Kerala's rubber procurement plan fails, prices fall further

Large plantations halt production as heat hits latex making process

Kerala government's announcement in budget to procure natural rubber to support prices is facing challenge as the price of bench mark grade RSS-4 dropped to Rs 117/ Kg today.

State had announced earlier to procure natural at Rs 150/Kg to support prices from falling. The procurement is yet to commence.

Kerala government has announced to procure 20,000 tones at a price tag of Rs 150/Kg. The latest budget has earmarked Rs 300 crore for the purpose, but procurement is yet to start.

This makes the market in real crisis as a section of traders had stocked rubber anticipating procurement. A dealer said that the summer shower is now a problem to them as fungus infection is likely in due course.

Earlier the government's announcement had created some hope in the market, but as global price drops on a daily basis, there is absolutely no takers for rubber in local market. The market is now on a dropping mode even in the midst of the off season.

Tapping has been stalled in most of the large plantations as production of latex is too low due to extreme summer heat. Small and Medium farmers are not tapping tress for the last one year.

Yet the market does not show a sign of improvement as overseas market are on a low price regime. Import is rather high during last couple of months as the overseas market is attractive to the rubber based industries, especially for the tyre makers.

Standard Malaysian Rubber (SMR) is available at a price tag of Rs 84-85 in Malaysia and rubber is pouring to the country, according to local traders.

They said that there is no demand for rubber in the local markets and tyre makers are also away from the market since last couple of weeks. All the steps taken by the state government failed miserably to enthuse the market.

Although the Union government is talking of raising the import duty from 20 to 25 per cent the formal decision is yet not taken. However now the way global prices are falling daily how far duty hike will provide support is also an issue, said one of the traders.

Local dealers are not able t stock rubber due to various uncertainties, growers are not getting even the market price as dealers are not ready to give the price announced by the Rubber Board. Benny Chacko, a grower said that they get a maximum of Rs 115/Kg.