India is adding many new production facilities for Plywood, Doors, Laminates, Particle Board, MDF, Furniture, Kitchen, Wardrobes, etc but a significant step towards sustainable forestry or plantation is unfortunately missing. Neither Industry nor Government is active enough to counter the next looming crisis in this sector. The euphoria to put up a panel/board or MDF/PB plant is unanimously everywhere but if asked ‘where is the raw material timber’ everyone looks the other way.
Will closing the eyes stop the problem from coming? The wood procurement on a range-bound price level is a must for the wood-based industries to survive and grow. The pricing of each species of wood or plantation timber (as a raw material) has been so erratic that it needs no data or proof. The extreme high of per quintal of Rs.1200/- to the Lowest as Rs.250/- has been a big disrupter for the markets that have led to bankruptcy for many farmers and even factories in the past.
With an increase in the number of new factories coming up in Haryana, Punjab, Kerala and other parts of country, the future timber prices is not hard to assume. A long queue is desperately waiting in UP (If UP government allows new license too just like Haryana) indicating the looming raw material crisis and High prices of wood, imminent in recent future. The addition of new plants in MDF, PB etc are also contributing to the rush.
The seriousness of the scenario can be gauged by the mass media news that ‘Swedish furniture major IKEA is in talks with a number of state governments for sourcing wood for furniture’. States like Telangana, Karnataka, Maharashtra and north-eastern states are approached by the furniture major company for sustainable wood availability solutions. The factories in Kerala are slowly adopting to local eucaly (specie of eucalyptus) hence they are balancing the gap of silver oak. Kandla factories too are finding difficulties with costly imported core and timber.
If you look at the Decorative laminate, the supply is growing on a much higher level compared to demand in an already overcrowded segment. In HPL, the number of new units or new brands are continuously growing thus bringing down prices with each passing year. I can clearly see the writing on the wall that ‘companies in wood panel decorative segment will be facing tough time after mid 2018 in profit and/or healthy balance sheet due to haphazard expansions’.
Today raw material (wood procurement) is a biggest challenge for plyboards-panels & furniture industry in India, followed by shortage of trained technical people and skilled work force. The coming time might force units towards closure and find way to import. Hence the wisest step an industrialist can take is to recalculate Pros & Cons before establishing a plywood or a laminate or any similar unit.
He must be ready to embrace a long spell of efforts, bigger capital and facing the volatile market head on. Demonetisation and GST implementation are events of the past. The Big blow event could be of ‘Wood Scarcity’ & ‘Cut Throat Competition’ which I see coming. And I hope corrective measures are taken to avoid this.
Pragat Dvivedi
Founder Editor
Email id:- dpragat@gmail.com ( M) 9310612991