Agri Business

Kerala’s planters body oppose e-auction platform for rubber trading

V Sajeev Kumar Kochi | Updated on June 11, 2020 Published on June 11, 2020

Rubber growers are facing tremendous financial distress due to high production cost   -  KK Mustafah

Says the existing open market system is the right mechanism to determine prices

The Association of Planters of Kerala has come out against the Rubber Board proposal to set up an e-auction platform for trading natural rubber, saying that the existing system provides fair prices for the commodity and maximum benefit to growers.

The members of the planters body felt that the current open market system, where the elasticity of supply and demand determine the price level, will be the right mechanism for the rubber sector. Ajith BK, Secretary, APK, told BusinessLine that growers could get the maximum farm-gate price under the current system compared to any other crops cultivated and sold.

The rubber sector is dominated by small and marginal growers and the local trader extended financial support to them through cash advances against future crops. But the e-auction platform may not be able to make financial settlements within a fortnight, which could cost growers dearly, he said.

Price discovery

Referring to tea which is sold through e-auction system in the country, he pointed out that majority of the growers are unsatisfied with the price realisation of their produce. There are even apprehensions among the growers that there are persistent efforts to suppress the prices below a certain level. “Our members fear that, the possibility of formation of such cartelisation by the buyers will be more in the case of rubber, as this market is dominated by a small number of large consumers,” he said.

APK was of the view that the cost of establishing the e-auction platform and its maintenance will be loaded on the grower, eroding the earning potential further.

He said growers are facing tremendous financial distress due to high production cost, low price realisation and also due to the ill-effects of climate change. They are not supported with any financial assistance either by the Board or the government, especially in the case of medium and large growers.

The Board should initiate urgent measures to provide financial support by way of soft loans, developmental grants, social cost-sharing, etc. The growers can be supported by way of introducing safeguard duty for natural rubber and by restructuring the antiquated Standard Input Output Norms (SION). This will have a positive impact on the price front, he said.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on June 11, 2020
This article is closed for comments.
Please Email the Editor