Financial Daily from THE HINDU group of publications
Friday, Jun 18, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
`Rubber exports unlikely to touch last year levels'
Vipin V. Nair
Kochi , June 17
RUBBER exports are unlikely to touch last year's record level as international block rubber prices are ruling lower than the domestic price, industry sources say.
``Even if an incentive of Rs 10 is offered, we cannot export block rubber at the current prices. Vietnam block rubber is available at $1,220 c.i.f (cost, insurance and freight),'' Prof K.K. Abraham, President, Kerala State Cooperative Rubber Marketing Federation (RubberMark), said here at the sidelines of the World Rubber Congress 2004.
At this rate, international price works out to be Rs 54 a kg, while the price of block rubber in the market is about Rs 58 a kg.
Last fiscal, 75,000 tonnes of rubber were exported. Of this, block rubber made up 30,000 tonnes.
The cost of scrap rubber, which is the raw material to process block rubber, is around Rs 54-55 and the processing cost Rs 4-5, the total production cost works out to be Rs 58-59.
This proposition also made production of block rubber unattractive, Prof Abraham said. ``I don't know how we can export block rubber.''
Exports of rubber have already begun to slow down. ``Our exports in April and May were only 2,500 tonnes. The Pala Rubber Marketing Society has exported some 500 tonnes in June, while the RubberMark exported only 1,000-odd tonnes,'' he said.
Prof Abraham did not give any projections on the export front but said: ``It would be lower than our exports last year.''
Unless the Government comes out with a clear stance on the issue of providing exports subsidy and measures are taken to improve the production of TSR, exports are likely to be affected.
The Commerce Ministry is yet to take a decision of continuing the subsidy on rubber exports. During last fiscal, the Government gave subsidies ranging between Rs 3.5 and Rs 5 for various grades of rubber.
According to sources, the Rubber Board's proposal to extend subsidy for exports this fiscal too is under consideration.
``It is likely that the subsidy could be lower than last year,'' the sources said.
The Government is under pressure from the user industry, particularly tyre manufacturers, for extending subsidy to exports.
According to the industry, exports were one of the reasons for the sharp rise in domestic prices.
However, the growers say they should be allowed to export when the user industry imports its needs.
Last year, rubber and its goods exports fetched over Rs 2,500 crore, while imports cost Rs 750 crore.
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