‘Viability key to sustainability of rubber cultivation’

Rubber Board Chairman A Ajith Kumar outlines the various initiatives undertaken by the board to increase the production, and the productivity, of rubber-growers, and gives an overview of the industry. Excerpts from an interview he gave Aravindan in Kottayam:

Natural rubber production has been declining in recent years. What was the situation in 2016-17?

According to provisional estimates, NR production in 2016-17 increased by 22.8 per cent, to 690,000 tonnes from 582,000 tonnes in 2015-16. NR production had declined during the previous two years by 16.7 per cent and 12.9 per cent, respectively, reflecting a negative supply response to the relatively low prices. The extent of untapped area had increased from 8 per cent in 2013-14 to 30 per cent, and productivity declined from 1,629 kg/ha to 1,437 kg/ha between 2013-14 and 2015-16.

The increase in NR production was mainly on account of promotional efforts initiated by the Board and implementation of the Rubber Production Incentive Scheme (RPIS) by the Kerala government, with the Board’s active involvement. It is projected to increase by 16 per cent to 800,000 tonnes in 2017-18.

What are the initiatives being taken by the Rubber Board to enhance production and productivity and improve quality of Indian rubber, and to address the problem of tapper shortage?

The Board strategy to enhance productivity and increase production was to formulate and implement initiatives addressing the main reasons for the lower production and productivity. The relatively low rubber price is the main reason. In the current macroeconomic context and policy regime, including multilateral commitments, there are limitations in influencing prices. Nevertheless, the Central Government had raised import duty of dry forms of NR to 25 per cent and imposed port restrictions to regulate import of NR, the main channel through which global market trends percolate into the domestic market. It was critical to focus on measures that would enhance the net income of rubber growers.

Sustainability of rubber cultivation primarily depends on its economic viability. Low-frequency tapping can bring down cost of production substantially without a reduction in the yield, and also enhance the economic life of rubber plantations. This will reduce the number of tappers required per unit area. The Board keenly propagated low-intensity tapping, including weekly tapping, during the past year. Another measure was setting up a Tappers Banks to address the shortage of labour. During 2016-17, 24 Tappers Banks were formed; the target for the current fiscal is 50. The Women Tappers Bank linked to Kudumbasree is another new initiative. Another focus area was skill advancement, especially for tapping and processing.

Under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) project, sponsored by the Ministry of Skill Development and Entrepreneurship (MSDE), the Rubber Board conducted a re-skilling programme called Recognition of Prior Learning (RPL), benefiting 10,000 tappers/growers, with an outlay of ₹2.80 crore. The MSDE has approved the second phase of the RPL project to impart training to 22,000 persons in rubber tapping and processing in Kerala, Tripura and Assam.

Another area of focus is the formulation of State-specific plans for overall development of the NR sector and convergence projects with State governments. The Board had initiated talks with the governments in rubber-growing States last year. Kerala’s budget has included collaborative projects for intercropping of fruits and vegetables in immature rubber plantations and developing homestead farming, clubbing rubber cultivation with other income-generating activities such as poultry, bee-keeping, goat farming and cattle rearing. Discussions on formulating such projects are under various stages of progress in other rubber-growing States. In short, the initiatives focus on a rubber grower-centric approach to enhance net income from all possible means, rather than focussing on rubber cultivation alone.

Major Indian consumers want ‘block rubber’, but the main processed form is ‘sheet rubber’. How will the Board reconcile this?

The mismatch is on account of technical and market factors. Though sheet rubber is superior to block rubber in terms of properties, the latter has higher consistency. Consistency has become more critical as radialisation in the tyre sector has advanced at a fast rate, especially in the medium and heavy vehicles segment. However, the “mismatch” gets accentuated — and block rubber is imported in bulk — only during phases when global prices of block rubber are very much lower than domestic sheet prices.

However, the global composition of processed forms of NR is dominated by block rubber. The shift from sheet rubber to block rubber in other countries was mainly on account of the need for consistency in material properties, ease of shipping, and tapper shortage. The threat of cheap imported block rubber, the labour shortage in traditional rubber-growing regions in India, the changing requirements of consumers should also be considered. A gradual transition may happen in the Indian NR sector as well, with increasing share of block rubber in the processing mix. The schemes for promoting processing and marketing of sheet rubber are also being continued as sheet rubber will remain the major processed form of rubber in India in the foreseeable future.

Reconciliation of the “mismatch” can be partly brought about by targeted promotional efforts. However, in a competitive economy, the combination of processed forms of rubber is mainly determined by market fundamentals.

What is the outlook for the NR sector this year and beyond?

Rubber prices, which reached peaks in 2011/2012, declined thereafter with the price of RSS 4 reaching a monthly average of ₹93.55 per kg in February 2016. Towards the end of 2016, rubber prices improved on account of supply tightness due to repeated floods in Thailand, firming up of the US dollar against Asian currencies, the increase in futures market price, firm oil prices and so on. Rubber prices declined in recent weeks on account of increased supply from Thailand, sale from Thai government-sponsored stock, decline in oil prices, weak demand and rising inventories.

The main factor while projecting the outlook for commodity sectors, including NR, is macroeconomic growth indicators. Developing Asia has continued to perform better and the region is forecast to expand by 5.7 per cent each in 2017 and 2018. NR production in major rubber-growing countries continues to be lower than potential. Demand for NR is slowly rising in China and India. On the whole, the NR market is expected to remain flat in the near future, but could be volatile due to oil prices, weather conditions, speculative factors and geopolitical concerns. The recent decline in rubber prices was mainly on account of decline in oil prices linked to the glut due to rising inventories in the US and lack of commitment to production cuts on the part of OPEC members and speculative factors. However, the historical cyclical trends in commodity markets predict a rebound in prices during the medium term.

There are reports that the Board is closing down several offices and regional laboratories. Is this true?

The establishments of the Board in terms of offices, regional research stations, regional laboratories, nurseries, farm etc. were developed during the last 60 years or so. Most of these were developed when office procedures were done manually. There have been several changes in the mode of operation and administration of promotional activities and provision of other services on account of computerisation, IT-enabled services and developments in communication and infrastructure. Hence, there is a need to rationalise the establishments of the Board. This will reduce unwarranted non-productive expenditure and enable the Board to divert more resources to essential promotional activities.

However, there has been no discussion or decision on closing Regional Laboratories of the Board. The Laboratories were set up for soil and leaf analysis to provide fertiliser recommendations for individual holdings. Growers generally apply chemical fertilisers based on the general fertiliser recommendations of the Rubber Board. This damages the soil if the status of the soil is not considered. The online rubber fertiliser recommendation system developed by the Rubber Board (RubSIS) makes fertiliser recommendation services available to all growers online. Its MobileApp version is now being developed to make it more easily accessible to growers using cellphones. RubSIS will help prevent unscientific use of chemical fertilisers to a large extent. However, physical soil testing facilities will be continued and growers wanting to test soil samples will be able to avail of this facility.

Establishments of the Board, including Regional Laboratories, will be examined for rationalisation if only the services being rendered can be provided through other means. The rationalisation exercise is formulated with the principle that services rendered to stakeholders will not be compromised.

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