultivation of bamboo (Kanak Kaich- Bambusa affinis) on private / community lands in Tripura state : Espacement: 1.25m x 1.25 m No. of culms per Acre: 2564 Survival/Acre : 2051 Wage rate:Rs.50 per MD Casualty replacement: 10% Planting season: April / May

Sr. No.

Particulars of work

Unit

Cost Rs. per year

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1 1 2 Site preparation Thorn / Live hedge fencing Digging of pits (1 cft) and mixing insecticides 4 Cost of insecticides/ Pesticides 5 Cost of plant Rs.3/-per (rhizomes) rhizome (2564+256=2820) Planting/replanting (100 rhizome per MD) Weeding working cum soil 25/2 7,692 200 20MD 4 MD 200 500

2 -

3 -

Total 200 500

1,000

1,000

200

768

8,460

1,250

50

1,300

10/3/2

500

300

200

1,000

8 9

Protective irrigation Pruning / tending / cleaning etc 96 MD 10/10/10

500 500

500

500

500 1,500

12,342

1,618

700

14,660

Yield and returns

Years 2 3 4 year onwards

No. of culms to be harvested 1,500 2,000 2,000

Income @ Rs.5/-per culm 7,500 10,000 10,000

Economics of Bambusa affinis in one acre (Amt.Rs.)

Years

Cost

12342

1618

700

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Benefits

7500

10000

10000

10000

Net Benefit

-12342

5882

9300

10000

10000

PWC @15%

12415.88

PWB @ 15%

22935.54

BCR

1.85

IRR

53.52%

Model Bamboo Plantation Scheme for rest of the country Table 6: A model scheme for Bamboo cultivation in India COST OF BAMBOO CULTIVATION ON PRIVATE LANDS / COMMUNITY LANDS ESPACEMENT : 6M x 6M NO.OF CLUMPS/ACRE : 110 SURVIVAL/ACRE : 88 WAGE RATE : Rs 50 / MD CASUALTY REPLACEMENT : 20%

Yield: Harvesting Schedule Years Culm per clump Total culm Available 5 6 7 8 onwards 4 6 8 10 352 528 704 880 Income @ Rs.10 per culm 3520 5280 7040 8800

N.B: * 1) Intercropping can be taken up depending upon the nature of farmlands and the inputs available. 2) Since, incomefrom intercropping is insignificant the same has not been considered while calculating economics. 3) Cost beyond 4th year has not been considered since the project will start generating income from 5th year onwards. 4) IRR works out to 25.49%

Annexure-1 NABARDs Bamboo Development Policy

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NABARD has recently formulated a Bamboo Development Policy to give real thrust to develop the sector with an integrated approach. The major objective is to commercialise Bamboo at farmers level. All along bamboo has been considered as a poor mans crop.It is high time we put bamboo into industrial pedestal with appropriate tie-up arrangements with bamboo based industries viz.paper,handicrafts and the new emerging areas of eco-friendly products e.g. housing,tiles, flooring,bamboo shoots etc. The focus would be comprehensive development of bamboo resources as a marketable commodity with more emphasis on farmlands especially revenue wastelands.The planning commission approach for Agroforestry development through bamboo will be followed.A linkage of bamboo farmers with bamboo artisans will also be made. Besides, wherever feasble bamboo projects will also be promoted for development of degraded forest lands. The above approach would broaden our interventions / business opportunities significantly as there is huge untapped potential in wasteland development under Farm forestry/ Agroforestry. Besides, inadequately managed bamboo forests and bamboos after flowering can be covered under JFM approach / co-financing etc. Emphasis would also be made to promote quality bamboo plantation projects assisted by NABARD for higher productivity and better returns. Use of clonally propagated seedlings and Tissue cultured plants will be advocated for improving quality and productivity. Goals of the Policy The major goals for bamboo development would be proper use of available bamboo resources for value addition,creation of new technology based plantations, efficient marketing, new product development through technology upgradation, institutional development/strengthening,design support leading to economic upliftment of rural people. Financing Models: NABARD will promote and fund Bamboo projects under the following models: 1. Setting up of Bamboo nurseries for quality plant production including Tissue Culture plantlets 2.Wasteland development model through BAMBOO under Farm Forestry 3.Bamboo based Agroforestry model 4.Tie -up arrangement with bamboo based industries including handicrafts 5.Cluster development for Artisans and Craftpersons for bamboo product development including marketing 6. Funding under RIDF -JFM model 7. micro-Finance through NGOs under SHG model wherever feasible NABARDs strategy In order to realize maximum benefits from marketing bamboo products, NABARD will adopt the following approaches: 1) Establish supply chain from the farmers field to large industries viz. paper,wood sustitute,plyboard, flooring,furniture etc. to improve market position. Through this arrangement , industrial farms can have easy access to bamboo raw material at competirive cost on parternership basis. NABARD will see that the business partners provide local producers with high quality planting materials,provide technical guidance, quality control and a buy- back guarantee arrangement including arranging finance wherever feasible. 2) Assist in developing small scale Forest enterprises for using Farm-forest bamboos 3) Assist the entrepreneurs in improving product quality, use of improved machines, tools and releiability for continuous and uninterrupted supply to market chain.TIFAC /IIT-Mumbai has developed effective machineries/ tools for harvesting, cross cutting,splitting, knot removing and processing of bamboos by artisans and small scale industries. NABARD will try to popularise these tools especially to the artisans. 4) Strengthen producer organizations especially the handicrafts sector for easy access to local market.The focus would be on design development, technology upgradation and market facilitation to augment the capabilities of artisans. The handicrafts sector is intimately linked to tourism sector. Hence, promotion of this sector is critical for economic growth of rural areas. 5) Imparting training to the entrepreneurs in association with INBAR, CBTC,NEDFI, etc., through workshop/ seminar to be held regularly in potential regions of the country.

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6) Remove regularity barriers especially for free movement of bamboo produced from farmers fields. Review of Private Plantation Companies & Follow up action by SEBI: Recently private investments are forthcoming from companies raising plantations with or without involving public equity. As such this is a welcome effort to meet the objectives laid down in National Forest Policy. However, the promises made by such companies are apprehended to be unrealistic. Hence, it is essential to look into the claims made by these companies to prevent exploitation of investors as well as to provide adequate safeguards that the investment raised are properly utilised and the confidence of investors in afforestation activities does not get a jolt. Therefore, Ministry of Environment and Forests constituted an inter departmental committee to study the growth rate and Economics of private plantation companies and to ascertain the truth behind their claims. On the basis of the detailed analysis of the data collected, technical information available, and observations, the committee made strong recommendations. Based on these, SEBI has cautioned the investors through a public notice which may be followed.

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