The Hindu Business Line : ‘Rubber growers will get better prices in domestic market’

Kottayam, Dec. 8 The rubber scene is now turbulent with the reports that the prices are declining alarmingly and therefore there should be some intervention at this stage to stop the downtrends. A political party has come out with the request that the Government should purchase rubber at Rs 100 a kg to prevent further price fall and thus protect the growers.

While the call for higher prices is based on vested interests with no rationale behind it, they do not analyse how the prices reached the unethical levels some time ago. In an interview with Business Line, Mr Sajen Peter, Rubber Board Chairman, analysed in detail the present situation.

Excerpts from the interview:

Uncertainty is the symbol of the global market. The fluctuations in rubber prices are often unpredictable and unexpected. Not only that, after an artificial hike beyond expectation, if the price declines naturally, the outcry that ‘the price shatters’ is perhaps heard only in respect of rubber.

A suggestion now heard from many quarters is that rubber should get Rs 100 a kg as a remunerative price for all times. It is good also. But one who observes the price for the last two years could convince that it is not an immediate possibility. The average annual price during the last two years has been Rs 92 a kg. In 2007-08, it was reduced to Rs 91 a kg. But on an assessment of the current trends, the average annual price would be somewhere near Rs 95 only. The average price during the last six months till September is above Rs 122 a kg. This more or less clearly indicates as to where the price should be in the coming months.

The anticipated production during the current financial year is 8.75 lakh tonnes. So far, 45 per cent of the target has been achieved which comes to 3.96 lakh tonnes. Considering the present situation, there cannot be more growth in consumption beyond the expected levels. Not only that, the financial recession, which has affected the whole world, creates uncertainty in the market.

As China and India, the leading Asian countries, have emerged as financially strong, the global recession has not affected the rubber sector so far. Major portion of the rubber is being used by the automobile industry. Any weakness in this area would affect rubber also. Indian rubber growers are lucky to have a strong domestic market and therefore, they would get better prices at their own door steps.

The consumption and production factions are complimentary to each other and no doubt it would ever remain favourable to rubber. But leading rubber producing countries such as Malaysia, Thailand, Indonesia, etc for the time being will have to depend on imports. This tripartite alliance has formed an international rubber consortium. But in the rubber sector mainly occupied by small holders, controlling production is not as easy as in the case of OPEC interfering in oil production.

The small holders have all the facilities for an effective interference in the market and Rubber Producers Societies (RPSs) would also help them. The RPSs at Thripura unanimously proved that they could watch the situation in the market and do the needful. If it is possible to supply enough rubber to the domestic market and a fixed percentage is to be exported, then price stability could be ensured. For this the small growers should strive hard to strengthen their own RPSs if not they will repent.