The Hindu Business Line : Rising rubber prices: Growers merry, small units worry

RUBBER prices have crossed the Rs 60-a kg mark after a lapse of eight years signalling the revival of prosperityin rubber plantations. While the growers are jubilant, the atmosphere is gloomy where small manufacturing units are concentrated as the price hike has adversely affected about 5,000 of them in the country.

Though according to reports at some places the prices flared up to an intra-day high of Rs 61 a kg, the official announcement of the Rubber Board was Rs 60 a kg for RSS 4 and Rs 59 for RSS 5. It was in 1995 rubber prices reached a record level of Rs 65 a kg.

Growers who appeared to be generally enthusiastic about the boom in rubber prices feel that the current trend will prolong indefinitely. In Kanjirapally-Mundakayam belt , a major rubber-growing area, buses were plying with posters displayed on either side advising the growers to hold on the stock as the prices would touch Rs 100 a kg in the near future.

The world rubber consumption as per the statistics compiled by the International Rubber Study Group ( ISRG) has been going up at a reasonably good pace. Of the 18.97 million tonnes consumed in 2003 as against 18.09 mt in 2002, NR accounted for 7.8 mt and SR 11.16 million.

The demand growth of NR in the overall rubber offtake has reflected in price rise. The price of block rubber improved to 132 cents by the close of February 2004 and stayed more or less at the same level during March.

Meanwhile, about one lakh tonne of rubber smuggled out of the State through check posts create a short supply situation. The number two buying by the smugglers is always above the running market price. This along with the adverse climatic conditions and unofficial trading through village markets create acute scarcity of the raw material in the open market, sources said.

As a result of the illegal transaction, the agency that undertakes transportation is entitled to get Rs 25,000 per load besides the usual vehicle rent when it crosses Karikka border and reaches Karnataka where only 4 per cent purchase tax is levied. In Kerala, however, the tax is 12.65%. The large-scale smuggling would come to an end if only a uniform purchase tax is introduced both in Kerala and Karnataka.