"Natural rubber should be brought under the Agreement on Agriculture (AoA) provisions and the bound rate accordingly increased to help the plantations brace up for the WTO regime and make them sustainable in the long run," sources in the United Planters Association of South India (Upasi) said.

They said the WTO-bound rate for natural rubber was as low as 25 per cent, while for synthetic rubber it was 40 per cent.

Unless the bound rates were moved upwards and import duties increased accordingly the sector would find it difficult to even survive, they added.

Already the plantations were affected by the rock bottom prices which continued to remain depressed for the fourth successive year.

Prices of Lot Rubber had declined from Rs 48 per kg in 1996 to Rs 37 (1997), Rs 27 (1998 and 1999) and Rs 26 by end 2000.

During the last three years the average price of RSS4 grade had been below the benchmark price declared in 1998.

While the prices refused to go up, cost of production had increased considerably due to the escalation in labour, land and input costs causing considerable hardship to the growers, Upasi sources said.

The planters were having difficulty in cost recoveries but such low prices did not make much difference to other countries which were already producing Natural Rubber (NR) of comparable quality at a lower cost.

After the lifting of QRs this could be critical as about 87.1 per cent of production in 87.5 per cent of area was done in an average size of 0.5 hectares held predominantly by 9 lakh small planters.

In the meantime, production has increased and is projected at 6,45,000 tonne in 2000-01 compared to 6,20,000 tonne during 1999-2000.

Rubber crop, which was dependent on the vagaries of weather, had a long gestation period and the grower was in no position to trim the production according to demand.

The government had initiated market intervention efforts since August 1997 to procure 50,000 tonne of natural rubber on its account through State Transport Corporation.

About 90 per cent of the procurement had been done and was still continuing but with little effect.

Upasi sources said that the agri status will help natural rubber to compete better against the synthetic rubber. Though 11 times more energy inefficient than NR, synthetic rubber enjoys a higher bound rate limit.

NR growers were paying agricultural income tax at prohibitively high rates despite it being classified as an industrial raw material, sources said.

(PTI)