Rubber growers are going through a tough period with poor yield and leaf fall disease adding to their current problem of lower prices, which are hovering around Rs 150 a kg.
“Rubber growers have been squeezed this year with monsoon being 150 per cent higher than normal. Trees have been affected by the leaf fall disease which has reduced production by 20-40 per cent,” said M.P. Cherian, Chairman of the United Planters Association of Southern India’s rubber committee.
“Excess monsoon rainfall this year has also reduced the number of days a grower taps the rubber tree,” said George Valy, President of Indian Rubber Dealers Federation.
“The residual money in the pocket of planters has come down now and they could begin facing more problems if the situation continues for another six months,” says Cherian.
According to Rubber Board Chairperson Sheela Thomas, there has been a slight decrease in production as well as consumption this year.
Domestic production during the first half of the current fiscal was 4.26 lakh tonnes (lt) against 4.85 lt in the same period a year ago.
The fall in prices has been nearly 23 per cent from a high of Rs 196.50 a kg that growers got for RSS-4 grade on August 10. During the same time last year, prices were ruling at Rs 163. The RSS-4 grade is being used by the consuming industry, particularly tyre makers, who consume 65 per cent of the country’s total production of over nine lt.
“Small farmers with holdings less than three hectares are the ones who are facing problem due to current prices. They are in real trouble,” said N. Radhakrishnan, Adviser, Cochin Rubber Merchants Association.
“With small farmers being unable to get tappers, they will be badly hit,” said Valy.
According to the Rubber Board, over 90 per cent of 10-11 lakh rubber growers are small farmers.
“Though prices of RSS-4 are ruling at Rs 153 a kg, a grower can actually expect that for only 65 per cent of the rubber he produces. The remaining gets scrap rubber rate,” said Cherian. Currently, scrap rubber fetches around Rs 106 a kg.
“Growers seem to compare current prices with the record Rs 240 a kg they fetched two years ago. But domestic prices were higher than global prices until November,” said Rajiv Budhraja, Director-General of Automotive Tyre Manufacturers’ Association.
Rising costs “Growers are facing problems of rising costs in managing plantations. Costs have gone up four times since 2008-09,” said Cherian.
For example, the rubber firms’ per employee cost that was Rs 135 a day four years ago has increased to Rs 450-500 now, including statutory payments such as provident fund, bonus and medical care.
According to Valy, growers have to pay a minimum of Rs 3 a day for a tree for tapping 100 trees. “This turns out to Rs 600 a day for a grower who has 200 trees,” he said. “Small and marginal growers have their own difficulties and limitations to afford the increased cost of inputs and labour wages,” said Sheela Thomas.
“In the last couple of years, prices of inputs such as fertiliser have also gone up,” said Radhakrishnan.
“Farmers realise 95 per cent of farm-gate prices here compared with 60-70 per cent in other parts of the world,” said Budhraja.
Higher Imports Growers and traders point to imports as one of the reasons for fall in prices.
“Till November, 2.38 lakh tonnes have been imported. We could end up importing a record three lakh tonnes this fiscal,” said Valy. In 2012-13 fiscal, 2.17 lt were imported.
“Despite cheaper imports, tyre companies have been affected by weak automobile sales. Pan-Asia, there are 3.5 lakh tonnes waiting to be offloaded into the market,” said Cherian.
Car sales during April-November period of the current fiscal dropped by nearly five per cent. Sales of commercial vehicles declined by 17.5 per cent during the same period.
According to Sheela Thomas, rubber consumption in the first half of the fiscal was 5.72 lt against 5.8 lt in the year-ago period.
“The price scenario should be delinked from imports. Production dropped during July-September and even now, future availability of rubber continues to be a concern,” said Budhraja.
“We had indicated to Government officials that we will be importing this year,” he said.
The Rubber Board Chairperson said: “It is a fact that, owing to an extended period of rains, supply of rubber in the domestic market was tight in the last 4-5 months. The contracted imports landed at the start of peak production period and this exerted a downward pressure on price. The price crash is attributed to various reasons and import is one factor contributing to it.”
While Upasi and tyre manufacturers are seeking support for the entire pipeline from the grower to the end-user, Radhakrishnan suggests suspension of imports for a few months.
Sheela Thomas said that imports cannot be barred in view of the country’s commitment to the World Trade Organisation.
Glut The situation could turn to worse in the next couple of months for growers as production is set to peak, said Radhakrishnan. “Production could be around 2.30 lt during December-January, while consumption will be 1.80 lt only. It will leave an additional 50,000 tonnes as surplus,” he said.