ITC Limited has signed a Memorandum of Understanding (MOU) with the Andhra Pradesh Government to collaborate on the state's 'Velugu' programme, to develop wastelands in Andhra Pradesh. The proposed partnership on 'Velugu' is yet another milestone in ITC's wasteland development programme. With the long-term objective of seeking sustainable solutions to the problems of endemic poverty and deforestation, ITC and the AP Government will synergise their strengths in forestry development in the Khammam District of Andhra Pradesh. This collaborative programme will be initiated with a pilot social forestry project covering 1,000 acres.

The MoU was signed on January 9, 2004 in Hyderabad by ITC Chairman Y C Deveshwar and the Andhra Pradesh Minister for Small Scale Industries, Employment Generation and 'Velugu', Mr B Gopalakrishna Reddy, in the presence of the Union Minister for Law, Justice, Commerce and Industry, Mr Arun Jaitley, and the AP Chief Minister, Mr N Chandrababu Naidu.

This joint effort will leverage the social mobilisation skills of 'Velugu' to identify potential beneficiaries and make the necessary investments in preparing their lands for plantations. ITC Limited will contribute through its skills in project management and logistics support and by providing quality planting stock.

The Velugu programme is part of the Andhra Pradesh Government's Vision 2020 which outlines the elimination of rural poverty as one of its most important goals. Velugu is being rolled out in two phases - the Andhra Pradesh District Poverty Initiatives Project and the Andhra Pradesh Rural Poverty Reduction Project. Velugu thus is the largest poverty alleviation project in the state working in over 860 mandals in 22 districts and already reaches 30,00,000 of the poorest of rural poor.

The procurement of industrial timber exclusively from sustainable sources and the consequent reduction of dependence on public forests is an integral part of ITC's long-term business plan. ITC believes that the only way of creating sustainable wood markets is by providing the necessary economic stimulus to farmers to promote industrial wood plantations on their private wastelands. This is the Company's strategy for a sustainable green future, which it has been putting into practice for the last few years.

In order to achieve this objective, ITC has been following a two-pronged strategy:
 
1. ITC's Farm Forestry programme was initiated in 1992-93. Under this programme farmers are encouraged to create plantations on their surplus lands and wastelands, using high-yielding disease-resistant clonal planting stock, suitable for the paper and pulp industry. These saplings for clonal plantations are developed by ITC's own biotechnology research centre, and are supplied to the farmers at subsidised rates. So far, ITC has reached out to nearly 6,000 farmers covering 17,500 hectares.

2. In the year 2000 AD, ITC began to examine ways of designing an afforestation model that would endeavour to tackle problems of endemic poverty of small land-holders through significant increases in farm incomes and generation of employment. Since January 2001, ITC has embarked on a model of social forestry that targets poor tribal families and addresses the twin objectives outlined above. So far nearly 4,000 such plantations have been promoted covering nearly 4,500 poor families. In 10 years, ITC plans to bring 10,000 hectares of private wastelands under plantations at an annual rate of 1,000 hectares. It will cover about 12,000 tribal households directly and another 7,500 indirectly through employment generation.

The salient features of this programme are:
 
1. The lands that are being brought under plantations are private wastelands. The main plank of the project is building of capacities at the grassroots level in order to initiate a virtuous cycle of sustainable development. With the help of partner-NGOs, households are organised into forest user groups and given intensive training in development issues, formation of micro-credit groups, managing accounts and maintenance of documentation, followed by intensive training in the management of plantations and sylvicultural practices.

2. Given the economic vulnerability of such households, ITC consciously promotes mixed-species plantations that include indigenous forest species along with fast-growing exotics.

3. The most unique feature of the project is that the financial assistance that is extended for the promotion of these plantations will be recovered by the village sanghas. ITC's long term vision is that with these loan recoveries, each of these sanghas will be able to build up a large enough village development fund to take care of village development programmes. In this manner, ITC hopes to promote self-reliance and sustainability in yet another way - in the development process itself.

ITC hopes that this MOU and the pilot project will form the nucleus of a long-term and sustainable partnership between the government and the private sector and emerge as a replicable model for others.