Feb 15: There seems to be no end to the rubber crisis even as several agencies appointed by the union and state governments are engaged in the procurement of all varieties of rubber, especially RSS-4 grade and RSS-5.Among the major factors that have led to the fall in rubber prices were the import policy of the centre, which allowed the import of used rubber tyres and rubber, the recession in the automotive sector and the general decline in industrial growth.
The State Trading Corporation (STC) and the Rubber Marketing Federation were initially entrusted with the task of procurement of rubber. STC had set itself a target of procuring 10,000 tonnes, of which 9,000 tonnes has already been procured. Recently, the state government decided to intervene and speed up procurement with a fresh target of 20,000 tonnes within a month.
Owing to the failure of STC and Rubber Marketing Federation (Rubbermark) to effectively procure rubber, the state government has now entrusted the task of procuring the rubber toKannur-based Rubco and the Kerala State Warehousing Corporation at Rs 2 per kg above the prevailing rate. Rubco was set a target of procuring 5,000 tonnes of rubber, mainly RSS-4 and RSS-5 grade (a superior variety of ungraded rubber).
Though domestic rubber prices have declined over the last one year, they are still Rs 4 per kg higher than the international price. (See chart)Rubber prices had touched a peak of Rs 70 per kg during June 1995 for RSS-4 grade. Kerala, the state most affected by the current crisis, accounts for over 92 per cent of the total production of rubber in the country. Of the total 8.5 lakh rubber growers in the state, 98 per cent are small farmers with about 7.25 lakh growers cultivating three lakh hectares. Another 1.25 lakh growers have two hectares and above.
The supply of rubber has outstripped demand by over 50,000 tonnes at present. Unless, this excess rubber is absorbed either by procurement or by industry the rubber crisis is likely to continue. But the situation is likely toimprove in 1998-99 when domestic production would be 6.19 lakh tonnes and utilisation 6.58 lakh tonnes while in the year 2000 the demand would be 7.46 lakh tonnes and domestic production 6.95 lakh tonnes only, according to industry estimates.
Globally, rubber prices have always been below the prices prevailing in Indian markets and international prices are also falling due to the recession in south-east Asian economies.
Lately, the Rubber Board has taken up cultivation of rubber in Assam, Tripura, Karnataka and Tamil Nadu, which will further affect Kerala growers.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
