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Monday, Feb 11, 2002

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Agri-Biz & Commodities - Rubber
Government - Agricultural Policy

Kerala rubber subsidy scheme may not boost exports



THE Kerala Government's recent Rs 40-crore subsidy scheme for rubber export is unlikely to attract more exports. For, the newly-announced scheme is applicable only to trading organisations in the co-operative sector as the Rubbermark, Rubco, Rubber Marketing Societies and companies promoted in the RPS sector apart from Infam and the Warehousing Corporation procuring rubber at the mininum statutory price.

A committee comprising the Additional Chief Secretary, Agriculture Production Commissioner and the Principal Secretary for Co-operation would monitor progress of the export and district level sub-committees presided over by the District Collectors would evaluate the export efforts in each district. But these have not become functional owing to the indefinite strike of the State Government employees. Even if the committees are formed, it is doubtful whether anybody would come forward to export rubber.

Export of rubber needs sizeable finance. The co-operative organisations undertaking rubber trade are not financially sound to make quantum purchases without credit. The Kerala Government is not prepared to stand guarantee for the co-operatives' credit from the State Co-operative Bank. The Rubber Board has also a scheme to give subsidy of Rs 3.50 per kg for export of rubber. It would be available to any exporter, whether in the co-operative sector or otherwise. It is possible to export rubber without loss taking advantage of the combined assistance of the Kerala Government and the Rubber Board, amounting to a total of Rs 7 per kg. Both the subsidies are available to a co-operative. The domestic price of RSS 4 is currently hovering around Rs 30 per kg while the international price for the grade is fluctuating between Rs 28.50 and Rs 29 per kg. Even if the purchase is made at the MSP of Rs 32.09 per kg, subsidised export can bring in an element of profit, after meeting the outgo on interest on credit and other incidentals. But no co-operative has faith in the Kerala Government's offer.

Past experience prevents them from taking the plunge. The Government has not disbursed the promised export assistance on about 13,000 tonnes of rubber sold to Singapore a couple of years ago. Rubco has to receive about Rs 5 crore in the operation and the Rubbermark about Rs 2 crore. .

There are rubber dealers doing large volume of business, but they do not want to enter a field with uncertain financial return. Current events portend firm trends in the overseas market and there is possibility of profit for anybody attempting export now, utilizing the Rubber Board's export assistance.With over a month after the Union Ministry's fiat, the prospects of STC entering the rubber market are still bleak.

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