Keralas procurement drive loses fizz, rubber prices crash

Written by M Sarita Varma | Thiruvananthapuram | Updated: Mar 29 2014, 09:03am hrs
Despite rubber farmers' bravado last week over facing the alleged price-battering by the consumer industry, prices have crashed from Rs 160 a kilo to Rs 147 a kilo in a span of 10 days. This is mainly because the expected white knight, the Kerala government's rubber procurement machinery, had slipped on its word.

"It was on the steam of this promise of procurement at higher price that the rubber farmers held on to their stocks when tyre firms offered relatively low prices. To cover the production costs, the growers would need at least Rs 169 a kilo," said Siby Monipally, general secretary, Indian Rubber Growers' Association (IRGA).

The Kerala government had promised to procure rubber at Rs 171 per kilo, which is the average price of RSS-4 grade rubber in the last three years. It had entrusted three procurement agencies Rubber Mark, Marketfed and RPS ( Rubber Producers Societies) to put their act together on this. The procurement process had also got going from March 4. In the initial days, the procurement had hauled up the price from Rs 147 a kilo on March 13 to Rs 160 per kilo in a week.

However, as the poll atmosphere thickened and the fund allotment dwindled, the procurement activity fizzled out. The natural rubber (NR) price is back to Rs 147 a kilo.

Plantations in Kerala, which account for nearly 90% of the rubber in the country, are now in a spot. The state plan to procure about 10,000 tonnes of NR through market intervention is yet to be realised.

A spokesperson of Marketfed, the outfit signed up for procurement, says that all the three agencies together have garnered as much as 500 tonnes from the market in a week. These agencies have told the state that it was not feasible for them to get busy in procurement at the current handling charges rate of Rs 4 per kilo.

When asked if the Rs 10-crore fund kitty was too small to fuel the rubber procurement at Rs 171 a kilo, state finance minister K M Mani expressed confidence that cash flows would be replenished as and when it was necessary. Kerala had put in application to dip in from the Centre's Rs 100-crore price stabilisation corpus for rubber.

The Automotive Tyre Manufacturers' Association (ATMA) had complained of shortage of rubber sheets in the domestic market, but not now. The shortage has become an easy reason for the consuming industry to turn to import options.

International market for rubber has been obliging the tyre firms, with Bangkok prices moving in the range of Rs 137 to Rs 139 a kilo.