Kerala government goes on Rs 100-crore rubber shopping spree to fix price freefall

Written by M Sarita Varma | Thiruvananthapuram | Updated: Jan 29 2014, 09:58am hrs
With the import levy hike failing to arrest the freefall of domestic price of natural rubber (NR), the Kerala government has stepped forward with its shopping trolley. Since nearly 90% of the rubber produced in the country comes from Kerala and the price fall disturbs the state's economy, the Congress-led UDF Government has rustled up hectic plans to procure rubber from the open market.

"We are working out procedures to effect rubber procurement at the earliest. The idea is to procure rubber from the open market to meet the demand from the state's production units," CM Oommen Chandy told the assembly on Tuesday.

In addition, Kerala has also sought Rs 100 crore for rubber procurement from the commerce ministry's price stabilisation fund.

Kerala plans to procure rubber from the open market to meet the demand from its production units, Chandy said, responding to a calling attention motion. "NR price is falling on account of the price slump in the international market. Though the Centre had agreed to Kerala's request to levy a charge on rubber imports, the steep drop in price had made this move ineffective."

From a highpoint of Rs 248 a kilo in 2011, price of RSS-4 grade rubber had fallen to Rs 200 a kilo in 2012, Rs 150 per kilo in 2013 and in 2014 January it stands at Rs 135 per kilo. While about five million families are impacted by fall in rubber prices, almost 40% are dependent on income from rubber alone. In Kerala, about 70-75% of the rubber farmers own less than one hectare of land.

LDF legislature Raju Abraham claimed that major tyre companies were the biggest beneficiaries of the price slump in NR. According to him, in 2011, when the price of rubber was Rs 248 per kg, a truck tyre was priced at Rs 17,000 and in 2014, when the price is Rs 135, the same truck tyre is costing Rs 23,000. "It was too late, when the state could get the Centre to levy import duty to arrest the price high since at this stage, international price was dropping at very fast pace," he argued, blaming the state for losses to the tune of Rs 10,000 crore for the rubber farmer.

Following the fall in prices, tapping for latex has come to a standstill in the rubber plantations. Apart from the price fall in rubber sheets, price hike in fertilizer has also added to the gloom.

While rubber growers blame marketing pitch from Vietnam rubber dealers, selling the equivalent grade of Indian RSS-4 at less than $2 per kg, consuming industry has been pointing fingers at the inconsistency in domestic availability of rubber. "Often, there is shortage in domestic market, which needs to be made good by import," Niraj Thakkar, president, AIRIA reacted, pointing to the 5% shortfall in production that Rubber Board had admitted in its latest report.