FFFFiiiinnnnaaaallll RRRReeeeppppoooorrrrtttt IIIInnnnddddiiiiaaaannnn AAAAggggrrrroooo aaaannnndddd RRRReeeeccccyyyycccclllleeeedddd PPPPaaaappppeeeerrrr MMMMiiiillllllllssss AAAAssssssssoooocccciiiiaaaattttiiiioooonnnn ((((NNNNeeeewwww DDDDeeeellllhhhhiiii)))) Study on Socio-Economic Impact of Agro Residue Mills Submitted by: N H Consulting Pvt. Ltd. F-131/1, First Floor, Pragati Bhawan Mohammadpur, New Delhi – 110066 Ph. 011 – 011-41718184/26174580 Tele Fax: 011-26174580 URL: www.consultingnhc.com Email – [email protected]/[email protected] October’ 2011 Study on Socio-Economic Impact of Agro Residue Mills CONTENTS SL. NO. PARTICULARS PAGE NO. CHAPTER ONE - EXECUTIVE SUMMARY 1-4 1.1 The Backdrop 1 1.2 Scope and Objectives 1 1.3 Methodology Adopted 1 1.4 Major Findings 2 CHAPTER TWO - SCOPE AND METHODOLOGY 5-15 2.1 The Backdrop 5 2.2 Relevance of Paper Industry to Rural Economy 6 2.3 Scope and Objectives 7 2.4 Approach and Methodology 8 2.4.1 Secondary Research 8 2.4.2 Primary Research 9 CHAPTER THREE - AGRO RESIDUE CHARACTERISTICS AND APPLICATIONS 16-25 3.1 Major Characteristics 16 3.2 Straw or Stalks- The Major Agro-residue 17 3.3 Main applications of Agro-Residues 22 3.4 Conclusions 25 CHAPTER FOUR - PRESENT STATUS AND FUTURE POTENTIAL OF AGRO PAPER MILLS 26-42 4.1 The Backdrop 26 4.2 Capacity and Production 26 4.3 Structural Characteristics of the Industry 28 4.4 Raw Material Structure 29 4.5 Trend in Capacity and Production 30 4.6 Future Scenario 37 4.7 Demand Projections 37 4.8 Challenges Faced by Agro-based Paper Mills 39 CHAPTER FIVE - OTHER INDUSTRIAL CONSUMERS OF BIOMASS 43-51 5.1 Other Bulk Consumers 43 5.2 Biomass as Source of Energy 43 5.3 Cogeneration in Sugar Industry 43 5.4 Biomass-based Power Generation 43 5.5 Capacity Status 44 5.6 Power Projects in Identified Clusters 46 5.7 Straw for Growing Mushroom 47 5.8 Compost for Button Mushroom 47 5.9 Paddy Straw Mushroom 48 N H Consulting Pvt. 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Study on Socio-Economic Impact of Agro Residue Mills 5.10 Global Scenario 48 5.11 Indian Perspective 49 CHAPTER SIX - SURVEY ANALYSIS AND FINDINGS 52-83 6.1 Survey Design 52 6.2 PRA of Sample Villages 52 6.3 Survey of Paper Mills 66 6.4 Structural Profile of Respondents 78 6.5 Type of Agro-residues for Paper Making 79 6.6 Agro-Residue Availability Status 79 6.7 Norm of Consumption 80 6.8 Consumption Pattern of Agro-residue 80 6.9 Procurement Process 81 6.10 Price Structure 81 6.11 Mode of Transportation 82 6.12 Terms of Payment 82 6.13 Employment Generation 82 CHAPTER SEVEN - SOCIO- ECONOMIC RELEVANCE ANALYSIS 84-121 7.1 General 84 7.2 Classificatory Profile of the Stakeholders 84 7.2.1 Social Composition of Household Surveyed 84 7.2.2 Economic Composition of Respondents 85 7.2.3 Farm Employment by Family Members 85 7.2.4 Farm Income Composition 86 7.2.5 Sample Composition by Off Farm Income 86 7.2.6 Households by Livestock Ownership 87 7.2.7 Households with Agri Equipments 88 7.3 Zonal Availability of Agro Residues 88 7.4 Harvesting Pattern 89 7.4.1 Wheat 89 7.4.2 Rice 91 7.4.3 Jute 93 7.4.4 Sugarcane (Bagasse) 94 7.5 Residue Recovery Pattern 95 7.5.1 Wheat Straw 96 7.5.2 Rice Straw 97 7.5.3 Bagasse 97 7.5.4 Jute/Kenaf/Mesta 97 7.6 Post Recovery Practices 97 7.6.1 Wheat Straw 97 7.6.2 Rice Straw 98 7.6.3 Bagasse 99 7.6.4 Jute/Kenaf/Mesta 99 7.7 End Use Pattern 100 7.7.1 Wheat Straw 100 7.7.2 Marketing of Wheat Straw 101 7.7.3 Rice Straw 102 7.7.4 Marketing 103 7.7.5 Bagasse 104 N H Consulting Pvt. 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Study on Socio-Economic Impact of Agro Residue Mills 7.7.6 Jute/Kenaf/Mesta 104 7.7.7 Grasses 105 7.7.8 Rice Husk 105 7.8 Price and Price Pattern 106 7.9 Farm Income Assessment 109 7.9.1 Income Loss to the Farmers from Rice Straw 109 7.9.2 Income loss to the farmers from Wheat Straw 112 7.9.3 Income loss from Jute/Kenaf/Mesta Stalks 115 7.9.4 Income Loss from Bagasse (Cluster Level) 117 7.10 Socio-Economic Relevance 119 ANNEXURES Annexure 2.01: Data Format for Agro-residue based Paper Mills Annexure 2.02: Data Format for Power Plants using Agro-residue Annexure 2.03: Data Format for Sugar Mills Annexure 2.04: Data Format for Other Agro-residue based Industries Annexure 2.05: Data Format for Traders of Agro-residues Annexure 2.06: Data Format for Transporters of Agro-residues Annexure 2.07: Data Format For Farmer House Hold Survey Annexure 2.08: PRA Check List Annexure 2.09: Guidelines for interaction with agricultural universities Annexure 2.10: List of References N H Consulting Pvt. Ltd. Study on Socio-Economic Impact of Agro Residue Mills ABBREVIATIONS $ - Dollar % - Percentage & - And @ - At the rate of CAG - Comptroller and Auditor General CIER - Center for Industrial and Economic Research Cm - Centimeter CMIE - Center for Monitoring Indian Economy CO - Carbon dioxide 2 CPPRI - Central Pulp & Paper Research Institute CVD - Chemical Vapor Deposition e.g. - For Example Etc. - Etcetera Ft - Feet Ha - hectare HHs - Households i.e. - That is IARPMA - Indian Agro and Recycled Paper Mills Association IPMA - Indian Paper Manufacturers Association ISO - International Standards Organization Kg. - Kilo Gram Kms - Kilometres Ltd. - Limited m3 - Cube Meter Mm - Millimetre MNES - Ministry of Non-conventional Energy Sources MT - Metric Tonne MW - Mega Walt NA - Not Applicable NHC - N H Consulting Pvt. Ltd. N H Consulting Pvt. Ltd. Study on Socio-Economic Impact of Agro Residue Mills PRA - Participatory Rural Appraisal Pvt. - Private RCF - Recycled Fibre RPL - Rana Papers Ltd. Rs. - Rupees sq.km. - Square Kilometer TMP - Thermo Mechanical Pulp TORs - Terms of references TPA - Ton Per Annum tpd - Ton Per Day U.P. - Uttar Pradesh U.S - United State UK - United Kingdom UNCTAD - United Nations Conference on Trade and Development UNDP - United Nations Development Programme USA - United State of America UV - Ultraviolet N H Consulting Pvt. Ltd. Study on Socio-Economic Impact of Agro Residue Mills CHAPTER ONE EXECUTIVE SUMMARY 1.1 The Backdrop In India, there has been tremendous growth of agri-fiber based paper industries during the past three decades. The industry hence not only started contributing to conservation but also added to the farmer’s income through purchase of otherwise waste agro-residues. The agro based paper industry in India grew in clusters such as Western U.P., Punjab, Andhra Pradesh, Maharashtra and in scattered form in other states of the country. The development added to the farmer’s income in these clusters and deprived of such income to the farmers where the industry did not come into existence. In view of the above, Indian Agro and Recycled paper Mills Association, New Delhi sponsored this study to understand the socio-economic relevance of agro based paper mills in India. 1.2 Scope and Objectives The study wraps up multiple objectives linked with agro residue availability, procurement and logistics on one hand and the end use pattern on the other. However, the study’s prime focus is on use of agri-residue by paper units and measurement of the consequent socio-economic benefits accruing to the farmers. In view of this conceptual framework, the emerging TOR of the study is to: • Assess demand supply status of agro-residues being used in paper making. • Quantify usage of agro-residues by pulp and paper industry on cluster basis. • Analyze end use pattern of agro-residues. • Establish price-pattern by different end uses. • Analyze seasonality, storage and supply factors. • Examine socio-economic benefits to the farmers. • Analyze livelihood framework and extent of additional income from agro-residues to the farmers. • Measure level of deprivation to the farmers in the areas where paper units do not exist. • Explore future demand potential by pulp and paper industry. • Suggest a road-map for the future to the industry to ensure regular supply of needed. raw material at prices which are remunerative to the farmer. Quantification of socio-economic benefits accruing to the farmers consequent to the emerging commercial demand for agro-residues from the paper industry clusters or the extent of deprivation where such units do not exist but could viably operate has been a neglected research area which this study probes. 1.3 Methodology Adopted The study wrapped up the major agro residues being used in paper making i.e. bagasse, wheat straw, rice straw, jute/kenaf/mesta sticks and fibrous grasses such as sarkanda, sawai grass and elephant N H Consulting Pvt. Ltd. 1 Study on Socio-Economic Impact of Agro Residue Mills grass etc. In order to understand the scenario a triangular approach using secondary, primary research and PRA has been adopted. The geographic average for primary research included districts of Muzaffar Nagar and Pilibhit (U.P.), Sangrur (Punjab), West Godavari (A.P.) Ahemed Nagar (Maharashtra) for clusters with paper mill. The counter clusters without paper mill included the districts of Deoria (.P.), Sitamarhi (Bihar), Madurai (Tamilnadu) and Amrawati (Maharashtra). The survey included a direct interaction with more than 900 farmers, 20 agro based paper mills, 40 transporters, 80 traders, 40other industries, 16 sugar mills and 8 agriculture universities. 1.4 Major Findings (cid:1) Agro residues based paper mills shares 23% of total production of paper in India has tremendous potential to convert waste into wealth. (cid:1) The major concentration are in western U.P., Punjab, Andhra Pradesh, Maharashtra and Haryana. (cid:1) Agro residues under study are also being used as fuel for power generation. Mushroom cultivation, animal feed, thatching and packaging. (cid:1) India recovers 58 Million Ton of rice straw with maximum availability in West Bengal (8.8 MT), followed by Andhra Pradesh (8.0 MT), and Punjab (6.3 MT). Other concentration for rice straw are Orissa, Tamilnadu, Bihar, Haryana and Karnataka. (cid:1) India produces more than 115 MT of wheat straw with highest volume coming from UP (37.7 MT) followed by Punjab (23.1 MT), Haryana (15 MT). Other areas of concentration are Bihar, Gujarat, Rajasthan and Madhya Pradesh. (cid:1) The Indian sugar mills recover about 66 MT of bagasse with highest volume being recovered in U.P. (23.5 MT), followed by Maharashtra (16.7 MT), Tamilnadu (7.1 MT) and the other prominent clusters are Andhra Pradesh, Gujarat, Bihar, Madhya Pradesh and Punjab. (cid:1) The harvestings are mostly done manually excepting in case of wheat and rice being harvested mechanically in Haryana, Punjab, Western U.P., part of Madhya Pradesh, Maharashtra, Karnataka and Gujarat. (cid:1) Manual harvesting cuts the plant from a bottom most portion yielding more fiber of good quality. On the contrary mechanized harvesting this aspect is ignored on cost ground. In process, enormous wealth is lost which other wise would have gone to the farmers. (cid:1) In Punjab and Haryana the straws are burnt right in the field since cost of collection is higher and the farmers want the field ready for the next crop. (cid:1) Jute/kenaf/mesta sticks are mostly used as fuel wood by the farmers, in thatching or abandoned in situ. (cid:1) In Amravati, Maharashtra- more than 75% of wheat straw is used for fodder purposes and upto 10% for compost preparation. (cid:1) In Ahemadnagar, Maharashtra- more than 50% of are burnt and 25% are used for fodder purposes. (cid:1) In Deoria, Muzaffarnagar and Sitamarhi 75-100% of recovered wheat straw are used for fodder. N H Consulting Pvt. Ltd. 2 Study on Socio-Economic Impact of Agro Residue Mills (cid:1) Barnala/Sangrur and Pilibhit 50-75% of wheat straw recovered is being sold to paper mills. In these districts 10-25% of this residues are being used for fodder. (cid:1) In Deoria, Muzaffarnagar, Sitamarhi, and Pilibhit about 85% of rice straw recovered is used for cattle feed and the rest is used for domestic use and compost making. (cid:1) In Barnala/ Sangrur farmers burn the rice straw of about 90% of recovered quantity in the field itself. (cid:1) In Madurai use of rice straw is made for compost making, domestic uses and fodder purposes (cid:1) In West Godavari some quantity of the rice straw is sold to paper mills and rest is used for domestic purposes. (cid:1) About 12% of bagasse recovered is the net surplus with the sugar mill provided they do not have cogeneration facility or distillery or other downstream products to feed. The other end uses of bagasse are mushroom production, biomass based power plants, paper, furfural and composting etc. (cid:1) After multiple use the net available surplus of these residues in India are as follows: • Rice straw - 16.2 MT • Wheat straw - 2.4 MT • Bagasse - 2.6 MT • Jute/kenaf/mesta sticks - 0.5 MT (cid:1) The prices of agro residue are lesser by 40-50% in the clusters where there is no paper mill compared to the clusters with paper mill. (cid:1) The total loss to the farmers emerged to be above Rs. 800 crores/ annum in none paper mill clusters. (cid:1) Total quantity of agro residues being used in paper making is 4370 thousand tonnes. (cid:1) Total income to the farmers from Residence Sales to paper mills is Rs.810 crores. (cid:1) Agro residues being wasted due to lack of demand or suitable procurement system is 19,211 thousand tonnes. (cid:1) Disposal of black liquor has been a technically challenged affair. The techniques should find out the ways which are feasible both technically and economically for disposal of black liquor. Such investments will check sickness and closure of several units based on agro-residues. If the residues available are used for paper making the multiple effect will emerge in following form: (cid:1) 115.9 lakh people can be provided with nutritious food (cid:1) 180 lakh people can avail medical insurance (cid:1) 16.23 lakh number of children can be provided with secondary education (cid:1) 3.24 lakh children can be provided with higher education (cid:1) 8.11 lakh toilets can be constructed in the rural set up (cid:1) 20 thousand of tractors can be purchased. (cid:1) 56.8 thousand ha. areas can be brought under minor irrigation. (cid:1) 81150 number of families can be provided with income generation activities N H Consulting Pvt. Ltd. 3 Study on Socio-Economic Impact of Agro Residue Mills (cid:1) 3.25 lakh number of dwellings can be constructed (cid:1) Rs. 56.81 crores can be generated out of the investments as interest income annualy. (cid:1) Rs. 97.38 cores can be generated from industrial ventures if invested in industry. N H Consulting Pvt. Ltd. 4