The Rubber Board is all set to launch online trading for natural rubber (NR) as an alternative marketing for the physical transaction of the commodity.

The board will call for expressions of interest (EoIs) soon to finalise partners for setting up an electronic platform and trading is expected to start in a couple of months, said KN Raghavan, Executive Director, Rubber Board.

The establishment of an electronic platform in NR is in line with the government’s policy to initiate e-trading for all agricultural commodities, and the new concept will bring in transparency and more visibility to buyers and sellers, he told BusinessLine .

The current NR transactions are carried out on the conventional ‘spot’ basis with informal understandings. The involvement of dealers in rubber trade has started dwindling from more than 10,000 in 2000 to 7,135 in 2020. The drop is expected to continue, as younger generations are not enticed to the trade due to declining margins, he added.

Besides, consumers are also concerned about the quality of processed forms of NR. Large volumes of ungraded rubber are still traded in the market and its price realisation is often low, especially for quality grades in the primary market. The absence of market awareness resulted in producers and consumers losing opportunities, said Raghavan.

Lack of inspection mechanism

He also emphasised the need to capitalise on the potential offered by developments in ICT (information and communication technology) in commodity trading. Most of the manufacturers in the non-tyre sector do not have a quality inspection mechanism at purchase points. Generally, the deal is based on trust, which often gets scuttled in terms of dilution in quality features.

According to Raghavan, most of the terms of trade are done orally without any legal backup such as a signed contract or purchase orders, which often leads to disputes between parties.

The Executive Director said the electronic platform will be designed to complement the existing system of dealer-processor-manufacturer based supply chain by encouraging them to participate in e-trade. Grower cooperatives such as rubber producer societies and small-scale rubber dealers operating at the village level will be encouraged for better visibility and price discovery, he said.

Trade facilitation platform

The e-trading platform is envisioned as a trade facilitation platform where buyers and sellers can bid for required quantities of rubber. The payment gateway also will be made available for the transfer of money. It is also proposed to set up personalised trade pages for manufacturers whose rubber procurement was done only through their registered vendors and factories.

The system for quality certification also will be instituted as part of e-trading, which will be an added feature to cater to the impending demand on non-tyre the sector, he added.

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