People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 18

May 01, 2011


Deregulating Forest Produce Markets:

Some Implications for Tribal Gatherers


Archana Prasad


IN a letter written to the deputy chairman of the Planning Commission, Montek Singh Ahluwalia on April 11, 2011, Jairam Ramesh, minister of environment and forests, has once again raised the contentious issue of the pricing of minor forest produce. In this letter, the minister has suggested that state governments should notify minimum support prices (MSP) for the 12 major non-timber forest produces, and that the fixation of MSP should be done by a central committee. Three more central propositions have been made by the minister in his letter. The first relates to the removal of monopolies of “any kind (including state agencies)” on the purchase of all forest produce. Second, in the same breadth the minister also states that the state agencies should not only purchase “profitable” forest produce but all other forest produce directly from the gatherers. In a third related proposition, it is recognised that forest produce needs to become more profitable for the gatherers and that the village level units need to be set up for value addition to such produce.




The latest suggestions made by the minister echo some of the concerns that have been raised by the Left and democratic movements in their struggles. It also takes some solutions recommended by the joint committee on the Forest Rights Act, which submitted its recommendation and report in December 2011. However, if the suggestions of the minister and the committee are accepted and implemented they will have far reaching consequences for the way in which forest dependent people are integrated into markets. In the first place, the proposed policy will denationalisation some of the commercially important forest produces like tendu leaves, sal seed, karaya gum, myrabolans and other such produces notified by different state governments. This means that it will remove the distinction between nationalised and other produces and introduce competition into the forest produce market. Thus, private traders and industry will be able to buy produce directly from the gatherer. As a consequence, the influence of the market on the determination of prices will be considerably enhanced. The assumption behind and logic of this argument is that the introduction of competition will ensure higher wages and prices for the forest produce gatherer.


Along with the introduction of competition, the second implication of these suggestions is that the base price of the produce will be determined by the MSP. But the burden for ensuring that private players and state agencies conform to the MSP is effectively put on state governments. Further if state agencies are to expand their marketing network then the whole burden of providing a MSP is going to fall on these governments even while a central committee will determine the prices. The method of determination of prices has been debated in the joint parliamentary committee on the Forest Rights Act. One of its much ignored and most desirable recommendations to the central government was regarding the establishment of a price commission for forest produce. The acceptance of Ramesh’s proposition will ensure that a bureaucratic and arbitrary central committee will replace a much sought after forest produce price commission. Further if the central government determines the base price of the produce, then it should allocate some funds for meeting the requirements of the state governments to meet the MSP if state agencies are to increase their outreach in terms of forest produce purchase. However given the varied regional and local patterns of forest produce production, harvesting and use, it is appropriate that state governments are mandated to have their own lists of essential produce and determine the MSP of this produce. This will be a far more realistic and workable method of determining the MSP.


But quite apart from this, another major question raised by the minister’s suggestions concerns the influence of the industry in determining MSP of forest produce. Both the letter of the minister as well as the report of the joint committee on the implementation of the forest rights act is emphatic that state agencies should increase their marketing network in minor forest produce. The report of the joint committee says that both state monopoly as well as free market is undesirable in forested areas. Rather it recommends that state agencies should tie up with ‘socially committed private sector/exporters’ to strengthen its network. This model has all the dangers of a public private partnership. Here a neo-liberal state is likely to tie up with big private players to employ smaller intermediaries to set up collection of infra structure in remote areas. This possibility is a real one and will only increase the control of big industry over the pricing process. In that case, the MSP will only ensure subsistence and not a fair wage for the forest produce gatherer. This will also imply that the exploitative control of the trader and the excessive influences of industry governed markets on prices continue and impacts the daily life of tribal gatherers.






In the light of the above analysis it is pertinent to ask whether the introduction of such competition would benefit the gatherers in this age of free market. The experience of forested areas in such cases is a rich one. Apart from nationalised produce, all other forest produce has generally been in the open market since the colonial times. For example in Madhya Pradesh apart from the four nationalised products, all other produce was primarily procured by the small trader for larger traders who in turn sold it to the industry. The bigger block level traders tied up with smaller traders who visited village markets to buy produce. From the gatherers side, the sale of produce has almost always been done under distress and has been part of a larger generalised trading system. For example, mahua seeds, aonla and rice will be bought together by the same trader. The sale of forest produce to specialised traders will only take place in the whole sale market. Given this nature of trade, the price at which the forest produce is brought is often determined by what the gatherer of the produce needs. Thus there are several instances where expensive forest produce will be bartered away for essential needs like salt and oil. Hence the pricing of the forest produce in the present day is determined by the poverty of the tribal and the strangulating hold of the trader over the daily life of these tribal people. This makes the forest produce markets highly volatile and unpredictable, and susceptible to the discretion of the traders. It is important to note that any attempts to dismantle the system through cooperatives have been unsuccessful in areas like Chhattisgarh and Madhya Pradesh where the hold of the traders is so oppressive that they even start to dominate the local cooperatives.





Hence from the central Indian experience it is quite clear that markets need to be regulated better and any prescription of deregulation is likely to increase the role of the trader, who is the symbol of highest oppression in a tribal society. Further experiences of states like West Bengal, Andhra Pradesh and Orissa give pointers to alternatives that can be explored. In states like West Bengal and Orissa, state machinery has ensured that traders have limited control over the market and gatherer societies benefit directly from their links with agencies of forest development. These states have also set an example of showing how people and state agencies can cooperate to regenerate and manage forest produce for the benefit of all. The gatherers not only get better wages and prices, but also maintain some control over the produce and its pricing process. In terms of an institutional framework, perhaps the best example of this has been the Girijan Cooperative Corporation of Andhra Pradesh. The most important aspect of its work is that it has recognised the character of the forest produce market and made forest produce collection a part of its larger trade. In many places, the outlets of the corporation have brought and sold food at cheap prices and also provided other basic needs like oil, cosmetics etc to tribal hamlets. They also act as collection centres of forest produce, and announce seasonal support prices for different forest products. This has ensured that tribal people were not dependent on traders for their basic needs and could sell their produce at a better price. Hence the fixation of prices was under greater social control.


Given this experience, the question of market deregulation and pricing needs to be posed in the context of the larger debate on what type of institutional framework is needed to increase the social control over the pricing system. While the democratisation of forest management and settlement of ownership rights is a must, the question about how mechanisms of ‘community control’ will respond to the markets remains. A good alternative seems to be the extension of a state infrastructure that covers every remote tribal hamlet. This facility could act as a distribution mechanism of cheap food grains and other daily needs provisions. At the same time it could also provide collection facilities of forest produce. One way could be to link gatherer cooperatives to a universal public distribution system which would sell cheap food grains on the one hand, and also buy forest produce from tribal gatherers on the other hand. In many places where tribal people have no money to buy cheap grains, a system of barter could be worked out at MSP rates. Such an innovation can make the PDS system a viable and a universal proposition in tribal areas, and it can also ensure that we begin to address the specific problems of forest produce gatherers.