← Business Models: Industry Specific (Industrials & Materials) (all topics)
Backward integration - pulpwood plantations
What it is
Pulpwood, waste paper and agri-residue are the fibre inputs to papermaking. India is fibre-deficient, so mills run captive and farm-forestry plantations, contract with farmers, and import waste paper
Captive plantation integration secures supply and cost
Impact on industries
- Plantation integration converts a volatile purchased input into a controlled cost, and is the main differentiator between Indian paper mills
- Agroforestry programmes give farmers an alternative crop and secure fibre within economic transport radius of the mill
- Plantations take 4-7 years to mature, so the investment precedes the benefit by a full cycle
- Imported waste paper exposes mills to global recovered-fibre prices and export restrictions imposed by supplying countries