Designing the methodology to establish minimum support prices of trees grown outside forests

11 Feb 2021

Agroforestry systems in India have the potential of achieving two-thirds of the forestry sector's NDC targets. This policy brief aims at analysing the status, potential and needs of agroforestry in India and the benefits of providing MSP to farmers for the timber they produce.

Designing Methodology

Trees outside forests (TOF) form a significant part of the forest and tree cover of the country and have emerged as major source of timber in India. TOF refers to all trees growing outside recorded forest areas irrespective of patch size. In India, the requirement of wood and wood-based products is met to a large extent from TOF. At present, more than 80% demand for timber is met from the agroforestry sector.

Agroforestry, the climate-smart production system, has the potential of achieving two-thirds of the forestry sector's NDC targets. In the context of agroforestry, the basis for having a Minimum Support Price (MSP) is to sustain the interest of farmers by incentivizing them with a base price which would protect them from market failures. The price would ensure that the farmers are compensated for all the costs they have incurred, remunerated for the labour, and incentivized for sequestering CO2 from atmosphere till the time of harvesting.

The defined harvesting cycle of various important agroforestry tree species also provides a great opportunity to lock the sequestered carbon in the form of furniture and re-use the land for sequestering additional carbon through new plantations. This not only helps in adding to the area under tree cover but also provides a substitute to the timber harvested from forests and, hence, aids in the conservation of natural forests for ecological functions.

In spite of these benefits, the agroforestry sector is facing several problems such as unregulated pricing regime, transit and felling regulations, and lack of incentives for carbon sequestration. Therefore, to devise a scheme for MSP for agroforestry produce, bringing policy reforms and more, the policy brief, ‘Designing the Methodology to Establish Minimum Support Prices of Trees Grown Outside Forests' on forestry was launched along with five others during the World Sustainable Development Summit 2021, TERI's annual flagship event.

This policy brief analyses the status, potential, and needs of agroforestry in India. Additionally, the policy brief also looks into institutional and policy reforms needed to realise the possibilities of agroforestry and the benefits of providing MSP to farmers for the timber that they produce.

Agroforestry provides an important opportunity to India to meet the challenges it is facing, whether it is increasing the tree cover and carbon sequestration obligations, rehabilitation of degraded land, crop diversification, supporting the micro, small and medium enterprises (MSME) sector, or providing livelihood to people.

Land degradation
Land use
Civil society/Grassroots
Policy Makers
Researchers/Post graduates