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Aravindan

Kottayam , Jan. 5

"Rubber, rubber every where, but not a drop (kg) in the market" a dealer said sarcastically. This is the harvesting season when the rubber growers tap the trees enthusiastically. But it is in short supply even during this peak production period. Who is deliberately holding the stock? Who is the culprit? The Rubber Board Chairman, Mr Sajen Peter, talked about all these in an interview to Business Line.

"Normally this is the time when all should expect better availability of rubber in the market. Fortunately enough, growers have maximum tapping days also. I think the issue is linked to prices.

"If you look at the situation right from July 2005 onwards, domestic price was lower than the international price up to October 2006 for 15 months. From October onwards, there has been a different trend.

"The domestic price has been increasing and from a marginal difference initially, it shot up to Rs 15 and beyond.

Intermediaries

"The Rubber Board had cautioned the farmers that it was not a welcome trend but as of January 4, 2007 again there is a price difference. Domestic price are higher than the international price by Rs 11. There is no justification for this as the situation is artificially created. Our farmers are incapable of holding excess stocks to manipulate the market. So it can be only some intermediaries. These stockists are financially sound, who can afford to do this.

"The Automotive Tyre Manufacturers Association (ATMA) has said the tyre industry will import 40,000 tonnes during the next three months. In March 2006, they made a similar statement but nothing happened. Even as per the advanced licence scheme, they could have easily imported 80,000 tonnes last year.

To oppose ATMA demand

"But they actually imported only 35,000 tonnes. I do not know why they did not import the rest 45,000 tonnes, which they could have done without paying import duty.

"To assess the situation taking into consideration the declaration of ATMA, I am not aware whether there is a move to demand a reduction in import duty. But any such move will be vehemently opposed by the Rubber Board because there is no justification for reduction of import duty.

"The highest consumer of natural rubber (NR) in the world is China where production is substantially low. Still they have a 20 per cent import duty. The whole thing has been manipulated just to stake a claim for reduction of import duty. On the other side, I do not welcome the current situation also because our price will have to necessarily follow the international price in the context of globalisation as it has given more opportunities for the rubber farmers.

"There are some consumers who say the price is to their disadvantage. If the stock is insufficient, then the question remains as to why they did not stock sufficiently when the price was ruling lower than the international price till October. In any case, the Rubber Board is equally committed to the role of the consumers. Both the consumers and producers are the two sides of the same coin. That is why I came out earlier with the press release cautioning the farmers also against rising prices. This will have to be studied in depth. If a situation arises wherein the price difference is more than Rs 5 a kg to the disadvantage of the farmer, the Board will push up exports. There is a global shortage for rubber and we have sufficient export potential."

More Stories on : Interview | Rubber | Economic Offences

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