Natural rubber production shrinks 15%

By: | Published: April 18, 2015 12:07 AM

The country's natural rubber (NR) production, at 6,55,000 tonne, has shrunk 15%, compared to 2013-2014...

The country’s natural rubber (NR) production, at 6,55,000 tonne, has shrunk 15%, compared to 2013-2014. According to Rubber Board statistics, this output fall coincides with 4% increase in consumption at 10,18,185 tonne.

“At the current level of low price, production is hardly likely to collapse in the next fiscal too, as growers in Kerala, the country’s rubber belt, are demoralised by continuing fall in domestic demand for rubber,” says Sibi Monipilly, general secretary, Indian Rubber Growers’ Association.  At present, rubber plantations are also weathering the production off-season.

The price of natural rubber in India  bears a strong correlation to crude oil price, in a chain of supply-demand factors. While the crude oil price gains, the price of synthetic rubber used in the manufacturing of tyres grows higher. This whips up demand for natural rubber and escalates the price.  Domestic price of NR is also dependent on the vagaries of international demand for rubber. In a single month, the domestic price of bellwether grade RSS-4 has collapsed by 15% to Rs 117 per kg.

However, as NR consumption in the country in 2013-2014 is up a tad, compared to the previous year, the NR imports to India, at 414,606 tonne, have increased by 15% vis-a-vis the previous year. The imports are up because of easy availability of crumb rubber in the international market, trading sources said. According to Rubber Board statistics, NR imports  grew at a rate of 23.07% during 2004-05 to 2013-14.

As a policy intervention measure, Kerala, the state most impacted by the blues in the rubber economy, had held parleys with tyre firms to come out with an understanding that the industry would buy more NR domestically. However, due to red tape wrangles, the state’s promise to give purchase tax waiver was active only by the tail-end of the production season. Still, tyre firms had brought about 48,000 tonne through this intervention. The state’s budgetary announcement to buy rubber at Rs 150 per kg is also yet to take off. The commerce ministry has been working on a comprehensive NR policy, holding discussions with stakeholders in the rubber supply chain. Considering the shifts in international rubber supply dynamics, experts at the Rubber Board have proposed that the blueprint for the policy must recognise the changing commercial value of NR and the emerging challenges in market integration.

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