The Kendu Leaf Trade: Problems & Prospects in Orissa - Vasundhara

The Kendu Leaf Trade: Problems & Prospects in Orissa
Bikash Rath
Sr. Programme Officer
August 2006
Revised: November 2006
©VASUNDHARA
15, Saheed Nagar
Bhubaneswar-7
Orissa(India)
Phone/fax: 0674-2542011,012,028
E-mail: vasundharaorissa@satyam.net.in
Website: www.vasundharaorissa.org

A note from the author
The Kendu leaf business has been providing livelihood support to millions of poor and
marginalized people in Orissa since about a century. The contribution from this source to the
annual income of the pluckers’ families is so vital that any major set back in the business
threatens their livelihood. During the past few years, such risks have been noticed in the state
particularly after the poor sale years, and the general apprehension is that the crisis in the end
market, i.e. the bidi industry is going to turn this business into a dying trade in future. It was in
this context that a necessity was felt to examine the facts and factors associated with such
apprehensions so as to assess the extent of the future risks, and also to find out some amicable
solutions to minimize such risks.
The present study is a one-person study, and as such the author takes the responsibility of all the
shortcomings/drawbacks of the report. Given his lack of practical experiences of the complex
dynamics of the KL trade, the author cannot vouch that his observations and analysis are perfect
in all respects. Still, it can be humbly said that the present report is based on facts, and as such,
contains matters that should not be ignored.
During the study the author had to refer to various related studies, and was specially benefited by
the Right to Information Act, 2005 which ensured a lot of valuable information from the KL
wing of the Forest Department as well as the Central Excise & Customs, Bhubaneswar. My
sincere thanks are due to these departments, and also to all others, particularly individuals like
Sri Rabindra Nath Sahu, Asst. Chief Conservator of Forest(Kendu leaves); Sri Ajit Kumar
Satpathy, DFO(KL), Phulbani; Sri M.C.Patel, President, Orissa Bidi Manufacturers Association,
Sambalpur; Sri Maheswar Pradhan, Marketing Manager(KL), OFDC; Sri Vijay
Singhala(President) & Sri Manoj Singhania(Secretary) of Orissa KL Purchaser’s Association; Sri
Pitambar Dash, National Enterprises, Rourkela; and Sri Jaydev Dey, President, Federation of
Biri, Biri Leaves,&Tobacco Merchants, Kolkata who have contributed significantly to this study.
I am also thankful to my colleagues at Vasundhara, particularly Ms. Rekha Panigrahi and Sri
Rana Roy for their contribution.
It would be great if this endeavour contributes to secure the KL trade in the state thereby
securing the livelihood of the pluckers.
Bikash Rath
1

A keri of kendu leaves. The colour(pl. see our website) is because of the old stock and
inadequately stored material.
2

Executive summary
Orissa stands for quality so far the production and sale of kendu leaves in India is concerned.
Market situation adversely affected kendu leaf sale even 40 years ago or so, so this is not a recent
phenomenon. The recent problems are the anti-tobacco campaign and the changing tobacco
consumption habits, the impact of which is claimed to have affected the production & sale of
bidi, the only commercial end use of kendu leaf. Besides, the bidi industry has other internal and
external threats/limitations/problems. Under such conditions, an effective & strategic production
& sale policy can only help the state trading in kendu leaves profitably sustain for long in the
interest of more than 17 lakh poor people dependent on this trade. Assessments indicate that the
situation is not that bad, and also that the scope is bright if a proper strategy is implemented with
sincerity. However, for long-term sustenance development of alternate market use is essential,
and this can be achieved through dedicated R&D work.
3

Contents
Kendu leaf: an introduction 8
Commercial use of kendu leaf 8
KL policy of the government of Orissa 9
Livelihood dependency of KL pluckers and bidi-makers in the state 9
Normal trade dynamics 11
The current crisis 13
Implications of the crisis 20
The crisis of exaggerating the situation 21
Combat strategy 29
The issue of smuggling 42
The question of decentralization 44
The Konark bidi experiment 46
Conclusion 47
REFERENCES
4

List of charts
Chart-1: Forms of tobacco consumption in India 14
Chart-2: Bidi production in parts of western Orissa 16
Chart-3: Production, delivery and sale(1973-74 to 1984-85) 17
Chart-4: Production, delivery and sale(1993-94 to 2004-05) 17
Chart-5: Cost of production versus sale price(1973-74 to 1978-79) 18
Chart-6: Cost of production versus sale price (2000-01 to 2005-06) 19
Chart-7: Bidi production by G.C.Shaha 21
Chart-8: Bidi production by Ceejay Tobacco 22
Chart-9: Bidi production by Manilal Dayalji & Co. 22
Chart-10: Bidi production by Dayalal Meghji & Co. 23
Chart-11: Total production of bidi in the Sambalpur range(central excise) 23
Chart-12: Total production of bidi in the Jharsuguda range(central excise) 24
Chart-13: Production of bidi in areas other than western Orissa 24
Chart-14: Production of New Orissa Bidi 25
Chart-15: Total production of bidi in Orissa 26
Chart-16: Gross profit earned from the KL business 28
Chart-17: Sale quantity versus average sale value(of KL) 29
Chart-18: Share of National Enterprises (NE) in the total export of KL 33
Chart-19: Share of NE in the total export of KL to Sri Lanka & Pakistan 34
Chart-20: Growing establishment cost in KL operations 38
5

List of annexure
1. Gradation of Kendu Leaves as practiced currently in Orissa
2. Production, delivery and sale of KL in Orissa
3. Average cost of production versus av. sale price of KL
4. Sale and expenditure in KL trade
5. Quantity delivered versus quantity sold in the state trading
6. Sale value of KL
7. Approved establishment cost
8. Partial breakup of the expenditure in KL operations in 2003
9. Approved cost norm for 2006 operations
10. Export of KL by National Enterprises, Rourkela
11. Employment generation through KL operations in 2004
12. Target of KL production in Orissa in lakh quintals
13. Qualitative production of KL(in quintals) in Orissa
14. Total production of KL(in lakh quintals) in Orissa
15. Production of bidi by licensed manufacturers of Orissa
16. Export of bidi from India
17. Procurement of Siali fibre by the KL wing
18. An example of the alleged irregularities done on the part of the KL wing
19. Media’s concern over the smuggling of KL
20. An analysis, in the media, of the problems in the KL business
21. Concern over the implications of declining market of bidi on the KL pluckers
6

22. An example of the pluckers’ plight
23. Media concern over the injustice done to pluckers
24. An example of the lackadaisical attitude of the KL wing
25. Media concern over the natural damage to the KL crop
26. Whose fault is this
27. Letter of M/S. Overseas Traders
(a bundle of bidis)
7

The Kendu Leaf Trade: Problems & Prospects in Orissa
1.Kendu leaf: an introduction:
The source of kendu leaf(KL) is the plant Diospyros melanoxylon which is a species that can
grow upto 20 metres, but is normally found as a shrub on government waste lands and degraded
forest lands because of the annual cutting aimed at better production of leaves.In some areas like
in the Athamallik-Rairakhol region this also grows on private lands particularly because many
such private lands were actually KL growing forest lands, and the people who converted its
status for agricultural purpose allowed the bushes to grow as they took it as a parallel source of
income. The leaves supplied from such private lands are known as praja patra(tenants’ leaves),
and the Forest Department procures the same under the name of growers’ leaves(GL) priced on
the basis of not the number of leaves(keri), but the weight(quintal).
The plant is a very good coppicer, and produces good leaves only after coppicing. Hence, each
year, during the month of February-March the bushes are cut at an angle with the stem, and good
leaves come out by April-May for collection. Pluckers start their collection early in the morning,
and by evening they dispose of the leaves at the nearest collection and processing center(phadi)
of the Forest Department(KL wing), in the form of small bundles(keri) each containing 20
leaves(40 leaves in phal areas). The KL wing makes arrangements for proper drying and
processing(putting leaves of different qualities under different categories), and then transfers the
stock to Orissa Forest Development Corporation(OFDC), a public sector undertaking, for
marketing. The stock thus received by OFDC is sold first through tenders, and then through
auction. For this, OFDC gets 4% commission (excluding 1% for construction of godowns in the
total 5%) from the gross sale proceeds, and after deducting the working cost plus other kinds of
expenditure (tax, etc.), the rest is required to be paid by the Corporation to the government 1 .
2.Commercial use of kendu leaf:
Till date the one & only commercial use of kendu leaf has been as the wrapping material for bidi,
the country cigar. Bidi is known as poor man’s cigarette because the low-income category,
especially those belonging to the labour class, who find to difficult to afford branded cigarettes,
go for this cheap and alternative form of smoking.
Archival studies find a reference of bidi in India dating back to 1711 A.D.(GoI: MHFW 2004,
p.13).However, large scale commercial production of bidi in organized form is supposed to be
more or less 100 years old in the country.
Normally, some comparatively coarser and low-processed tobacco is wrapped with about onefourth
of a kendu leaf to make a single bidi. After wrapping both the ends are folded, and a
thread is tied on the bidi to further secure the binding. It is the tobacco, which is the actual
identity of any particular brand of bidi. Each brand has its own flavour, and users addicted to any
particular flavour(brand) normally do not prefer other brands unless they find the latter more
1 In actual practice, the Corporation has however retained a part of this amount, owing to its financial problems, as a
result of which the net receipt at the end of the government has remained substantially lower than the actual amount.
As 50% of this net receipt is released as KL grant, the latter is affected.
8

charming. The brand, which cannot provide this charm, cannot survive in the market.
Although several alternatives like the leaves of Bauhinia racemosa and Holarrhena
antidysenterica are available as bidi wrapping material(Tewari 1994), kendu leaf has been the
only one used commercially on a very extensive scale because of its hygroscopic & pliable
nature, characteristic aroma, slow burning capacity, and availability in bulk quantities,
etc.(Sarangi quoted in Rath 2004, p.5).Sometimes known as the golden leaf(or silver leaf), its
commercial production and marketing is also about 100 years old.
3. KL policy of the government in Orissa:
Kendu leaf has played a major role in the Orissa politics since decades, more particularly prior to
its nationalization. Most of the KL producing areas in the state belonged to some erstwhile
princely states(garjats) of western Orissa, and the feudal rulers earned a lot from their monopoly
on this item. After the merger of these states in 1948-49, the Orissa government gradually
established its statewide control over KL in phases, but the procurement and trade remained
practically under the control of private traders who used to heavily bribe bureaucrats and
politicians in power in order to continue this control. This relationship created great controversy,
and even forced government(s) to resign. In order to check this kind of political influence, and
also to secure the interest of the state as well as its KL pluckers, the Orissa government
nationalized kendu leaf in 1973. Since then, the KL wing of the Forest Department is procuring
and processing KL whereas OFDC is selling the same.
A high level committee known as the Kendu Leaf Coordination Committee (KLCC)
decides/approves every year the quantity of KL to be produced, as well as other relevant matters
except the purchase price which is decided by the Kendu Leaf Advisory
Committee(KLAC 2 ).Usually, the KLCC meets once in a year just before the procurement starts
in the field.
Unlike in the neighbouring states of Chhattisgarh and Madhya Pradesh, no share in the net
revenue from KL business is ploughed back directly to the pluckers in Orissa. Instead, there is a
provision for sharing 50% of this revenue with the panchayatiraj institutions(PRIs) in the form of
KL grant.90% of the KL grant is disbursed for PRIs in KL growing areas(at the ratio 72:10:8
respectively for Gram panchayats, Panchayat samitis, and Zilla parishad), and 10% is retained by
the government in the form of ‘hard cash grant’ for ‘socially relevant purposes and other
activities’ which in actual practice rarely has any relation with the KL growing areas or the
welfare of the KL pluckers.
Delayed payment had been a major issue for the pluckers for many years, but recently this matter
has been solved. Irregularities in bush cutting operations, and closure of phadis in some areas are
among the current issues.
2 Chaired by the Minister of Forest, this committee has four representatives from the growers’ side.
9

4.Livelihood dependency of KL pluckers and bidi-makers in the state:
As per the KL wing of the Forest Department, there are about 8,64,183 plucker’s card holders in
the state(2005), and since they are known to be assisted in the field by one or more members of
the family, the actual number of KL puckers are supposed to be much more. And one can easily
see that considering atleast an equal number of dependents (even if partial), it is a question of the
livelihood of more than 17 lakh people of the state.
While the KL pluckers generally belong to the marginalized sections, most of them are women
and adolescent girls. The contribution of KL to their family income varies according to various
factors like the number of family members involved in the collection, etc.; but it has been found
that normally this contribution is about 13-20 % of the total annual income of the family. Thus,
needless to say, there is a critical dependency of these people on KL collection. It may be
mentioned here that kendu leaf collection is the only major item among the non-timber forest
products collected state-wide during its season.
Coming to the bidi rollers, the numbers vary according to various estimates. One such estimate
suggested this number to be more than 7 lakhs(quoted in Rath 2004, p.34).
Bidi rolling is an unhealthy job because of the rollers’ day-to-day exposure to tobacco. People in
this profession have been found to have respiratory problems and other health troubles. Still they
have been doing it for generations because of their critical dependency on it. And without KL
they will not be able to continue this profession. This KL is usually supplied by the employer,
but in parts of Angul-Rairakhol belt the KL pluckers themselves work as bidi rollers thus adding
value to their collected KL though not adequately paid in practice against this value addition.
Women pluckers carrying kendu leaves for disposal
10

5.Normal trade dynamics:
(Kendu leaves being dried, and bagged for transportation as phal)
While other KL-growing states produce only unprocessed(i.e. not graded according to quality)
leaves otherwise known as phal, most of the Orissa production is in the form of processed leaves.
Basically, five categories of leaves are recognized depending on the size, colour, and texture,
etc.. However, OFDC distinguished total 9 categories among which some are actually a mixture
of two categories. Current practices recognize atleast 7 categories, like I,III, IV, IVs, and IVm
(‘s’ stands for super and ‘m’ for medium).The so-called GL, though considered equivalent to
grade-IV, is sold separately.
Production of phal leaves is cheaper, and hence the sale price is considerably lower than that of
the processed leaves; but transportation is expensive as their bags tend to be much more bulky,
and hence occupy significantly higher volume for the same tonnage. However, if a trader can
ensure phal leaves from a good crop area, then he has a probability of getting more or less an
equivalent production of bidis for the same PPQ 3 .
Processed bags are basically used for two reasons: quality control in bidi production, and as
reserve for use during the period by when phal leaves lose their quality. Phal leaves deteriorate
much earlier than processed leaves, and hence are first exhausted. Further, the wastage during
bidi making is minimum in case of the processed leaves than in phal.
3 Normal practice measures only processed leaves in terms of their weight, and phal leaves are measured in terms of
standard bags(each such bag contains about 1,000 bundles having 50 leaves per bundle in states like Chhattisgarh,
but in Orissa the SB contains 1250 keries each keri having 40 leaves. The total number of leaves is thus constant in
all the states and the weight of each leaf is roughly one gram.) in advance sale areas. However, in areas where
advance sale is not in vogue and the Department takes responsibility of selling the phal production through OFDC,
the measure is not the SB, but the PPQ or phal processed quintal. 1 PPQ is equivalent to 1.33 quintals of phal
because if the latter had been subjected to processing, wastage/rejection would have reduced the weight to their
weight more or less equal to the former. The PPQ measure helps compare phal production with the processed.
11

The cost of processing is compensated by the proportionately higher price of processed leaves
than phal. Similarly, the higher cost of production of bidi by using processed leaves is
compensated by the lower amount of wastage. However, sometimes the balance may not be so
perfect, and compensation may not be adequate because of various reasons. The traders and/or
KL procurers try their best to ensure this balance, or rather a misbalance in their favour by
making sure that the leaves they would be getting are of adequate quality. This is done on the
basis of a sampling, but sometimes unofficial means can also be used to get the bags of their
interest.
In case of phal production, the advance sale mechanism helps both the traders and the
government because the trader offers his price on the basis of his assessment of the quality and
quantity of leaves to be produced in an area. If his offer is accepted and he gets the exclusive
right of procurement in the area, then he takes all possible measures to ensure his gain.
Accordingly, he unofficially ensures that bush cutting is done properly though the operation is
actually carried out by the KL wing.
In the normal system results of the tender are announced by June, but delivery starts from
October due to the rainy season. Bidi manufacturers use the reserve stock of Orissa
leaves(processed) till the delivery starts from October. For the traders, there is an uncertainty till
the results of tender are out after which only they are able to ascertain their transaction for the
year. However, in the advanced sale mechanism the trader gets his leaves during the season
itself. The adoption of this advanced sale policy in the neighbouring state of Chhattisgarh
affected the traders’ procurement from Orissa as they could now themselves ensure leaves for the
period during which they earlier lacked stocks and had to depend on Orissa leaves(processed
ones in particular as these are much more durable).
During December-January, traders place their offers through tenders for advance sale in any
particular area/unit, and take delivery of all the KL procured by the Department within 24 hours
of the procurement. This means that the Department no more takes the responsibility of drying or
bagging the leaves, and the trader purchases the green leaves to process the same under his own
responsibility. After processing, the leaves are stored in the godowns of OFDC and the trader is
allowed to take delivery of the same only after clearing his dues.
For 2006 crop year, 90,000 standard bags(phal) were fixed for advance sale as against 30,000
quintals(phal) to be produced departmentally. While advance sale reduces the risk in the
marketing of phal, not all units are sold in advance due to traders’ preference of only areas of
good production (quality/quantity).
12

No pain, no gain
Adopting the advance sale mechanism was more an expression of helplessness on the part
of the government than being a well-planned strategy. Whereas this ensured profitable sale
of phal leaves, the margin of profit was much lower for the government than for the traders.
For instance, the government received only 1% profit from the advance sale areas of
Jeypore KL division in 2005, as against 36% from the departmentally worked areas. In
2006, the profit in this area rose to 38% and 137% respectively. While loss of revenue is an
issue, it has also been alleged that traders engage labourers from other states, and resort to
malpractices to maximize their gain. Therefore, some people feel that advance sale should
be discontinued (vide The Samaj, 16-11-06, p.10).
About 80% of the Orissa production is said to be supplied to West Bengal. This however
contributes only 35 to 40% of the total quantity of leaves procured/consumed in West
Bengal(and part of Assam).The bidi industry in West Bengal is centred in and around
Murshidabad, and illegal supplies from Orissa are not supposed to reach so far; rather such
supplies are said to be consumed in the districts nearer to Orissa(per. comm.., Vijay Singhala and
Jaydev Dey).
Rural bidi rolling units, which work for brand manufacturers, purchase processed lots from
OFDC if they can not ensure KL from other sources; but they do not prefer to purchase the total
requirement of the year at-a-time because there is a risk of damage of the leaf quality during the
rainy season owing to lack of adequate storage facilities. Hence, they prefer retail purchase at
appropriate intervals. However, big units having adequate storage facilities can afford wholesale
purchase. According to the present norm of OFDC, the minimum purchase quantity by any
purchaser is 100 bags(60 kg each).
6.The current crisis:
During the last few years, the marketing of Kendu leaves has been not as smooth as it was 10 or
15 years ago. Not only Orissa, but all the KL producing states, particularly Chhattisgarh and
Madhya Pradesh have experienced difficulties in selling their stocks at appropriate prices.
Getting satisfactory prices has been more a matter of concern than disposing the stocks, and this
problem is supposed to be the outcome of a substantial decline in the sale & production of bidis.
The anti-tobacco campaign/measures on one hand, and the growing popularity of more
convenient and ready-to-use items like gutka are said to have made the bidi market suffer
significantly. Traders’ assessment suggests a 30-40% decrease in the sale of bidis over the last
few years, in the Indian market.
13

Chart-1
Forms of tobacco consumption in India
Cigarettes
14%
Chew ing
products
46%
Bidi
40%
(based on www.tobaccojournal.com/A_passage_through_India)
As indicated in the above chart(#1), bidi should have atleast 40% share among the tobacco
products used in India. There is hardly any doubt that two decades ago this share was much
higher when competition from new forms of chewing products like gutka was at its minimum. In
fact, an assessment indicates that in 1971 the cigarette consumption also had a higher
share(23%).
Bidi has been the poor man’s cigarette since decades. A daily labourer or a rickshaw-puller used
to find himself more comfortable with this form of smoking than with cigarette. Even though the
cigarette industry has produced mini-cigarettes as counterparts of bidi, still it is believed that
there are 10 times more bidi-smokers than cigarette smokers, and that in 2004, about 960 billion
bidi sticks were sold in the country
(source: www.tobaccojournal.com/A_passage_through_India).
The bidi industry is a highly fragmented market, and except few, most of the units are small and
they produce bidi for the local market. There are also people who do not have any formal unit as
such, because they make bidi for supply to some ‘unit’, which then releases the same under its
own brand name. Some bidi companies have their units in different states, which gives them an
edge over the essentially localized units to adjust the profit or loss of one unit against that of the
other units.
Bidi industries actually belong to the cottage industry category so far their operations are
concerned. They hardly use any machinery, and usually employ labourers to roll bidis on
contract basis(i.e., wage is paid on the rolling of every thousand bidi).
14

The bidi market basically runs on credit. However, the manufacturers themselves do not prefer to
take loans to stabilize their financial strength because they apprehend that owing to the nature of
the bidi market, it might not be possible for them to repay the loan. Hence, they rather prefer to
decrease the production or manipulate things.
In Orissa, the Gujuratis dominated the bidi manufacturing sector for decades, and the credit of
establishing a name & fame for Orissa leaves basically goes to them. They follow what is known
as ‘behavioural accounting system’ to best suit their purpose. Under this system, the profit is
calculated not on the basis of the results of the past financial year, but on the basis of current
achievements.
Besides threats from external factors like gutka, the legally produced bidi is facing a serious
internal threat from the growing production & sale of unauthorisedly produced bidi particularly
because the latter is cheaper and because of its lower price can still offer an attraction to the bidi
addicted mass. While the legally produced brand has a sale price of Rs.150 to Rs.170 per 1000
sticks, the unauthorized/duplicate bidi, which can still have the same brand name as the
authorized one, can sale at Rs.100 to Rs.120 for the same quantity. Such a substantial gain on the
duplicate brand offers an attraction to the addicted customer, not to mention the shop-keepers
who sale the same. It is apprehended that the duplicate bidi shares about 25% of the total
production of bidi in the country.
The contradictory situation is reflected in an assessment that while about 50 years ago the
approx. daily production of bidi in western Orissa was around 60 lakhs, the current
production(daily) is more than 1 crore. What is important to note is that while 50 years ago about
50-60% of the bidi produced in the state used to be consumed within the state itself, currently the
consumption is about 10% only, rest of the production being sold outside the state(personal
communication. M.C.Patel).
Exact figures of the production, demand, and sale of bidi in Orissa are not available. One
indicative estimate by M.C.Patel, himself a bidi manufacturer and president of the bidi
manufacturer’s association in the state, suggests that the daily sale of bidi in Orissa may be
between 30-40 lakh pieces of which more or less 70% comes from other states.
This second contradiction (most of the bidi produced in the state is sold outside Orissa whereas
most of the bidi sold in Orissa comes from other states) is due to two factors: 1.addiction to a
particular brand (which may come from some other state), and 2.cheaper price or some other
advantage(s).
While availability of quality (processed) KL in Orissa attracts bidi manufacturers to establish
manufacturing units in this state, lower production cost of bidi in some other states like West
Bengal facilitates the supply of such bidi to Orissa 4 .The situation has its within-the-state
counterpart as can be seen in the Raimul village near Ranapur. Whereas the village produces
about 20 lakh bidis per week, the villagers themselves prefer the New Orissa Bidi, a brand
4 As an example, the actual labour payment in West Bengal is about Rs.36 per 1000 bidis whereas in Orissa it is
Rs.40(not to include government rates or payments made in unauthorized units).
15

manufactured in coastal Orissa .
M.C.Patel & Co., manufacturers of good quality Patel Bidi, achieved a production figure of 32
crores(bidi) per annum merely five years ago whereas during 2005-06 this production was
drastically reduced to only about 11.57 lakhs. On the other hand, a small manufacturing unit of
Balia village near Ranapur has increased its capacity from 1 lakh bidis two years ago to 1.5 lakh
bidis, per week now. Such a contradictory situation is simply due to the fact that
illegal/unauthorized and/or low-quality operations are essentially low-cost in nature which helps
the manufacturers sale their product at a competitive price in the dwindling market whereas
authorized and/or quality bidi manufacturers find it increasingly difficult to sustain themselves in
the market owing to substantially higher cost of production.
For instance, an illegal but big manufacturer may be able to produce his bidi at the cost of Rs.55
per thousand whereas his counterpart, a registered manufacturer of quality bidis, has to spend as
high as Rs.120-122 for the same number of bidi production. For those using kendu leaf pluckers
as bidi- makers(like those in the Boinda-Athamallik area) the cost of production can be lower
than Rs.55 per 1000 as these operators save a lot on establishment, and other expenses.
Thus, for one or more reasons the bidi industry appears to have experienced a declining trend in
its production during the last 10 years. For instance, as seen in the following chart(#2), in
Bargarh, Hirakud, Balangir and Titilagarh areas the production record indicates a decrease by
56.85%:
Production in numbers
Chart-2
Bidi production by registered units in Bargarh, Bolangir,
Titilagarh and Hirakud areas under Sambalpur-II division
of Central Excise & Customs
5000000
4000000
3000000
2000000
1000000
0
3625100
1996-97
1997-98
1998-99
1999-2000
2000-01
Year
2001-02
2002-03
2003-04
(based on the statistics provided by Central Excise & Customs)
2004-05
1564000
2005-06
16

And the result of this crisis is supposed to be reflected in the achievements in the selling of
kendu leaves by the state agency. Charts 3 & 4 clearly indicate how the situation has changed
over the years, and the risk of poor disposal/marketing has become prominent during the recent
decade(indicated by the significantly non-synchronous lines):
Chart-3
Production,delivery, and sale:
KL business in Orissa during 1973-74 to 1984-85
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
Quantity in lakh quintals
KL
production
in lakh
quintals
Delivery in
lakh
qunitals
Sold in lakh
quintals
Year
Chart-4
Production, delivery, and sale:
KL business in Orissa during 1993-94 and 2004-05
Quantity in lakh quintals
6
5
4
3
2
1
0
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
KL
production
in lakh
quintals
Delivery in
lakh
qunitals
Sold in lakh
quintals
Year
(Charts 3 & 4 based on Malik undated, and statistics available from OFDC and the KL wing)
17

One can further see from the two following charts how the cost benefit ratio has changed over
the years in the state trading, as a consequence of the disturbing markets:
Chart-5
Cost of production versus sale price:
trend of state trading of KL in Orissa
during 1973-74 to 1978-79
Price in rupees
400
300
200
100
0
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
Cost of
production/quintal in
rupees
Average sale
price/quintal in rupees
Year
(based on Mallik, undated, table-3)
18

Chart-6
Cost of production versus sale price:
trend of state trading of KL in Orissa
during 2000-01 to 2005-06
Price in rupees
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Cost of
production/quintal in
rupees
Average sale
price/quintal in
rupees
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Year
(Based on the statistics provided by the KL wing and OFDC. However, the figures of the
average cost of production and average sale price are only indicative as they vary under the
influence of various factors. 5 )
This somewhat closed pliers-shaped trend(chart-6) of the relationship between cost of production
and sale price is a matter of concern not only from the business point of view, but also from the
view point of the livelihood of lakhs of KL pluckers whose income depends on a healthy
business of their produce.
In fact, the production in 2003 was expected to fetch an average sale price of Rs.4370/quintal,
but the actual realization was about Rs.3330 only which is approx. 23% less from the expected
amount. Similarly, the 2004 crop was expected to have a.s.p. of Rs.3800, but the actual
realization was about Rs.3414 only which is approx.10% less from the expected amount.
If we are going to reach a stage when the cost of production equals with the sale price, then one
can still expect the government to continue the trade keeping the interest of the pluckers; but
when the former exceeds the latter substantially, it might be illogical for the state to continue the
trade. And there may be several implications of such a crisis.
5 This chart is based on data(particularly, sales) pertaining to the financial years whereas a crop-year wise
comparison would have probably given a different picture. Crop-year wise data however could not be arranged from
OFDC, though the concerned officer was of the view that plotting such data would not make any substantial change
in the picture.
19

7.Implications of the crisis:
While difficulties in sales are causing loss to the state exchequer, the impact on the livelihood of
the poor people dependent on KL operations at grassroot level has become of a matter of concern
because decrease in the target quantity and closure of phadis have been the fall out of the
claimed crisis in the bidi industry. During the meeting of the Committee of Public Accounts on
25 th April 2005, a member expressed concern if the KL trade was proving unprofitable for the
government then there was no use of doing this business; and the Principal Secretary(Forest
Deptt.) responded to this unenthusiastically just by saying that from overall point of view the
trade was not a loss-making one. We say ‘unenthusiastically’ because there was no attempt on
the part of Forest Department to convince the committee about the fact that at almost zero
investment, the government used to get more or less 25% of the total transaction value(in rupees)
as net profit; but the instance itself indicates that the government may someday consider
discontinuing the state trading of the produce if the situation deteriorates continuously.
Whereas the nationalization is said to have substantially increased the average annual production
as compared to that of the pre-nationalization years(vide Report of the Task Force, pp.v-vii),the
current situation is that between 1998 to 2000, the annual target of KL production used to be 5
lakh quintals in the state, but since 2001 it has been reduced by 5% or more. However, at phadi
level the reduction in target has been sometimes much more conspicuous. In some areas phadis
have either been closed permanently, or procurement has been totally stopped there temporarily
leaving the pluckers of the area in lurch. For instance, poor sales resulted in the temporary
suspension of procurement in 4 Ranges of the Navarangpur KL Division in a recent year.
While it is true that lack of sufficient quantity of good leaves in a particular area has made phadi
running economically not viable there, thus leading to a closure of the concerned phadi;
mismanagement is an open truth which has also played a significant role in some cases. For
instance, in the Ranapur region(Nayagarh district) there used to be several phadis during the
early nationalization years, but almost all of them were closed afterwards whereas large scale
bidi making takes place in the Balia-Raimula area and the leaves for this purpose are collected
mostly from the local area. Although it is a fact that the leaves of that locality are not of the
quality and quantity required to sustain so many phadis, but why not one phadi particularly when
so much bidi is being made there using the local leaves Bhasker Mohapatra and Maguni
Pradhan, who respectively worked in the Raimula phadi as the munshi and labourer, recall that
mismanagement was an important factor behind the closure of that phadi(per.comm..). And
newspapers have published even photographs showing how carelessly leaves were stored in a
phadi of the Ranapur area. Added to this is the lack of proper bush cutting operations. Does this
not suggest that if some areas are proving not to be economically viable, then that is partly or
wholly because of the mismanagement and/or corruption of the responsible officials
When the uneven distribution of phadis creates problem for the pluckers, it can be well-imagined
what would happen to them if the government totally closes procurement from their area by
closing phadis. In that case either they would have to travel to greater distances in order to reach
the next phadi of their area, which in turn would mean loss of persondays, not to speak of the
physical pain and other complications; or else they would have to sell their leaves at a lower
price to the illegal traders who take advantage of such situations.
20

Not only the procurement of KL, but the bush cutting operations done to ensure better production
also provides employment to the local people. Decrease in procurement or closure of phadis can
directly have an adverse impact on all such kinds of employment opportunity. In fact, the
government ordered in 2005 to increase the earlier proposed target(0.25 lakh quintals) for phal
production to 0.50 lakh quintals so that the poor pluckers of concerned tribal areas would not
suffer financially from stopping KL operations all of a sudden(vide approved minutes of the
KLCC meeting for 2005 crop year).
Instances from the Navarangpur KL Division suggest that irregularities in the procurement (like,
temporary suspension) may result in the weakening of the pluckers workforce because the
uncertainties may divert them to other kinds of employment opportunity. Since KL plucking is a
kind of skilled or semi-skilled job, pluckers’ disinterest in the collection of KL is not a matter to
be ignored particularly in view of the quality crisis in our production.
8.The crisis of exaggerating the situation:
While some authorities the KL wing and/or OFDC seem to be increasingly taking refuse under
the crisis in the bidi market in order to escape the blame on their own negligence and
malpractices, the case of significantly high transaction of smuggled leaves indicates that such an
excuse can not be granted so easily.
The following charts would indicate that although the bidi industry as a whole appears to have
suffered some set back, the impact of the current crisis in the industry has not been uniform. For
instance, the trend in the total production of G.C.Shaha, manufacturers of the reputed brand
Meghna Bidi, has not been the same as compared to that of some of its major counterparts in
western Orissa, as seen in charts 7-10:
Chart-7
Bidi production by G.C.Shaha in Orissa
Production in numbers
1800000000
1600000000
1400000000
1200000000
1000000000
800000000
600000000
400000000
200000000
0
Production in unit-
1(Badmal)
Production in unit-
2(Ganesh nagar)
Production in unit-
3(Sambalpur)
Total production in
three units
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Year
(based on data provided by Central Excise & Customs)
21

Chart-8
Bidi production by M/S. Ceejay Tobacco
Bidi production in numbers
700000000
600000000
500000000
400000000
300000000
200000000
100000000
0
1996-97
1998-99
2000-01
2002-03
2004-05
Production in
Jharsuguda range
Production in
Sambalpur
range(unit-1)
Production in
Sambalpur
range(unit-2)
Year
(based on data provided by Central Excise & Customs)
Chart-9
Bidi production by M/S.Manilal Dayalji & Co.
300000000
Production in numbers
250000000
200000000
150000000
100000000
50000000
0
Production in
Jharsuguda range
Production in
Sambalpur range
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Year
(based on data provided by Central Excise & Customs)
22

Chart-10
Bidi production by M/S.Dayalal Meghji & Co.
Bidi production in numbers
500000000
450000000
400000000
350000000
300000000
250000000
200000000
150000000
100000000
50000000
0
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Production in
Jharsuguda range(unit-
1)
Production in
Jharsuguda range(unit-
2)
Production in
Sambalpur range(unit-
1)
Production in
Sambalpur range(unit-
2)
Year
(based on data provided by Central Excise & Customs)
In fact, as charts 11-13 reflect the production of bidi in some of the major bidi-producing regions
has either remained more or less stable, or has increased so far the figures of 1996-97 and 2005-
06 are concerned:
Chart-11
Total production of bidi by registered units in the
Sambalpur range of Central Excise & Customs
Production in numbers
3500000000
3000000000
2500000000
2000000000
1500000000
1000000000
500000000
0
2883076000
2142336000
2536364000
1996-97 2000-01 2005-06
Year
(based on data provided by Central Excise & Customs)
23

Chart-12
Total production of bidi by registered units in the
Jharsuguda range of Central Excise & Customs
4500000000
4000000000
3500000000
3000000000
2500000000
2000000000
1500000000
1000000000
500000000
0
1999374590
1616355400
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Bidi production in
numbers
Year
(based on data provided by Central Excise & Customs)
Chart-13
Production of bidi in areas other than western Orissa
Production in number
7000000000
6000000000
5000000000
4000000000
3000000000
2000000000
1000000000
0
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Year
(based on data provided by Central Excise & Customs)
And, although some individual units appear to have suffered badly(see, for instance, chart 14 for
the official projections of New Orissa Bidi, one of the popular brands of coastal Orissa) during
the concerned period(1996-97 to 2005-06), that is not necessarily due to the crisis in the bidi
24

market for there are other reasons that might prompt some manufacturers project a declining
trend in the production. One such reason is the hike in the excise duty/cess charged on bidi.
Chart-14
Production of New Orissa Bidi
250,000,000
Production in number
200,000,000
150,000,000
100,000,000
50,000,000
0
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Year
(based on data provided by Central Excise & Customs)
The excise duty has increased substantially during the last 10 years, as shown in the following
table:
Table-1
Date
Cess per 1000 bidis
17-10-95 Re.0.50
20-10-98 Re.1
28-6-2000 Rs.2
13-5-2005 Rs.4
1-4-2006 Rs.5
(source: Central Excise & Customs Commissionerate-II, Bhubaneswar)
This increase is unfavorable to the current situation in the bidi market, as a result of which bidi
manufacturers tend to under-furnish their production figures so as to partially reduce the
expenditure under this head. Some reportedly change the name and/or address of their units in
order to escape the payment of their dues. This may partially explain why, despite the closure of
some units, the overall production in the state has not been proportionately affected.
When the state figure is analyzed in cumulative, we find that in 2005-06 Orissa produced
(legally) about 566.5 crores of bidi(vide chart 15). To exclude illegal production, this much of
25

production accounts for less than 1% of the national production although according to the
potentiality in KL production, this should have been about 10%.
Chart-15
Total production of bidi in Orissa
Production in number
8000000000
7000000000
6000000000
5000000000
4000000000
3000000000
2000000000
1000000000
0
7483133165
5665169107
4887363190
1996-97 2000-01 2005-06
Year
(based on data provided by Central Excise & Customs)
This indicates that although in comparison to the production of 2000-01, that of 2005-06 has
decreased by 24.29%, comparison with the production of 1996-97 shows that it has actually
increased by 15.91%.
At national level also the situation appears to be more or less similar. For instance, Jaydev Dey,
proprietor of Mantu Bidi Pvt. Ltd, Kolkata says that whereas his earlier daily production was
around 50 lakh sticks, now it has come down to 15-20 lakh sticks due to a substantial decrease in
sales. However, he, as the President of the Federation of Biri, Biri Leaves, and Tobacco
Merchants, Kolkata also admits that on the whole the bidi production in West Bengal has
increased roughly by three times during last 10 years or so(personal communication, 30-5-06).
Umesh Parekh of Desai Brothers Ltd., Pune, an expert on bidi business, believes that the
production of bidi in India has remained more or less stagnant( or marginally declined) with a
current average production of about 250 crore sticks per day(personal communication). This
includes the production that goes unrecorded by the Central Excise & Customs, and suggests an
annual production of around 900 billion(90,000 crore) sticks.
Recorded production of bidi in the country is supposed to be significantly underestimated than
the actual production. For instance, data from the Ministry of Industry indicates that in 1994-95
the production was nearing 416 billion sticks which decreased to about 408 billion sticks in
1995-96 followed by an increase upto approx.418 billion in 1996-97.On the other hand,
calculations based on the production of bidi tobacco however puts the production in 1996-97 at
around 700 billion sticks(ILO 2003,pp.44-45).Since bidi manufacturers are required to pay
26

excise duties, etc. on the basis of their production figure, hence it is obvious that there would be
a tendency to furnish a figure suitable to them. Further, unregistered manufacturers also count for
their production, which evades excise duty. Hence, the recorded figures that are based on the
returns filed by the bidi manufacturers are not quite reliable.
The Indian Market Research Bureau estimated the annual consumption of bidi to be 700 billion
(ILO 2003,p.44) in 1996.Accordingly; the sale of about 960 billion sticks in 2004 definitely
suggests a remarkable growth rate. Or, if any of these two estimates are supposed to be underestimated
(700 billion)/overestimated (960 billion) atleast it should suggest a more or less stable
market during these 8 years. Even if the decrease in production in the registered manufacturers is
believed to be correct, a compensatory increase in the production (illegal) in the unregistered
sector should account for this. In fact, according to Euromonitor estimates the bidi sector grew
by almost 20% in volume between 1998 and 2002. In 1990s, bidis first appeared to have lost
their appeal compared to mini-cigarettes which recorded a growth rate of 15% per year because
of their comparatively lesser price resulted from a decrease in excise duties, but the excise duties
were later increased on the latter in 1998 affecting this growth. The status, as per Euromonitor’s
latest research (2004) is that bidi has 53.5% share in the domestic tobacco consumption in India
as against 18.8% for cigarettes (www.tobaccojournal.com; Milenkovic Z. 2004,
www.euromonitor.com ).
And the ground reality is not always in conformity with the claims that the demand of bidi has
decreased. For instance, Kandarpa Dehuri of Kumurisinga(near Angul), who worked as a
commission agent for Konark Bidi and now sells bidi alongwith other items, says that during the
last 10-12 years his sale of bidi has increased from 500 per day to 700/day.His experience is that
gutka has affected the sale of betel, and not of bidi as it is substantially costlier than the
latter(per. communication).
90,000 crore annual production requires about 54 lakh quintals of processed leaves(calculated
@1 crore bidis per 60 quintal processed leaves 6 ). Hence, the market size for kendu
leaves(processed) in India appears to be of atleast 50 lakh quintals per annum. Given the total
production in the country to be around 30 lakh quintals 7 of phal plus processed leaves, the annual
production of processed leaves should be roughly 24 to 25 lakh quintals(to include processed
production from Orissa, as well as the phal production in the country converted into processed by
the factor 0.75) . This suggests a substantial deficit 8 in the production so far the demand is
concerned.
Why then the stocks remain unsold sometimes This may be because of any of the following
three reasons, as under:
6 For good quality leaves, the yield of small/standard size bidi is said to be roughly 1500/kg whereas that for long
bidi is 1200/kg..
7 Vide Tewari Dr. D. N.(1994), Tropical Forest Produce, p.309
8 this may not hold good if the assessments of annual bidi production/sales at about 900 billion is considered highly
overestimated(say by 50%).
27

• There is a bumper crop.
• The particular stock is of poor quality.
• Price is not attractive.
In fact, the CAG (Comptroller and Auditor General) rejected the explanation of OFDC that
stocks remained unsold due to saturation of the demand in the market, and observed that lack of
market strategy and market intelligence was the reason of this failure(Govt of Orissa 2003, p.33).
Further, the achievements in the KL business during 2005-06 and 2006-07 look quite promising
(see chart-14). This has been possible not only because of a favourable market, but also because
of the dealing mechanism.
Chart:16
Gross profit earned from
the Kendu leaf business
during 2001-02 to 2005-06
Gross profit earned in crore
rupees
100
90
80
70
60
50
40
30
20
10
0
2001-02 2002-03 2003-04 2004-05 2005-06
Year
(Note: This chart is based on the statistics provided by the Chief Minister of Orissa on 31-7-06,
in the state assembly, in reply to a question. However, there is some difference in the said
statistics as compared to the figures availed by the author from OFDC earlier though it is not
unlikely that the initial statistics might have been revised later.)
Hence, any intention of the concerned agencies to veil their corruption, malpractices, and
mismanagement at the expense of the livelihood of lakhs of the poorest of the poor should be
strongly dealt with. Regarding some of their genuine problems, the strategy is suggested in the
next section.
28

9.Combat strategy:
9.1: Efficient and effective production-cum-marketing system:
9.1..1: Reducing the extent of vulnerability:
One can see from chart 17 that in case of both phal and processed KL, the corresponding average
sale value has followed an erratic path. The erratic behaviour is much more prominent in case of
phal leaves than in case of the processed; and the declining trend is much more conspicuous in
case of the former between 2001-02 and 2005-06.An all-time low in the average sale price of
phal leaves was recorded in 2005-06 as against that of the processed in 1992-93, during these
years 9 .
Chart-17
Comparative chart showing average sale value of
phal and processed KL during 1991-92 and 2005-06
4500
Average sale value in rupees per quintal
4000
3500
3000
2500
2000
1500
1000
500
0
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
Year
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
Average sale value of phal KL per quintal in rupees
Average sale value of processed KL per quintal in rupees
(based on OFDC data)
As the above chart suggests, it is only the phal leaves whose marketing has suffered a
considerable set back whereas sale of the processed leaves has more or less remained unaffected.
9 This however does not necessarily mean that the 2005 crop had a miserable market value. For instance, during
2005-06, OFDC received only 0.26 lakh quintals of phal from the KL wing, but sold 1.04 lakh quintals obviously to
dispose of the unsold stock of the previous year(s). As the unsold old stock material had a poor value, its average
sale price affected the average sale price for the whole stock (marketed) of phal during the said financial year.
29

This is obviously because Orissa has its competitors only in the phal sector, and the phal market
is controlled basically in major phal producing states like Chhattisgarh and M.P.. Bumper
production in these two states and any change in the marketing strategy therein significantly
affects Orissa as traders decide their strategy according to the situation in these states. This is
what happened in 2004.Although the Orissa phal is supposed to be more preferable than its
counterpart in the neighbouring states because low production status helps in better handing and
early marketing of the phal here in Orissa, the advance sale system in Chhattisgarh/M.P. helped
the traders overcome the limitations in these two states, and hence Orissa virtually lost its
attraction till it itself followed the same strategy in 2005.The situation in 2004 can be imagined
from the fact that in the Jeypore Division whereas the net gain per PPQ during 2002 and 2003
was Rs.1922.95 and Rs.1289.88 respectively, in 2004 there was a net loss of
Rs.1145.53/PPQ(based on the statistics provided by the KL wing).
Presently the whole of Jeypore and Navarangpur divisions and part of Khariar division are
producing phal leaves. Although the advance sale system has been introduced, not all units are
purchased by the traders leaving the unsold units for departmental working. The Department
further decides if it will pursue procurement in such units, and if so, to what extent. Hence, it is
not that the advance sale mechanism solves all problems.
The question is that if phal marketing is the only major vulnerable part of the kendu leaf trade in
the state, why go for it Even if it is said that the phal system is practically feasible in naxalaffected
areas, why not then restrict it to only those units where processing of leaves is otherwise
not feasible, so that the extent of vulnerability reduces significantly
Two reasons are usually cited against this suggestion: 1.the transaction in phal is quite negligible
in comparison to that in the processed leaves; and 2.The areas currently under phal are not
feasible for the production of processed leaves 10 (this has been seen practically in the Jeypore
Division). Recognizing these factors, it can be said that any proposal for bringing more areas
under phal should be carefully examined on the ground of above discussion so as to avoid any
increase in the vulnerability factor.
9.1..2: Reorienting the operations of OFDC:
The Corporation (OFDC) rather popularly stands for ‘corruption’ among the traders because of
the following experiences:
• Mismanagement
• Corrupt practices
• Adamant behaviour
Although the general approach of OFDC in the matter of achievement in KL sales has been that
they have achieved what was possible within the existing limitations, and also that there is no
need to worry since ‘we have the monopoly (in processed leaves)’;but the Comptroller &
Auditor General cited several instances which indicate that not every thing was so perfect with
10 There may be also a reason that in some areas working/processing is practically difficult, not to speak of
commercial viability.
30

the Corporation. For instance, there was no follow up action by the management to analyze the
causes of the lower a.s.p.(average sale price) and take remedial actions. Similarly, regarding 205
quintals of leaves found short and stolen under different central godowns of the company during
1996-2002, no recovery action was initiated (May 2003). Further, no action was taken for
realization of Rs.34.24 lakh from the original bidders who did not turn up for payment of their
dues in time(Govt of Orissa 2003).
The case of Kerala Dinesh Bidi(KDB) is an interesting example of OFDC’s dealing mechanisms.
KDB, one of the biggest bidi manufacturers of India having its unit in Kerala used to be one of
the important buyers of KL from Orissa as it procured more or less 25,000 quintals of processed
leaves from OFDC every year, and was known also for its high rate of payments. During 2000-
01, OFDC dispatched, ‘in good faith’, 25,200 quintals of KL to KDB without executing an
agreement, and raised bills worth Rs.12.36 crore against that. KDB paid only Rs.6.33 crore, and
then said that the rest was to be adjusted against what they had already paid ‘in excess’. KDB’s
argument was that upto 2000 OFDC received more than the deserving price because of the
‘erroneous fixation of price’ in the negotiation committee. The CAG remarked that such a plea
was not legally acceptable as the price was fixed by the said committee alongwith the
representatives of KDB(vide Govt of Orissa 2003, p.34). However, OFDC could not recover the
due amount mainly due to non-execution of agreement. Of course, supply to KDB has been
stopped since then despite some offers from their side for negotiation (because the offers did not
appear to provide a permanent solution to the problem), but supplying so much of KL without
any agreement indicates that OFDC did not behave like a responsible public limited company.
While unofficial sources do say that failure in this recovery does not matter much as KDB has
actually paid in excess, what does matter is that Orissa lost one of its big customers.
Mangalore Ganesh Bidi (MGB) was another important purchaser for Orissa. This company
procured more or less the same quantity like KDB, but was known for its practice of buying
some of the last sold lots. However, after 2001 the relationship between OFDC and MGB
virtually broke up allegedly due to some unfair activities of OFDC, and hence another big
customer was lost 11 .
Regarding the loss of these two customers, the attitude at OFDC has been that of a dame-care
monopolist who thinks that there is no problem in the marketing of his produce as there is no
dearth of buyers in the market. However, such an attitude is not expected from a responsible
public limited company. Even private traders would normally see this against their policy.
Although the KL sale policy of the government in 1997 recommended to open at OFDC a
marketing cell for KL so that it could shift from mere selling to actual marketing, it was
implemented only in 2005. Even in 2006(June), OFDC does not appear to have actually shifted
to ‘marketing’ in the real sense of the term, and lacks market intelligence also. Its plea(in 1996-
97) that ring formation by traders resulted in poor sale has elsewhere been rejected (vide Govt of
Orissa 2000, section 8.2.8).
11 It was a coincidence that the Mangalore Ganesh Bidi(MGB) was facing difficulty during this time owing to some
internal as well as external reasons. Its popular brand had a good market in the United States, but in 1999 the US
banned the import of this bidi on the ground that MGB had been found using bonded child labour for manufacturing
the bidis.
31

The Orissa Kendu Leaves Purchasers Association has categorically alleged that though it was
earlier decided to hold tripartite meeting between the purchasers, the KL wing, and OFDC; this
has not implemented, and even OFDC has ignored responding to their letters in the relevant
matters (vide their letter dtd.25-7-05 to Sri S.N.Burma, then Joint Secy., Forest Department). To
this the reply (unofficial) available at OFDC was that the said Association is not the association
of the actual end users, but of some agents who just act as mediators between the end users and
OFDC; and also that neither these people can help in enhancing our sales, nor is there any such
legal provision for this kind of meeting; so why go for it However, this explanation can not just
be taken for granted as the President of the Federation of Bidi, Biri Leaves, and Tobacco
Merchants, Kolkata, who also happens to be a bidi manufacturer does see the need of this kind of
meeting. Even the KL task force recommended to encourage such meetings (vide section 10.2 of
its report). Moreover, acknowledging the receipt of letters and giving appropriate reply is a
simple matter of curtsey, so this should not have been ignored.
Of course, OFDC has been struggling with several problems and it has its own limitations.
Earlier, timber used to be its chief source of income; but after the ban in 1992 this source has
been squeezed to such an extent that income of KL has become important. It is for this reason
that OFDC has retained a significant part of the royalty to be paid to the government. Such a
regular default finally resulted in a rather insulting situation when the government decided to
allow utilization of funds through a joint account so that OFDC can no more utilize the
concerned funds independently.
One of the major grievances of OFDC has been the low rate of commission paid to it for KL
selling. The KLCC has rejected the request of the Corporation to raise this rate from 4% to 8%.
While there is a argument that OFDC’s contribution in selling KL does not deserve more than
4% commission, there is a perception on the other side(OFDC) that even betel shops are getting
higher rates of gain on the products they sell, and that why should one invest on market
intelligence, etc. with such a low rate of return
What seems important is that if the rate of commission is actually a factor that has affected the
performances of OFDC, then the government should not ignore it. Either OFDC is to be stopped
from expecting more than the existing rate, or its share should be increased. Given the fact that
timber cutting has been resumed recently, OFDC’s dependency on KL commission may not be
so critical now; but if we are expecting it to operate perfectly as a commercial organization, then
we should also give respect to its genuine commercial expectations. The government should also
take initiatives to pay incentives to the Corporation in case the latter makes some outstanding
achievement in the sales.
9.1.2.1: Facilitating direct export from Orissa:
It is only Orissa which supplies leaves for export to other countries, as export-quality leaves are
essentially processed ones. In many of the phal-leaf producing states it is the bidi manufacturers
themselves who procure leaves from the government, and hence they do not intend to process
and/or grade their procurement for direct export purpose.
32

During 1987-88, more than 5941647 kg of KL worth Rs.83517016 were exported from
India(Tewari 1994, p.310).However, in 2004-05 the total quantity and value of export were
3180516 kg and Rs.185806603 respectively.
Sri Lanka and Pakistan are the two countries, which import the major chunk of the KL exported
from India. And the only agency in Orissa, which exports kendu leaves, also happens to confine
its supply to only these two countries. This agency is M/S. National Enterprises of Rourkela.
Chart 18 presents the export record of this agency (NE) for the years 1999-2000 to 2004-05:
Chart-18
Share(volume-wise/value-wise) of National Enterprises
in the total export of KL from India
Total export and share of
NE therein(volumewise/value-wise)
50
40
30
20
10
0
1999-
2000
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Total export quantity in
'00 MT
Export (quantity) by NE
in '00 MT
Total export value in '00
lakh rupees
Export (value) by NE in
'00 lakh rupees
Year
(based on the statistics provided by National Enterprises, Rourkela; Export Promotion Council,
Bhubaneswar; and DGCIS, Kolkata)
As seen in chart-18, NE has not been able to match its achievements with the national trend. This
is clearer from chart 19:
33

Total export to SL & Pak.
and the share(in %age) of
NE therein
Chart-19
Share of National Enterprises in the total export of KL
from India to Sri Lanka & Pakistan
35
30
25
20
15
10
5
0
1999-2000
2000-01
2001-02
Year
2002-03
2003-04
2004-05
Total export(quantity)
to SL & Pak. in '00 MT
Total export(value) to
SL & Pak. in '00 lakh
rupees
Share of NE in the
total quantity exported
to SL & Pak.
Share of NE in the
total value of export
SL & Pak.
(based on the statistics provided by National Enterprises, Rourkela; Export Promotion Council,
Bhubaneswar; and DGCIS, Kolkata)
What is the reason that while exporters of the country were successful in maintaining a kind of
stability in their export (total), NE failed in the same
The reasons are many. For instance, export requires transactions through international banking
whereas Orissa, particularly Rourkela, lacked this facility for years. The unnecessary delay to
making this transaction possible through Kolkata(etc.) is not only discouraging in terms of the
whole process, but also in terms of financial gain because exporters of Mumbai or Kolkata, who
need not waste this much of time, earn some interest over their receipts by this time which
contributes 5-10% on their net profit. Besides, there are some other problems also which are
faced simply because activities are controlled from Rourkela and not from Kolkata/Mumbai.
Given this situation, the Government of Orissa, which ironically runs an Export Promotion
Council, should have considered providing special concessions/facilities to NE as the latter
happens to be the only exporter from Orissa among the exporters(around 10 in number) of the
country. Instead of doing so, the attitude of the concerned agency has been as if more favourable
towards exporters from other states; and the irresponsible behavior is also reflected in the fact
that an arbitration case filed by NE has been pending since many years ‘without any justifiable
reason’. On one hand, the exporter has to struggle due to lack of facilities and problems in the
marketing; and simultaneously has also to struggle against heavy corruption and unfavourable
attitude. How can we expect such an export agency to perform better In fact, NE’s bitter
experiences of the official- as well as unofficial systems here(Orissa) may result in gradual
withdrawal from this export business of KL.
Although export accounts for only 8-10% of the total sale quantity of processed leaves, the
value(sale/export)-wise share is about 14-17%.While export provides an opportunity to access
34

overseas market, it also helps earn foreign exchange. The current situation demands that all such
opportunities having even a small market share should be individually explored properly.
Moreover, the NE case also exposes the loopholes in the state’s policy and marketing strategy.
9.1..3: Implementing a quality production policy:
Although it is the OFDC which is often blamed for the irregularities/failures in kendu leaf sales,
the fact that OFDC markets only what is supplied to it by the kendu leaf wing should draw equal
attention to the performances of the said wing so as to see to what extent the root of the problem
lies at the production level. The traders see that corruption or malpractices is confined not only at
OFDC level, but also has its roots in the KL wing. While the CAG slammed the Forest
Department for the lackadaisical attitude in disposing the seized (between 1998-99 and 2001-02)
stock of KL, thereby causing blockage of a revenue worth more than Rs.11 lakhs and also
causing devaluation of the stock(source: http://cag.nic.in/states/orissa/revenue/chapter6.htm);
misappropriation of the money meant for bush cutting and other required operations is a much
known factor.
There is a significant decline in the production of quality(grades I,II and III) leaves during the
last 30 years. For instance, in 1973 the total production of quality leaves shared 45.59%(vide
Govt of Orissa 2000, p.20) of the total production of KL in the state whereas in 2003, this share
was as low as 0.59%(Rath 2005, p.29). Analysis by the KL task force indicates that the poor
achievement in this field started in 1980s, and the situation worsened in 1990s.
Objections have been both informally and formally raised by the KL traders against irregularities
in whatever supply made by the KL wing. The quantity of undesirable leaves (like, red leaves)
has been found beyond tolerable limits; grading/binding has been found to be ‘drastically’
deteriorated, and shortage in the weight of bags has also been reported causing considerable
difficulties for exporters who require consistency in the quality and weight with tolerable limits
of deviations (see annexure-27).
Misappropriation of the money meant for bush cutting, other irregularities in bush cutting, and
improper storage arrangements are some of the important factors responsible for man-made
deterioration in the quality of kendu leaves in the state. The recent kidnapping of a Divisional
Forest Officer(KL) in western Orissa by Maoists is said to be on this ground of heavy
misappropriation. During his field visits this author got to know from a phadi chaprasi in the
Navarangpur district that bush-cutting operations started in his area of late in March although it
should have been in February (2006). The result: late coppicing and less production of quality
leaves during the collection period. Moreover, there was seen a callous attitude in protecting the
drying leaves although the weather was cloudy and rain was expected. And this was in the same
Division which saw difficulties in selling its crop because of the poor quality. If this Division
produces only phal, that does not mean that no care is to be taken at the production and disposal
stage.
A study conducted on behalf of the Kendu Patra Tolali Mancha, that was supposed to emerge as
the state-level forum of the KL pluckers, cites some examples of irregularities at phadi level in
parts of the Sundargarh and Jharsuguda districts as under:
35

In Kadamdihi phadi under Kadamdihi range, whereas only on 3 days bush
cutting has been carried out, the records show it as 12 days! Similar is the
case of Tamparkela phadi where bush cutting has been done for only 5
days but the records put it as 15 days!! Also in case of Bagdihi section,
signatures have been obtained by the Ranger for 15 days of bush cutting
whereas actual bush cutting took place only for 5 days. In this context the
Munshis who are not a party to the ‘profit’ express their inability to resist as
they fear loosing their jobs. Such type of corruption also exists in drying
and loading operations where the Munshis employ small school children
at very nominal rate (Rs. 3-4) for the purpose.(Report on the Feasibility of
KL Phadi Level Cooperitivisation, 2004 draft, p.13)
Some social scientists, who have closely seen the happenings at the grassroot level of KL
production, believe that cooperitivisation at phadi level can ensure a smooth, transparent and
better management of the phadi level activities which in turn can ensure better production and
sale both in the quantitative and qualitative sense. Current system purchases KL from the
pluckers on individual basis, but under the proposed system the government would purchase KL
from pluckers’ cooperatives to be created under the Self-Help Cooperative Act, 2001. Such
cooperatives would have no control on the sales, and their responsibility would be only upto the
stage of transferring the KL lots to the government for sale purpose. Hence, this cooperitivisation
would not threaten the government’s monopoly in sales; rather it would augment the efforts
made/required for better production and sale of KL in the state. This would also help check
corruption, and would also help develop a greater sense of responsibility among the pluckers.
The existing (only in name or in pen & paper) phadi committees are not expected to be able to
achieve this much.
There seems an increasing tendency in the KL wing to get excuses for most of its dissatisfactory
performances on the plea of the so called ‘dying trade’ of KL and policy changes in the
neighbouring states. But old purchasers say that some of the genuine the advantages, which were
available to them 15 or 20 years ago, are gone. For instance, earlier the bags(processed) used to
weigh almost 60 kg (net) even after the loss of moisture; but now the gross weight is 60 kg and
the net weight is coming to 52-53 kg(personal communication, Jaydev Dey, Kolkata).Similarly,
old lessees say that their system was more effective. For instance, phadis used to receive leaves
upto 15 th June unlike the practice of discontinuing procurement by the end of May. Of course,
changing times and changing situations might require new modalities; but if such modalities
cannot be as effective as the old ones, what is the use of adopting them
Regarding the changing situation, although targets are fixed to enhance the production of quality
leaves, there are some inherent problems, which need to be addressed. For example, closure of
phadis in sanctuary areas proved detrimental in some cases. Although the quantitative production
was not much affected due to such closures, qualitative production did suffer significant set back
in some areas. For instance, in Angul Division(KL), the closure of 21 phadis in the Purunagarh
and Narsinghpur Ranges is said to have reduced the production of quality leaves by about
50%.What is also significant in this regard is that although the phadis were closed in accordance
of the Wild Life Protection Act, 2002 to ensure uninterfered natural dynamics in the sanctuaries,
36

this has actually not been successfully ensured as smugglers have taken advantage of the closure.
Unwanted rains sometimes result in the damage of the leaf quality of an entire area. Further,
climatic changes and loss of KL growing areas to development projects, etc. also account for the
reduction in quality.
However, the KL wing cannot be allowed to get excuses for its negligence that affects the sale of
leaves. The lackadaisical approach of the authorities is reflected in the fact that whereas the
KLCC in 2004 advised the Additional P.C.C.F.(KL) to investigate the fire related damages, the
minutes of the meeting for 2005 crop year do not even mention any follow up action in this
regard. Similarly, the cost norm is approved every year; but the achievements corresponding to
the same are not analysed in the following year. The Committee decided in 2005 that all efforts
would be made to reduce the fixed costs further during the said year, but there was no mention to
the achievements in this regard in the minutes of the meeting held in the following year(2006).If
such a high level committee functions just for formality, then how can the agencies responsible
for production and sale be monitored properly
Sale is controlled from Bhubaneswar although from business point of view Sambalpur is actually
the most feasible place for this purpose for all the stakeholders. It is said that to check corruption
(manipulation by local traders), Sambalpur was not preferred; but an impartial enquiry would
reveal that this decision has not proved very beneficial to the government’s (OFDC’s) marketing
capability. A simple example is that to get purchase rights over phal leaves in the Khariar KL
Division, the trader has to travel a long and uncomfortable distance to Bhubaneswar, that too
without an guarantee that he would receive a proper and fair dealing in the matter. Would he be
interested for this if he gets a better alternative in the neighbouring Chhattisgarh state There
should be periodical review of decisions like this on the basis of sound statistical data so that it
can be confirmed if the decision has actually met its objective.
Media reports repeatedly allege that some field level officers are actually spending more time at
Bhubaneswar as a result of which the field activities are being neglected, affecting the
production. Sincere officers of old times also believe that their modern counterparts are having
more facilities, but are less sincere and more opportunistic in attitude. Of course, this is not true
for all the staff; but how many officers have achieved the kind of credit, which one DFO
achieved in the Khariar Division in the 1990s by making the leaves of his Division better
saleable Although this officer got transferred from Khariar in due course of time, his
achievements are still proving highly beneficial for that Division. In fact, his achievement shows
that much can be done at the level of production so as to ensure better sale prices for the leaves.
The KL task force recommended that grading of leaves into various classes should directed by
market requirements, and that OFDC should conduct periodical market surveys to ascertain what
kind of quality composition market prefers. Of late, government has commissioned a market
study on KL through Indian Institute of Forest Management, Bhopal. The results of this study are
yet to come(June 2006).However, the recommendation of the task force should also be extended
to the nature of lots in terms of their volume/weight. Because, some bidi manufacturers in and
outside Orissa prefer our processed lots, but they are not comfortable with the limitations of the
sales procedures. For instance, each bag contains 12 bundles each of 5 kg weight; but some
37

manufacturers prefer bundles of lesser weight (in other words, lesser leaves) as they don’t want
to take risks of misappropriation of the costly leaves by the bidi rollers who receive such bundles
from them. Some people also want flexibility for some kind of retail sale because they are not in
a position to purchase at a time the minimum number of bags/lots fixed by OFDC. Limitations of
this kind are said to be one of the factors, which are responsible for little or no interest of the
traders, and/or bidi manufacturers of many parts of the country (like northern states) in
purchasing processed lots from Orissa. Of course, the issue of the weight of the bundles does not
seem to have any importance so far the overall sales are concerned, because purchasers keen on
this issue are very marginal in number. Still, this can be taken just as an example the different
kinds of requirement in the market.
9.1..4: Ensuring a market-friendly pricing mechanism:
The current situation demands that every care should be taken at all levels of production and
marketing so that our sale prices remain market-friendly without any net loss. This can be done
through an effective check-and-balance approach.
For instance, the following chart(#20) indicates that there has been a substantial increase in the
establishment cost during the last few years:
Chart-20
Growing establishment cost in KL operations
Est. cost in Rs./quintal
600
500
400
300
200
100
0
478
449
347
372
2003-04 2004-05 2005-06 2006-07
Year
(based on approved cost norm statistics as provided in the KLCC
proceedings of the corresponding crop years)
Whereas the purchase price(per keri) of KL has increased only by 2.38% between 2003 and
2006, the establishment cost has increased by more than 37% during the same time. This is
certainly a matter of concern, which needs proper attention 12 .
12 And we have been told recently that steps are being taken in this direction though there is no expectation for a
substantial decrease in the establishment cost in the recent future.
38

About 40 to 50%(sometimes even more than that) of the total cost of production is spent on the
procurement from pluckers. A time may come when even reducing the procurement price may
be necessary. In that case, sharing the KL grant directly with the pluckers can compensate their
loss. In fact, a review of the objectives and achievements of the KL grant policy is very urgent,
as it has been increasingly felt that this has deviated from its original purpose, and that the
present circumstances demand a revised approach.
The KL task force (2000) has recommended several measures many of which appear either fully
or partly feasible for implementation towards reduction of production cost.
9.2: Concessions to the bidi industry:
The production cost for bidi has increased substantially during the past few years. The price of
kendu leaf is said to have almost doubled whereas that of coal(used to generate heat to which the
bidis are exposed just after rolling in order to increase the durability) and tobacco has risen by
three times and 100% respectively (per. comm.. M.C.Patel).
The government is revising the bidi binders’ wages from time to time, and this wage is
increasing. While bidi manufacturers manage to pay lesser wages on the basis of a negotiation
with the binders, availability of binders is decreasing due to better scope in alternative
professions.
One of the major grievances of the legally operating manufacturers is the provision in the Excise
policy to exempt excise cess up the production of 20 lakh bidis for manufacturers of unbranded
bidis. They complain that not only this has resulted in a substantial loss of revenue for the
government, but also has promoted the growth of duplicate bidi as manufacturers take advantage
of the provision and prefer to change their status to that of the small scale unit holder which
deserves this exemption. In West Bengal, this duplicate bidi is supposed to have been able to
capture 20-30% of the share in the bidi market. Hence, authorized production looses its share to
this duplicate bidi.
Flavoured bidi has some market abroad, but samples cannot be sent against trade enquiry easily
as courier companies do not accept such tobacco products. Bidi manufacturers think that if
policy level changes are made to solve their problems, then they can sustain somehow atleast for
one or more decades despite changes in the smoking habits of the people. The government
should therefore incorporate the possible strategy of redressal of the genuine grievances of bidi
manufacturers so that the end market can be secured under an integrated strategy for better
marketing of KL.
9.3: Develop alternate utilities of commercial importance:
9..3..1: Tobacco-free bidi
Several innovative ideas have been implemented not only to stabilize the bidi market, but also to
harness the export potential. Flavoured bidi is one such attempt which uses various flavours like
vanilla, strawberry, grape, and clove, etc., added to the tobacco, to provide a more pleasant
39

feeling in bidi smoking. And this has proved successful also.
The extreme attempt however has been the tobacco-free bidi. This was made in view of the antitobacco
campaign, and herbal materials were used to provide the smoker a health-friendly
smoking opportunity. However, this has virtually failed to attract the bidi-lovers not only
because it fails to satisfy the addicted body & mind, but also it may change even the normal
sensations of taste to a displeasing one because of the materials used. One such bidi developed
by Orissa Beedi Shramik Mahasangha, a federation of bidi workers, could not click in the market
for this reason thought it used more than 10 herbal ingredients.
There is still a hope that if developed properly keeping in mind the addiction of the bidi smokers,
and to provide them a strong and effective puff though in the non-tobacco way; the tobacco-free
bidi can successfully help the bidi industry. Needless to say, this needs careful R&D work. If
successful, not only it will help the bidi industry sustain the anti-tobacco campaign; but will also
save the bidi rollers from the health problems resulting from exposure to tobacco.
40

A packate of Madhuri bidi, and its leaflet
41

9..3..2: Non-smoking utilities:
It has been always found that an item having only one end use is at risk of a dwindling business
when there is any disturbance in the end market. Sal seed has been a good example of this.
To save kendu leaf from such a situation, its other useful properties should be explored and
verified for commercial purposes. For instance, it should be verified if taking meals in the platter
made with kendu leaf accelerates digestion.
Vasundhara made an attempt to see the effectivity of the aqueous extract of kendu leaf on water
contaminated with arsenic, or fluoride, or some other toxic radicals. The R&D work, that was
conducted with the paid technical assistance of the Regional Research Laboratory, Bhubaneswar
demonstrated that the KL extract was indeed effective in removing arsenic and lead from
water(demineralised). Some effectivity was also recorded in case of nitrate and fluoride 13 . This
awaits further validatory work, but at the same time it has demonstrated that alternate utilities of
KL can be developed for commercial purposes.
The Regional Research Laboratory was entrusted with the responsibility of developing some
alternate utilities for KL, but its performance in this direction has not been very satisfactory so
far. The KL wing, which paid RRL for the research work related to KL, is now expecting refund
of atleast a part of its payment.
10.. The issue of smuggling:
Smuggling of kendu leaves from the state has been a comparatively subsided but hot issue since
some years. There has been even a private/media assessment that the turnover in this illegal
sector is almost equal to that in the legal sector(government trading).Although some experienced
officers of the Forest Department(KL wing) dismiss this assessment as an exaggeration, they do
admit that smuggling of KL is actually taking place in considerable quantities.
What is quite interesting is that in some areas, it is the production of government’s bush cutting
that is smuggled out. This happens when the government fails(intentionally or unintentionally) to
harness the full potential of the area where bush cutting has been done. When the pluckers find
that the government is not going to procure their collection, they see no fault in giving the same
to the smugglers. And sometimes the smugglers are in a position to offer better price as they save
on bush cutting and some other legal liabilities. However, the ground reality can be a more
complex affair sometimes involving officials of the Forest Department who are known to help
the smugglers (for instance, vide the media report published in the ‘Samaj’,17the June’06, p.10,
Bhubaneswar edition).
Two major smuggling routes have been identified: one in western Orissa, and the other in
southern Orissa. Field- as well as media reports indicate one Masum(Mausum) Khan to be the
mastermind behind the smuggling from atleast three KL ranges(Kalimela, MV79, and
Malkangiri) in the Malkangiri district. Few years ago, Khan’s exploitation of the potentiality of
13 For more details please log on to:
http://www.vasundharaorissa.org/Technology/New_Clues_to_Organic_Detoxication_of_Water_revised_.pdf
42

kendu leaves in these three ranges was assessed to be roughly 60% of that of the departmental
production, i.e., about 20,000 quintals(phal).These smuggled out leaves are supposed to be sent
to the neighbouring Andhra Pradesh as Masum Khan reportedly works as an agent for a KL
leaseholder in Andhra.
On the other hand, production of 500 crore bidis/year should require 30,000 quintals of
processed leaves which means that manufacturers in Orissa should purchase the same quantity
from OFDC every year. Unfortunately(and it indicates the superficiality of the marketing
strategy) OFDC has no record to exactly assess how much is being actually purchased by the
units in Orissa because some of the purchasers have inter-state business and have units also in
other states. However, those confined to Orissa are supposed to purchase only about 3000
quintals(approx.).A private estimate puts the total quantity of purchase by all kinds of purchasers
having their units in Orissa, at 15000 to 25000 bags, i.e.15000 quintals maximum. Wherefrom
then the rest of the quantity comes Although some manufacturers say that they procure phal
leaves from other states, proper enquiry and raids on bidi units would confirm the extent to
which they are dependent on illegal supply of KL within the state. In fact, seizure of such illicit
material is not very unknown in the state; but what is normally seized is supposed to be but a
fraction of the whole.
To add to this is the conversion of KL into bidi by the pluckers themselves. Closure of phadis
facilitates this practice in many areas.
Naxalite problem has certainly affected official KL procurement from the affected areas like
Malkangiri. One estimate puts the quantity of phal leaves smuggled out to Andhra Pradesh from
the boarder areas of Orissa and AP, at around 80,000 quintals though this does not necessarily
mean all the stock being sourced from Orissa. However, this suggests that the total quantity
smuggled out in/from the state is quite a big one.
However, naxalites cannot be blamed for all the smuggling because the improper policy of the
government is partly responsible in the whole matter. For instance, suppliers of grower’s leaves
in the Athamallik-Rairakhol region are known to get much better price from the smugglers than
from the government. The irony is that the government stopped procuring GL from the Rairakhol
and Athamallik KL Division areas for some time the advantage of which went to the smugglers
and bidi contractors. After the strong warning of the DFOs of the concerned Divisions that unless
procurement is resumed, smuggling would be encouraged; the government ordered to start the
procurement again 14 .
Although GL(grower’s leaf) has some of its own problems(like, it contains a hole near the
petiole, made for hanging the leaves in a garland form for sundrying), and it is further
discouraging to know that the suppliers of GL tend to keep the best of their stock for the
smugglers, still the government has decided to pay, in addition to the revised price, an additional
amount to the growers towards the processing at their end. Also, the KLCC approved an
14 Despite the resumption of the procurement of GL in 2003, there was a report in 2004 that during the season, KL
worth about Rs.50 lakhs was(is) smuggled out from the Athamallik area every month(vide The Darshan, 5-8-04).
While the police as well as Forest Department staff are allegedly in nexus with the smugglers in many such areas,
river route is reportedly used also by the smugglers for easy escape.
43

increased target for phal production keeping in view the smuggling in the Malkangiri area, and
this has proved successful.
But the question is, whether it is advisable for the government to ensure a mechanism through
which all the quantity now smuggled out is diverted to the state godowns so that the
production(and sale) quantity can increase upto 6 lakh quintals or more, and the state exchequer
gets an additional revenue
The perception at OFDC is that it has got a threshold limit beyond which any transaction (sale
quantity) would cost it dearly. Hence, it is not interested to take an additional burden of so much
quantity. Further, as the marketing division (KL) of OFDC believes, there is also a threshold
limit of the total turnover value given which any substantial increase in the transaction quantity
beyond its threshold limit would mean a proportionate decrease in the average sale value per
quintal.
However, there is a scope of harnessing the potential of atleast a part of this illegally transacted
quantity because with an effective quality control mechanism and marketing strategy, the state
agencies should be able to profit from this increase in the sale quantity. Moreover, if the
smuggled out quantity does not remain confined to a tolerable/ ‘safe’ limit, it may affect the
business of OFDC from various sides(like, bidi industries in the state may reduce their quantity
of purchase from OFDC almost to negligible). Hence, business of kendu leaves through illegal
means should be carefully monitored and controlled if not totally stopped.
In this connection, the option of priority to local sales can be considered. In the Ranapur region,
about 2000 families are claimed to be dependent on bidi rolling, and they desire that local leaves
should be sold to them. For many of them establishment of phadi is against the interest since that
would mean diversion of local leaves to other parties through the Forest Department. They can
‘tolerate’ the phadi provided the Department takes care of their requirement. They are also
reportedly ready to pay a reasonable price(source: Puspanjali Satpathi).
A retired and highly experienced officer of the KL wing also opines for sufficient quota for the
bidi manufacturers of the state(per. communication, G.K.Dash). Of course, OFDC has to see its
commercial interest; but if this quota system can provide multiple benefits like decrease in the
interest of bidi industries in smuggled leaves, and greater employment generation (for bidi
rollers) through the establishment of more number of bidi industries, then such an option should
be duly considered.
11.The question of denationalization:
Ramesh Chanchlani, a bidi merchant of Delhi, who has been closely associated with the kendu
leaf trade and the bidi industry since three decades, believes that nationalization of kendu leaves
in many states is the major factor responsible for the crisis in the bidi industry. His argument
suggests that the nationalized trading is not flexible enough to cope with the changing market
dynamics as a result of which the price of bidi leaf as a chief raw material has not been quite
compatible with a desirable stability (or decrease) in the bidi prices. He believes in the principle
that as the market, so should be the return expected by the stakeholders(like primary collectors);
44

ut in practice certain things are fixed(like the procurement price) which is why the nationalized
trading has not been compatible with the changing dynamics 15 .
While some like Chanchlani opine for denationalization of the trade, there are traders who
believe that this would lead to a chaotic situation because there are so many people at various
levels ready to have their bite in this business cake, once they get this freedom the current
organized structure of the business would collapse.
In fact, one may recall the situation soon after the merger of the major kendu leaf producing
princely state areas with the parent province in 1948-49.These ex-states used to grant monopoly
rights in KL procurement, but after merger the Government of Orissa allowed the people of these
areas to exercise their full tenancy rights and the monopolists of the ex-state period now had no
right to claim any stake in the kendu leaf growing on private lands. As the earlier system was
about to collapse, petty traders lacking adequate experience and financial capacity entered into
the business resulting in an unnecessary competition leading to the collection of immature leaves
and thereby damaging the quality. Smuggling was also rampant. To check this, the GoO had to
declare KL as an essential commodity through the promulgation of the Kendu Leaves(Control
and Distribution) Order, 1949 (Govt of Orissa 1959, quoted in Rath 2004, p.12).
The major weak point in nationalized trading is that the produce is considered to be a thing to be
traded as per the order of the government, i.e., a sincere and dedicated personal touch is often
found lacking. There have been some officials who had been sincere in the matter to one or more
extents, but their contribution has not been properly acknowledged in many cases leading to a
discouragement. Even there are grievances more serious than that. The approach that it is not
‘our trade’ but ‘government’s trade’ might have favoured a lackadaisical attitude of the
authorities in such matters, but the current situation demands that all such internal issues be
quickly resolved.
Another matter of attention is the need of a single agency that will deal with both
procurement/processing and trading. The current system of giving the responsibility of
procurement to the KL wing and that of sale to OFDC sometimes seems to be allowing them an
opportunity to blame each other in order to escape any allegation of mismanagement or
irresponsible behavior at their level. Of course, the current system does involve the DFOs or
their subordinates of the KL Divisions in the sale/auction process, so it is not that the authorities
of one organization are completely ignorant of the problems/limitations of the other; but since
the current situation demands a uniformity in the approach from procurement to sales, and also
OFDC is getting more & more discouraged in the trading because of some of its un-addressed
grievances, the possibility of giving complete responsibility to the KL wing may be seriously
considered if existing issues can not be addressed properly under the current system. Reshuffling
15 In fact, many bidi manufacturers of Madhya Pradesh(undivided) reportedly shifted their units to other states when
kendu leaves were nationalized in this state in 1989 causing a substantial hike in the price of the leaves from just
Rs.5 to Rs.30, per kg. The direction of the state government to the manufacturers to pay a Dearness Allowance @2
paise per point further worsened the situation as the manufacturers found their cost of production now increased to
Rs.82.45, much higher than that in the competitor states. It was also alleged by them that the quality of the
production had deteriorated after nationalization, and that the production had also not been sufficient. The
manufacturers boycotted auctions(of KL) to protest the lower leaf content in the standard bags
(www.india-today.com/itoday/06101997/business.html).
45

of this kind has been done in many other departments/organizations of the government, and
hence implementing this may not be an extraordinary step. This would also help avoid the
unnecessary delay and other complexities in communications between the two organizations. But
before that it should be considered if a proportionate increase in the commission of OFDC, and
also a more coordinated effort of the two organizations would be more feasible than making
responsible any single organization. Because, the system of two organizations devoted to two
different (inter-dependant) objectives is ideally supposed to be very useful. The question is, if we
have been efficient enough to successfully harness this potentiality at the production and
marketing levels. The performances so far suggests that the answer is not totally negative; but we
should try to make it positive to the maximum possible extent. What is our strength should not
become a handicap.
The present situation in the market does not favour a disorganized procurement and sale
arrangement, so denationalization is not advisable at present keeping in view the interest of
thousands of poor pluckers as well as the fame of the Orissa leaves. The experience of semiprivatization
through advance sale system has also been not encouraging. What is therefore
advisable is to make the procurement and sale systems more effective instead of escaping the
social responsibility of welfare state.
However, the nationalization policy should not ignore the rights of the pluckers in areas where
departmental procurement has been stopped showing commercial reasons. Since the policy does
not allow sale of kendu leaves to any body other than the authorized agency, the only option
before these people to sell their leaves to private traders becomes illegal. This is an extremely
contradictory situation where the government does not procure from the pluckers, and at the
same time does not allow them to avail the services of private traders. There should be specific
provisions for such areas, and also for areas inside Protected Areas to address the genuine
livelihood needs of the people.
12.The Konark Bidi experiment: lessons learnt:
M.C.Patel & Co., one of the important bidi manufacturers of Sambalpur region, earlier used to be
lease holders of kendu leaf. In 1952, they had a considerable stock of unsold leaves which
prompted them to go for bidi manufacturing so that this stock could be profitably used. Since
then they have successfully established themselves as a bidi manufacturer.
The initiative of the Orissa Forest Corporation to open a bidi factory at Angul had more or less a
similar kind of reason behind it. The average quality of the leaves of the Angul region is not so
good(these are said to be of grade IV quality).In order to make a more profitable use of the same,
the Konark Bidi Industry was established at Angul. Like other bidi units, it also manufactured
bidi on contract basis through commissioned agents. The production started in 1977-78 with an
annual figure of 74,35,800 bidis which increased to 1,62,38,325 bidis in the next year. However,
it was soon realized that Konark Bidi was going to be a loss-making unit with almost no chance
of financial survival. In 1994-95, only 1,54,600 bidis were manufactured, and the unit was closed
permanently in 1996 16 .
16 The statistics relating to the production of Konark Bidi was taken, by courtesy Sri Muralidhar Pal & Sri Bijay
Kumar Pani, from the relevant statement prepared by the Corporation.
46

The reasons of failure of this initiative were as under:
• The unit started working under the technical support of Kerala Dinesh Bidi(KDB), but
the support actually proved to be detrimental on various grounds. For instance, the
tobacco selected(and purchased) for bidi making was not of the kind preferred in Orissa,
and hence the product(Konark bidi) earned a bad name in the market. It was later tried to
replace this tobacco and give the product a new flavour, but it was difficult to convince
the customers.
• Internal factors like mismanagement, misappropriation, lack of sincerity, and lack of
effective marketing strategy also accounted for the failure.
• The cost of production was not competitive with that of the private units as, unlike the
latter, Konark Bidi was not supposed to do any kind of malpractices as regards the
payment of various dues and duties to the government.
• The sense(constructive) of ownership, which cultivates the qualities like sincerity, and
commitment among the authorities, and encourages to take risks with a good-will to save
the business, was often lacking at managerial level.
While the Konark Bidi experiment does not favour value addition of poor grade and/or unsold
stocks, through bidi making(at government level); it also reminds of the fact that the state trading
of kendu leaf has survived till date only because Orissa has a monopoly in the production and
marketing of processed leaves. If this monopoly were not there, then the state trading would have
collapsed probably years ago due to its internal weaknesses.
13. Conclusion:
The Kendu leaf trade in Orissa has been threatened partially by external factors like the decline
in the demand of bidi, and also partially by internal factors like corruption, mismanagement, and
lackadaisical attitude at various levels of production, processing, and marketing by the
government agencies. If internal factors are dealt with properly, then external factors do not seem
to be a major threat for the Orissa kendu leaves atleast for the coming few years as our leaves are
still considered to be of first quality in the country. However, for long term sustenance in the
commercial sector, alternative utilities of kendu leaves should be developed on a war footing so
that one or more alternate markets can be ensured.
The task force headed by Dr. Ramvir Singh submitted their report to the government in October
2000, in which they have analysed in detail the problems in the state trading of KL in Orissa, and
have suggested a comprehensive strategy for restructuring this trade. Highly valued for its
analysis and suggestions, this report however seems to be partially outdated in the backdrop of
the recent-most experiences. For instance, it recommended(#10.11) that the KL wing should be
headed by an officer not below the rank of Additional Principal Chief Conservator of Forests,
who should be assisted by two Chief Conservator of Forests, one for operations and one for sales
& vigilance. While the first part of this recommendation has been implemented 17 , the second part
(appointment of two CCF level officers) is not considered to be feasible on various grounds
17 In a recent (August) decision, a CCF rank officer now heads the KL wing.
47

though the intention behind such recommendation is well respected. Similarly, its
recommendation (#10.3.2) to convert three additional divisions from process to phal system for
reducing production costs, no more seems a comfortable one. However, this report can be
certainly used as a guideline on the basis of which fresh review of the situation should be done at
appropriate intervals (say, twice a year) by a committee that include atleast two representatives
from the non-government sector who have been working honestly and seriously on one or more
aspects of this trade at state level. This committee can either replace the existing KLCC, or the
latter can be made more dynamic to take up this task effectively. For, without a dynamic
attitude(constructive) the dynamics of the KL trade can not be properly dealt with. Hence, every
effort should be made to ensure such a dynamics at all levels of the KL production and
marketing.
___________________
48

REFERENCES
Govt of India: MHFW (2004), Report on Tobacco Control in India, Ministry of Health and
Family Welfare (downloaded from internet)
Govt of Orissa (1959), Report of the Forest Enquiry Committee
Govt of Orissa (2000), Report of the Task Force(on Kendu Leaves Trade), Forest Department
Govt of Orissa (2003), Report of the Comptroller and Auditor General of India for the year
ended 31 March 2003(Commercial, Govt of Orissa), Office of the
Comptroller and Auditor General
ILO(International Labour Office) (2003), Making ends meet: Bidi workers in India Today
(downloaded from internet)
http://cag.nic.in/states/orissa
Kendu Patra Tolali Mancha(2004 draft), Report on the Feasibility of KL Phadi Level
Cooperitivisation, Vasundhara
Mallik, R.M.(undated), Procurement and Marketing of Kendu Leaves in Orissa:A Study of
Economic Deprivation and Benefits to Primary Collectors,
Navakrushna Chowdhury Centre for Development Studies
Milenkovic, Z.(2004), Bidis continue to dominate Indian tobacco market,
Euromonitor International (downloaded from internet)
Rath, B.(2004), Kendu Leaves, Vasundhara
Tewari D.N.(1994), Tropical Forest Produce
www.india-today.com
www.tobaccojournal.com
49

ANNEXURE
50

Annexure-1
Gradation of Kendu Leaves as practiced currently in Orissa
(as available from Orissa Forest Development Corporation)
Grade Colour Texture
I Green, lusturous Shinning greenish, grey Thin
II Same as I grade Thin
III greenish to greenish yellow, greenish gray Thin
IV - S Same as Quality - III Thin to medium
IV - M Same as quality- III Thin to medium
IV Mixed Color leaves fit for manufacture of Bidi. Thick
Grade Size and body condition
I 22 cms. up in length and 8 cms. up in width; free from pubescence, mould, dirt, crack; pliable; midrib and
veins not prominent; leaf blades not wavy.
II 18 cms. up in length and 8 cms. up in width; rest all like I grade.
III Leaves above 15 cms. length; may be little pubescent with slightly prominent veins; free from mould, dirt &
other defects. Leaf blade may be slightly wavy which will not affect production of Bidi.
IV - S 15 cms. up in length; pubescent; may contain mould cracks upto 10% of leaf area.; prominent midrib and
veins; leaf blade may be wavy.
IV - M 12 cms.up in length. Others same as IV - S.
IV Mixed sized and shape, hairy , velvety with prominent veins; uneven surface; mould or blemishes or holes
together not exceeding 20% of the leaf area.
Grade Remarks
I Should not include immature leaves. The bundle may contain upto 20% of II grade leaves.
II Should not include immature leaves. The bundle may contain upto 10% of III grade leaves.
III Bundle may contain upto 10% of quality IV- S.
IV - S Bundles may contain upto 10% grade IV -M leaves.
IV - M Bundle may contain upto 10% of quality IV and contain slightly immature leaves.
IV May contain upto 10% below specification leaves fit for making one Bidi.
There may be further two grades as under.
M – 1 Mixture of leaves of I & II grades in the proportion of 1 : 1.
M – III mixture of leaves of III & IV- S grades in the proportion of 1 : 1.
NB – Leaf length is to be calculated from the starting of leaf area and not from petiole.
51

Year
Annexure-2
Production, delivery and sale of KL in Orissa
KL production in lakh
quintals
Delivery in lakh quintals Sold in lakh quintals
1973-74 3.52 3.52 3.5
1974-75 3.39 3.39 3.37
1975-76 3.98 3.97 3.93
1976-77 4.13 4.13 4.1
1977-78 3.99 3.99 3.95
1978-79 3.83 3.82 3.75
1979-80 4.08 4.08 4.07
1980-81 3.08 3.08 3.07
1981-82 3.02 3.01 2.98
1982-83 2.95 2.94 2.92
1983-84 3.42 3.41 3.39
1984-85 3.94 3.91 3.9
1993-94 4.98 3.75 4.99
1994-95 4.91 4.07 4.91
1995-96 3.86 3.07 4.07
1996-97 5.15 2.98 4.68
1997-98 4.95 2.92 3.96
1998-99 3.91 4 3.77
1999-2000 4.7 4.6 4.03
2000-01 5.19 5.54 5.33
2001-02 4.07 4.42 5.45
2002-03 4.6 4.6 5.31
2003-04 4.77 4.51 4.38
2004-05 4.54 4.54 3.88
(source: OFDC; KL wing; and Mallik, undated)
Annexure-3
Average cost of production versus av. sale price of KL
Year Average cost of production/quintal in rupees Average sale price/quintal in rupees
1973-74 135.98 248.88
1974-75 145.89 258.31
1975-76 149.97 262.41
1976-77 150.59 275.8
1977-78 151.02 315.48
1978-79 172.19 339.27
Year Av. cost of production/quintal in rupees Average sale price/quintal in rupees
2000-01 2080.46 3443.97
2001-02 2455.56 3365.1
2002-03 2559.99 3831.91
2003-04 2609.57 3330.57
2004-05 2551.68 3414.34
2005-06 2728.17 2999.79
[source: Mallik, undated; KL wing; and OFDC(av. sale price for 2000-01 to 2005-06 calculated
from the sale value and sale quantity]
52

Annexure-4
Sale and expenditure ( in crore rupees) KL trade
Year Sale turnover Expenditure
2001-02 157.16 82.9567
2002-03 191.33 98.608
2003-04 160.99 105.27
2004-05 128.24 99.988
2005-06 154.035 84.346
(source: reply statement of the Chief Minister in the Orissa assembly on 31-07-06)
Year
Phal KL
delivered to
OFDC in lakh
quintals
Annexure-5
Quantity delivered versus quantity sold in the state trading
Phal KL sold in
lakh quintals
Processed KL delivered
to OFDC in lakh
quintals
Processed KL sold in lakh
quintals
1991-92 0.52 0.52 4.34 4.34
1992-93 0.69 0.69 4.91 4.81
1993-94 0.63 0.63 4.36 4.36
1994-95 0.67 0.67 4.25 4.24
1995-96 0.43 0.43 3.41 3.64
1996-97 0.41 0.41 4.58 4.27
1997-98 0.36 0.36 3.86 3.6
1998-99 0.71 0.71 3.29 3.06
1999-2000 0.82 0.82 3.78 3.21
2000-01 0.81 0.81 4.73 4.52
2001-02 0.79 0.73 3.63 4.72
2002-03 1.02 1.02 3.58 4.29
2003-04 0.97 0.89 3.54 3.49
2004-05 1.12 0.35 3.42 3.53
2005-06 0.26 1.04 3.46 3.87
(source: OFDC)
53

Year
Annexure-6
Sale value of KL
Total sale value of phal in lakh rupees Total sale value of processed in lakh rupees
1991-92 1298.16 12313.1
1992-93 1401.62 12319.51
1993-94 1578.85 13220.92
1994-95 1574.12 12506.46
1995-96 1174.94 11802.01
1996-97 945.14 12027.69
1997-98 547.09 10236.44
1998-99 1567.7 12493.62
1999-2000 2532.93 13056.2
2000-01 2934.96 15421.44
2001-02 2940.7 15399.15
2002-03 3887.27 16460.18
2003-04 3020.81 11567.13
2004-05 612.29 12635.38
2005-06 1016 13713
(source: OFDC)
Year
Annexure-7
Approved establishment cost
Approved establishment cost in Rs./quintal
2003-04 347
2004-05 372
2005-06 478
2006-07 449
(source: Proceedings of KLCC)
54

Annexure-8
Partial breakup of the expenditure (Rs.105.27 crores) in KL operations in 2003
Plucker's wage
Purchase of Grower's leaf
Bush cutting operations
Payment to seasonal staff(excluding binders)
(source: KL wing)
Rs.55.35 crores(52.57%)
Rs.0.57 crores(0.54%)
Rs.6.97 crores(6.62%)
Rs.12 crores(11.39%)
Annexure-9
Approved cost norm for 2006 operations
Fixed cost(for 4.2 lakh quintals including phal)
Item
Amount in rupees in lakhs
675
Bush cutting 410
Repair & maintenance of phadi 1124
Seasonal staff 49
Gratuity 240
Misc. contigency 2
Research 1883.5
Establishment cost 2.75
10% capital cost 4386.25
Total:
Variable cost(for 4.2 lakh quintals including phal)
Item
Process
cost(Rs./qtl)
Phal in
advance
sale
areas(Rs./
standard
bag)
Phal in departmentally
worked areas(Rs./ppq)
Purchase price of KL 1134 537.5 1204
Drying & storage 125 108
Processing, binding and bagging 426 168
Transportation 36 48
World Food Programme 1
Unforeseen 1 1 1
Entry tax(1% of the purchase price of KL) 11.34 5.38 12.04
Total: 1734.34 543.88 1541.04
(source: KLCC proceedings for 2006)
55

Annexure-10
Export of KL by National Enterprises, Rourkela
Total export
quantity in '00 Export (quantity) Total export value Export (value) by NE in '00 lakh
Year MT by NE in '00 MT in '00 lakh rupees rupees
1999-2000 29.775 3.99 15.542 1.97
2000-01 32.642 2.83 20.004 1.68
2001-02 40.986 3.4 19.244 2.15
2002-03 35.051 1.8 21.881 1.11
2003-04 31.179 1.44 19.414 0.87
2004-05 31.805 2.88 18.58 1.95
Total export
(quantity) to Sri
Lanka(SL) &
Pakistan(Pak.) in
'00 MT
Total export
(value) to SL &
Pak. in '00 lakh
rupees
Share(in %) of
NE in the total
quantity
exported to SL
& Pak.
Share(in %) of NE in the total value of
export SL & Pak.
Year
1999-2000 28.091 14.996 14.2 13.13
2000-01 27.822 17.32 10.17 9.69
2001-02 31.98 17.33 10.63 12.4
2002-03 31.04 20.4 5.79 5.44
2003-04 28.13 18.55 5.11 4.69
2004-05 29.09 18.14 9.9 10.74
(Note: In 2005-06, NE exported 1750 bags, i.e. 105 MT worth Rs.81.5 lakhs.)
[source: National Enterprises(NE); Export Promotion Council, Orissa; Directorate General of
Commercial Intelligence and Statistics, Kolkata]
56

Annexure-11
Employment generation through KL operations in 2004
District
Employment generated in lakh
persondays
Bolangir 22.39
Malkangiri 16.41
Sambalpur 14.74
Angul 12.74
Sundargarh 11.64
Bargarh 11.2
Boudh 7.94
Sonepur 7.58
Deogarh 7.32
Nuapada 6.55
Navarangpur 6.43
Kalahandi 6.09
Cuttack 0.36
Mayurbhanj 0.97
Jajpur 0.03
Dhenkanal 1.46
Keonjhar 2.59
Jharsuguda 2.84
Kandhamal 5.82
Ganjam 0.52
Nayagarh 0.87
Rayagada 0.1
Koraput 2.13
Total 148.72
(source: reply statement of the Chief Minister in the Orissa assembly on 31-7-06)
Annexure-12
Target of KL production in Orissa in lakh quintals, unless otherwise specified
Year Processed Phal Total
1998 Not available Not available 5
1999 Not available Not available 5
2000 Not available Not available 5
2001 3.75 0.75 4.5
2002 3.75 1 4.75
2003 3.75 1.1 4.85
2004 3.5 1.25 4.75
2005 3.5 0.5 4
2006 3.5
90000 standard bags (aprox.40000 quintal) in advance sale areas,
and 30000 quintals in departmentally worked areas
(source: KL wing)
57

Annexure-13
Qualitative production of KL(in quintals) in Orissa
Year Gr.I Gr.II Gr.III Gr.MI Gr.MIII Gr.IVS Gr.IVM Gr.IV
Gr.IVW/
RA GL
1998 595.8 NIL 2150.4 4.2 594.6 1067.4 12561.8 308140.1 NIL 9141.6
2000 714 NIL 2763.6 122.4 1009.2 951 13556.4 421824.6 NIL NIL
2002 579.7 NIL 2483.4 13.8 445.2 285 9596.4 344414.9 NIL NIL
2004 275.4 NIL 1497 1.2 232.2 NIL 5658.8 327353.2 NIL 6181.8
2005 339 NIL 1921.2 NIL 147 NIL 6805.2 332765.5 NIL 4369.2
Year
Total(excluding phal)
1998 334255.85
2000 440941.2
2002 357818.4
2004 341199.6
2005 346347.1
(source: KL wing)
Annexure-14
Total production of KL(in lakh quintals) in Orissa
Year
Total production of
KL
1998 3.91
1999 4.7
2000 5.19
2001 4.07
2002 4.6
2003 4.77
2004 4.54
2005 3.75
(source: KL wing)
58

Annexure-15
Production of bidi by licensed manufacturers of Orissa, as recorded by Central Excise &
Customs (region-wise figures which usually correspond to the units defined by the CEC)
Year Jharsuguda Sambalpur Bargarh(etc.) Belpahar Rest of Orissa Total production
1996-97 1999374590 2142336000 3625100 1075000 740952500 4887363190
2000-01 3972720990 2883076000 2697700 869000 623769475 7483133165
2005-06 1616355400 2536264000 1564000 9645000 1501340707 5665169107
(source: Central Excise & Customs, Bhubaneswar)
Annexure-16
Export of bidi from India
Item 2003-04 2004-05
Export in Value in rupees Export in Value in rupees
thousand
number
thousand
number
Other bidi 769254 92627091 193589 42763055
Other than paper
rolled bidi
manufactured
without machines
675734 113549272 1657638 231055808
(source: Directorate General of Commercial Intelligence and Statistics, Kolkata)
The two categories of bidi mentioned in the above table refer to bidis other than paper rolled
bidis, i.e. the bidis produced and consumed in India in extensive quantities. Paper rolled bidis are
produced in India in a negligible quantity.
The major importer countries are the Arab countries, though our bidis are also sold in European
countries, South Africa, United States, etc..
Annexure-17
Procurement of Siali fibre by the KL wing
Siali(Bauhinia vahlii) fibre(pata) is traditionally used to tie KL bundles. This natural fibre has a
property of getting stronger when exposed to water, and does not cause harm to the tied edges of
the bundles. The KL wing procures this fibre every year from the local suppliers.
The government has been granting lease for Siali fibre collection, to the KL wing since many
years. Accordingly, the DFO(KL) of the concerned division acts as the lessee, and royalty is paid
to the government against this procurement right. This right is of the nature of a monopoly where
59

concurrent lease has not been granted to TDCC, another govt agency. Usually concurrent leases
are avoided in order to ensure sustainable collection.
Following is the division-wise procurement (by the KL wing) figures of Siali fibre for the year
2003-04:
Division
Procurement in quintal
Athagarh 129.62
Keonjhar 95.07
Angul 40.74
Dhenkanal 83.39
Sambalpur(South) 209.27
Rairakhol 277.48
Deogarh 309.114
Bamra 250.17
1 keri/kera of siali fibre contains 20 pieces of the fibre of size about 6-8 ft. in length. Each
bag(60 kg) requires approx. 2 keras of this fibre.
Recent procurement prices fixed for this fibre, by the KL wing, indicate a maximum offer of
Rs.19 to 20 for the quantity of fibre required for one quintal of processed KL, i.e. max. Rs.12 for
one bag(60 kg KL).
[source: Office of the PCCF(lease section), Bhubaneswar; ACCF(KL); DFO(KL),Phulbani]
60

Annexure-18
An example of the alleged irregularities done on the part of the KL wing
(Published in the Oriya daily The Samaj,23-5-06, p.4)
Note: This media report speaks about the irregularities in bush cutting operations, as well as
harassment to the pluckers in some of the remote areas of the Athamallik KL division.)
61

Annexure-19
Media’s concern over the smuggling of KL
(Note: The report, published in The Sambad, dtd.14-05-06 says about the huge quantity of KL
smuggled out in the Rairakhol-Athamallik region by mafias who have established themselves to
such an extent that they even invest on bush cutting. The newspaper projected KL as the green
diamond, and cited example to convince that the lower sale price is not always necessarily due to
the poor quality.)
62

Annexure-20
An analysis, in the media, of the problems in the KL business
(Published in The Anupam Bharat, 17-11-04)
[Note: This analysis by Sri Gokul Meher, then the Secretary, Orissa Kendu Patra Karmachari
Sangha(KL Workers Union), Sambalpur says that although the current sale mechanism is said to
fetch better price, it fails to ensure timely disposal of the stock at the good price (hence, the profit
gained by the disposal of some stocks is significantly affected by the poor disposal of the rest of
the stock) as the mechanism is affordable basically for big buyers, thereby limiting the number of
purchasers. Further, the traders manage to know beforehand the offset price; hence the prices
offered by them are accordingly adjusted. Meher hoped that if things are properly managed, then
the state would be able to successfully sale about 6 lakh quintals of kendu leaves annually. ]
63

Annexure-21
Concern over the implications of declining market of bidi on the KL pluckers
(Published in The Bhaskar, 23-7-05)
(Note: This media report is on the proceedings of the workshop of the construction- and forest
workers, that was held at Bhubaneswar in July 2005.It was observed in the workshop that
although the impact of the anti-tobacco campaign had not been so remarkable, still the KL
traders took this plea to reduce the purchase price of the same.)
64

Annexure-22
An example of the pluckers’ plight
(as reported in The New Indian Express, 29-5-06)
65

Annexure-23
Media concern over the injustice done to pluckers
(as reported in The Pioneer, 6-4-06)
66

Annexure-24
An example of the lackadaisical attitude of the KL wing
(as reported in the New Indian Express, 25-5-04)
67

Annexure-25
Media concern over the natural damage to the KL crop
(as reported in The Pragatibadi,20-5-04)
(Note: This report speaks about the damage to the KL crop in the Malkangiri region in 2004 by
unseasonal rains. It also points out the lacuna at various levels of the KL operations, and
describes how the mafias take the advantage of the same, with an example that whereas the
potential of the district is worth about Rs.100 crores, the govt procured KL worth about Rs.20
crore only. However, the assessed potential may be exaggerated or superficial to some extent, as
the KL wing would like to say.)
68

Annexure-26
Whose fault is this
(Local people and the media expose the KL wing for its irregularities
in the Ranapur block, Nayagarh district)
69

(Note: The above matter was published in ‘Thengapali’, 15 August 2005 issue alongwith a
photograph from a press agency EPA. As shown in the photograph, the phadi at Dengajhari in
the Ranapur area was not well-maintained resulting in the loss of the leaf-quality due to exposure
to rains, etc.. The said phadi was actually built by the local people, as the KL wing did not
finance the construction; but the way this phadi was used and maintained by the concerned
department was more disappointing. In 2002-03, after protests by the local communities the
authorities decided to open only two phadis though their survey suggested a potential for more
phadis. The local people found enough reasons to suspect that the local authorities of the
Department had intentionally neglected their cause. However, situation has changed particularly
in 2006 after a new DFO took initiatives to take care of some of the major problems. The local
MLA has also intervened, and in 2006 there were three phadis and one temporary collection
center in this area.
It may be mentioned here that ‘Thengapali’ is the newsletter of Maa Maninaga Surakshya
Parishad, a federation of forest-protecting communities of the Ranapur block.)
70

Annexure-27
Letter of M/S. Overseas Traders
71

Annexure-27(contd.)
Letter of M/S. Overseas Traders
72

Annexure-27(contd.)
Letter of M/S. Overseas Traders
73

Annexure-27(contd.)
Letter of M/S. Overseas Traders
74

Annexure-27(contd.)
Letter of M/S. Overseas Traders
75

Annexure-27(contd.)
Letter of M/S. Overseas Traders
[Note: This letter of M/S. Overseas Traders was responded to by the Additional P.C.C.F.(KL)
with a thanks that the feedback would help improve the practices. He however explained that
although the operations were carried out by skilled persons, variation might be expected despite
all efforts; and therefore requested to intimate specific instances on production related
issues(item # 1,2,3 in their letter), vide letter of the APCCF(KL) dtd.21-10-05, bearing number
5691/1KL(Misc.)17/05. OFDC feels that most part of this letter corresponds to the
76

esponsibilities of the KL wing, and that OFDC has already done whatever possible within its
limits.]
77