Greening the Rural Areas- an Economic Analysis of the Community Forestry Programme

Greening the Rural Areas- an Economic Analysis of the Community Forestry Programme


Greening the Rural Areas- An Economic Analysis of the Community Forestry Programme

Vijay Intodia & Farida Shah [1]

Second World Congress of Environmental and Resource Economists

Monterey, California, USA

24th –27th June 2002

Greening the Rural Areas- An Economic Analysis of the Community Forestry Programme


Economic analysis of a community forestry programme has been done to ascertain the impact in terms of meeting the multifarious requirements of rural poor. The programme has been implemented in the sub-humid zone of Rajasthan, India by the village level institutions based on cooperative structure. Responses from the beneficiary respondents elicited generation of significant incomes from fodder, fuelwood, timber and labor days. The economic indicators based on Benefit Cost Analysis showed that all the societies are economically sustainable. Sustainability is often hampered by low community participation in the tree plantation programmes because of their long gestation period. It is therefore important to generate immediate returns by planting short duration fodder plants to make them attractive particularly for small and marginal farmers. Besides direct benefits, the programme had other positive externalities as environmental benefits, soil and water conservation, increasing water table and social empowerment, making it suitable for replication in other areas.


Forests have an important role in the economic development and ecological stability particularly for a developing country like India, which has predominantly agriculture, based economy. They provide several goods broadly classified as major and minor forest products, which serve as raw material for many industries, the focal points of economic growth. But during the past few decades rapid commercialisation and industrialisation has led to the loss of these resources. In fact 22.7 per cent area presently under forest is far below the minimum desirable of 33 per cent. It is not sufficient to meet the multifarious requirements of one billion human and 450 million livestock population. India supports about 16 per cent of the world’s population and 18 per cent of the global cattle population, with only 2.5 per cent of the world’s geographical area, 1.8 per cent of world’s forest area and 0.5 per cent of world’s pasture land (World Bank, 1996). The present depressing state of forest could never meet the fuelwood, fodder and other requirements of rural poor who directly or indirectly depend on them for their livelihood. As per an assessment fuelwood requirement in the year 2000 was 199 mt., 4.7 times greater than the supply and fodder requirement of livestock in the same year was 699 mt. of green fodder, while forest contributed only 178 mt. of green fodder.

Thus it was realised that if people’s demands were not met it would be impossible to save forests. In the scenario it was imperative that forest policy framework address the requirements of the rural poor rather than the commercial forestry which was mainly sought to fulfil the industrial requirements during the earlier years after independence. National Commission of Agriculture (NCA, 1976) first kind of its effort in this direction to address the needs of the rural poor recommended the social forestry. Social forestry included projects on farm forestry, extension forestry and reforestation of degraded forests for meeting the requirements of rural community.

During the period 1979-80 social forestry schemes were formulated and implemented through the foreign aid from International Agencies as World Bank, Swedish International Development Agency (SIDA) and United States Agency for International Development (USAID) etc. Social forestry was also included in the 20-point Economic Programme of the Prime Minister. To complement Govt’s effort Indian Farmers Fertiliser Co-operative Limited (IFFCO – the largest Fertiliser Co-opertive in India) started Farm Forestry cooperative project in the year 1988. Initially the programme was taken up on pilot basis. Later on looking at the success of the pilot project Canadian International Development Agency (CIDA) by means of India-Canada Environment Facility (ICEF) funded the programme to be implemented on a wider scale. To implement the programme on wider scale IFFCO promoted Indian Farm Forestry Development Cooperative Limited to promote farm forestry in the country. The project aimed at taking up 5000 hectares of wasteland for development in 10 states through the formation of Farm Forestry Cooperatives. The main aim was to establish integrated farming system by involving the local people. The project is presently under implementation in the states of Rajasthan, Uttarpradesh and Madhya Pradesh. The present study was done in the southern Rajasthan to analyse the economic impact of the farm forestry programme. Farm Forestry has been taken up in different states under different situation and varied market conditions. In the recent past not much research had been done on farm forestry, their management and socio-economic aspects associated with it. Therefore the study aimed at the economic analysis of the village level forestry programmes implemented by the cooperative societies.

2.Objectives and Methodology

The present study aimed at examining the economic impact of farm forestry programme on the rural beneficiaries based on the hypothesis that there were no sustainable economic returns from the farm forestry programme. Two different methods have been used for the purpose of the study. Firstly the responses have been elicited from the beneficiary members to ascertain the economic impact. Secondly benefit cost analysis of the selected primary farm forestry cooperative societies have been done. Benefit cost analysis was done to establish the feasibility of each of the cooperative societies, which would be a critical factor for the sustainability of the programme after the withdrawal of donor agencies. The study has been conducted in three districts of Rajasthan namely Udaipur, Chittorgarh and Rajsamand. Initially implemented in Udaipur district in the year 1995, later on the programme was extended to adjoining districts viz. Chittorgarh and Rajsamand. Thus the programme was in operation in the three districts at the time of the study. The study area is having 2096 sq. km and 2755 sq. km of dense and open forest area with per capita forests being 0.14 ha. The area is 17 per cent of the total geographic area of these three districts. For effective implementation of the farm forestry programme in these three districts Primary Farm Forestry Co-operative Societies (PFFCS) were constituted and registered under the State Cooperatives Act 1965. In all 45 PFFCS have been constituted under IFFDC covering all the three districts. For the purpose of the study nine PFFCS were selected out of forty five societies i.e. three from each district. These societies were selected randomly from each of the district. For the selection of member respondents a 10% sample was drawn by using random method of sampling from each of the four category of members classified according to the size of the land holding. The membership consisted both the male and female beneficiaries and therefore the sample included both the male and female respondents viz. a total of 250 respondents of which 160 male and 90 females.

Secondly benefit cost analysis was done to determine the direct benefits by the tree plantation done under the programme. Economic indicators as benefit-cost ratio (BCR), internal rate of return (IRR), net present value (NPV) and payback period (PBP) were calculated to establish the economic worthiness of the project. The benefit cost ratio was obtained by dividing discounted benefits to discounted costs using the formula given as under:

BCR = / N
∑ Bt
t=1 (1+ i)t
∑ Ct
t=1 (1+ i)t

Similarly Net Present Value is equal to the sum of present value of all cash flows associated with it. It can be expressed as:

NPV = / n

t=1 / Bt - Ct
(1+ i)t

Internal rate of return is the discount rate, which makes the present value equal to zero. It is the discount rate in the equation:

Bt - Ct / = 0
(1+ i*)t

Payback period is the number of years required before benefits begin to exceed costs. The long gestation period in case of Tree plantation is the major constraint to motivate farmers to participate in the programme.

3.Economic Analysis of the programme

Farm forestry as a component of social forestry has been considered an important source of fuelwood, fodder, and timber. The achievements of the farm forestry experience so far have been quite impressive but like the green revolution of the mid- 1960s, this has been confined to certain pockets of India like Punjab, Haryana and western Uttar Pradesh and to relatively good lands. These regions are the progressive ones as far as the agriculture is concerned where the farmers planted mainly eucalyptus plants on private lands as production forestry. However the region under the study i.e. sub humid southern plain and Aravalli Hills of Rajasthan in Western India is low productivity region and mostly characterised by the small and marginal farmers having average land holding of 4-5 ha. It was not economically viable for them to take up forestry plantations on private lands due to their long gestation period. Therefore the forestry programme was taken up on the village common lands to meet the requirements of rural poor in the form of fuelwood, fodder and timber. These requirements became more pronounced particularly in the context of low rainfall in the region during the last 3-4 years. The average rainfall in Udaipur, Chittorgarh and Rajsamand district is 584 mm, 719 mm and 519 mm respectively. In the year 1999 it has fallen by 34 per cent in Udaipur district and 24 percent in Rajsamand while Chittorgarh received the normal rains. The fall in the year 2000 was even more with 28, 42 and 50 percent fall in Udaipur, Chittorgarh and Rajsamand district respectively.

There had been many evidences that such common initiatives at the village besides fulfilling the needs also act as contingencies against crop failure or droughts. As stated by (Jodha, 1990) that village commons provide the community with firewood, fodder, timber material and other non-timber forest products (NTFPs). About 66-84 per cent of the domestic fuelwood needs of the poorer households are derived from these lands. The marginal and landless farmers to a large extent and the rich farmers to a lesser degree, depend on these lands for many of their subsistence needs. According to a study, 84-100 per cent of the rural poor derive Rs. 530-830 per year from the various dry regions in India (Jodha, 1986). A study in Uttar Kannada showed that the poor households in that district derive an income of Rs. 994 per household per year from their village commons (Pasha, 1992). The large farmers also depend on the village commons for their fuelwood needs to an extent of 8-32 per cent. Besides these direct benefits there could be other indirect benefits in the form of positive externalities as soil and water conservation, improvement in the water table, environmental benefits etc. (Nadkarni et al., 1992; Singh et al., 1997).

Before analysing the economic benefits of the programme it is important to understand the reasons and extent of community participation. Passive participation of PFFCS members cannot ensure success of the community forestry programme on common lands. The participation largely depends upon the extent to which the basic domestic needs of community members are fulfilled through farm forestry programme. The reasons for the involvement of people in forestry programme may vary with the individuals. Therefore it is important that community members be sufficiently motivated and convinced that all the benefits including employment, fuelwood, fodder, timber and minor forest products would occur to them. Reasons for the participation were also elicited to understand the motivating factors. Thus ‘Getting employment in the forestry programme’ was the most important reason for participation in the programme. This was followed by the ‘Fodder for livestock,’ ranked as the second most important motivational factor. Likewise ‘Awareness after the acquaintance with the utility and importance of plantation’ has also attracted the respondents in general to participate in farm forestry programme. In general it could be deduced that economic reasons had been more important than the social and other factors for the participation under the programme. To get an overview of the extent of participation in farm forestry programme the respondents were grouped into three categories based on their motivational level viz. low, medium and high. These groups were formed on the basis of calculated mean score and standard deviation of the over all score obtained by the respondents as a whole. Results showed that 71.20 per cent of the respondents were from the medium group of motivation level where as 16 and 12.80 per cent belonged to high and low group respectively.

Economic Benefits:

The major benefits had been in the form of fodder, firewood from lops and tops of trees, and timber wood. Since the trees have been only five years old timber wood has not been obtained till now and the fuelwood benefit was also minimal. Availability of additional fodder grasses from the forestry programme was a major benefit particularly due to its scarcity in drought. Also as the tree crop give returns only after 15-20 years availability of grasses from second year of plantation was a motivating factor for community to participate in the programme. The landless and the small and marginal farmers can benefit more from rearing of milch animals on grass produced in these areas than from the expected income from trees after a long waiting period of 15-20 years. The women were the greatest beneficiary as the rearing of milch animal is generally their job. Employment generated on milch animal rearing combined with management and harvesting of grass is expected to favourably compare the employment generated through plantations. Further, the former will be regular while the latter was only for a short period when the plantation operations were being undertaken.

Table 1 shows the average value of the fodder collected by each household in a year by the respondent beneficiaries. The maximum fodder grass of Rs. 207 have been collected in M. Ki Netawal and lowest (Rs. 49.60) in Langach. The values have been on a lower side but even this amount has been significant for the community as there had been severe drought conditions in the area during the last four years. The grasses collected from the plantation programme fulfilled around 25 per cent fodder requirements of the beneficiaries. Grass as a fodder in the study area is cut during the months of October-November. The cutting of grass was not restricted to the PFFCS members but all the villagers were allowed to do so as each of the village household had equal right on panchayat land. A person approaching the PFFCS for permission to cut grass is issued a coupon, which holds good for one person cutting the grass for one day. Half of the grass harvested is given to the PFFCS, which is sold in the village at about Rs. 100 per quintal contrary to market price of Rs 200 per quintal. Generally the small and marginal farmers undertake cutting of the grass under this system while the farmers with bigger land holdings purchase the grass sold by PFFCS. In some cases, the PFFCS gets the grass cut by employing labour on wages and then sells the grass to villagers irrespective of the membership. Out of these two systems PFFC gains more when half of the cut grass is given to it.

Table 1: Average per year fodder collection by respondent beneficiaries in different societies (n=250) (1995-2000)

Primary Cooperative Society / Grasses (in Rs.)
Gadoli / 152.00
Thamla / 53.75
Badgoan / 202.27
Langach / 49.60
Hingoria / 184.17
M. ki Netawal / 207.37
Sansera / 184.44
Bamania Kalan / 198.13
Joonda / 160.19
Total (Average) / 158.60

Employment Generation:

The forestry programme in the situation was an important source not only for fodder and fuelwood but also generated employment during the drought situation. Employment under the programme had been one of the most important perceived benefits of the project for the members of the PFFCSs. The need for wage labour has been strongest motivation factor for joining the PFFCS and had significant impact on the livelihood of these individuals. Also without the prospects of wage employment, people may be reluctant to take interest in programmes having long gestation period. Since the employment had been an important reason for the participation of rural beneficiaries, its impact on the members had been studied. Table 2 shows various impact indicators for the employment generated and these are scored by the respondent beneficiaries on a scale of 1 to 5 with 5 being ‘To a large extent and 1 for impact being ‘Negligible.’

‘Employment generated during the lean period’ had been most important impact as this has been ranked I by the respondents of the six primary cooperative societies and ranked II by the remaining three societies. ‘Increase in bargain power in wages’ also seemed to be an important impact due to programme. Interestingly respondent of the three societies have ranked ‘Spend more time on agricultural inputs than before due to reduced migration” as Rank I. The reduced migration due to employment helped community to spare time for the agricultural activities on their own lands.