Rubber growers lose Rs 480 crore on low prices

The domestic natural rubber growers have lost around Rs 480 crore in the last six months, thanks to the falling prices of the commodity during the same period.

According to a recent estimate of the Cochin Rubber Merchants Association (CRMA), the price of RSS-4, the benchmark grade sheet rubber, has dropped to Rs 74 a kg from Rs 96 a kg on January 9. The decline in the futures market is much sharper, with the prices crashing to Rs 74 a kg from Rs 101 a kg January 9.

According to N Radhakrishnan, president of the CRMA, the average fall in prices during the January-June period was Rs 12 a kg, while the total consumption during the same period was 400,000 tonnes. He said the growers would have lost Rs 480 crore because of the steep fall in the domestic market.

On the contrary, prices in the global market have moved in a narrow range. Citing the Bangkok tags during the last six months, he said the global prices had moved in a narrow band, thereby protecting the growers from a huge loss.

For instance, the Bangkok spot price on January 9 had quoted at Rs 86.40 a kg and the current rate is almost the same, he added. He alleged that the heavy fall in prices, especially during the off-season, was well orchestrated through the futures market.

Except for the increase in stock, thanks to rising imports, there was no real factor influencing the price line so heavily. It was a planned price manipulation in the futures market, he argued.

In January, the domestic prices were higher by Rs 10 a kg over the international prices. But they are lower by Rs 12 now and the difference is not in tune with the market parameters, growers believe.

To the dismay of domestic exporters, the lower tags are not helping improve exports because of an appreciating rupee. The strong rupee has on an average dented the exports by 4 per cent a kg, limiting the scope for exports.

Between April and May, total exports were around 3,500 tonnes as against imports of 16,000 tonnes during the same period. The rubber market is going through a twin crisis "� falling domestic prices and low export realisation as a result of a strong rupee "� and the prices are poised for a further decline, said traders.