Tyre industry supports rubber replantation for increasing production

With the prices of rubber rising due to rising domestic demand from the tyre industry, rubber farmers are hoping for a fresh replantation package from the centre government. Even the tyre industry is demanding for a fresh replantation package for raising production.

“We support the Rubber Board’s plea to the Centre for jacking up the replantation incentive from the current 20% of the farm costs to 30%, Rajiv Budhraja, Automative Tyre Manufacturers’ Association (ATMA) director-general, told FE.

About 57% of rubber from Indian plantations go to tyre makers. In the absence of a lucrative replantation policy, rubber farmers are unwilling to cut down their old trees and replant them with high yielding ones.

A rubber tree has an economic life of 28 years, not counting its first six to seven years of early treehood. In the later years, latex yield falls.

Instead of sweetening up the replantation mission, in some categories, the Rubber Board has even brought down the replantation subsidy. Under traditional plantation category, replantation subsidy was brought down to Rs 19,500 per hectare from Rs 20,000 per hectare. “Rather than spend about Rs 1 lakh in replanting, the farmers would prefer to continue to make the most out of their old trees”, Josukutty Antony, president, Rubber Nursery-Owners Association, says.

If the commerce ministry promptly takes up the issue of motivating rubber farmers, the re-plantation subsidy could go up by about Rs 10,000 per hectre to Rs 29,500 per hectare. However, considering that annual budgets and plan outlays on rubber are firmed up in advance, any revisit to the perks package is likely only next year.

Rubber Board sources confirmed that the best of the re-plantation perks in 2007-2011 outlay has been skewed in favour of the non-traditional areas. The board’s field studies also reflect apprehensions that farmers are going easy on re-plantation.

Interestingly enough, even in the meeting of the Rubber Board council early this month, it was an ATMA spokesman who first brought up the need to make the replantation subsidy sufficiently sweet to lure the reluctant farmer. The tyre industry is anticipating a huge domestic supply shock in 2011-2012. The domestic demand-supply gap was already at its worst, when consumption grew by 4.4% and production dropped by 3.2% in 2007-2008.

With Chinese tyre imports ‘dumped’ at almost 30% lower prices and higher import costs for both synthetic and natural rubber, the main option for the tyre industry is to play catalyst to domestic rubber cultivation.

An analysis that ATMA recently undertook had come out with the discomfiting finding that India’s share in South Asia’s replanted rubber area has, at 6,900 hectare, shrunk to 3.6%. In 2004, this was (at 7,000 hectare), as high as 10%.