Rubber industry, farmers at loggerheads

Rubber consumers and growers are at loggerheads. While the industry is demanding duty-free imports to ease supplies that have shrunk with rubber tappers being hit by chikungunya, farmers are shrugging off the need for overseas purchases.

India is the world's fourth largest rubber producer after Thailand, Indonesia and Malaysia. Kerala accounts for 92 per cent of the total domestic natural rubber production. With domestic output down this year, the rubber industry is demanding duty-free imports of 100,000 tonnes.

However, growers are saying that the demand is unjustified as 95 per cent of the imported rubber comes under the advance licence scheme, which is duty-free.

"An outbreak of Chikungunya in the major rubber-growing belt of Kerala has reduced this year's output by 50,000-80,000 tonnes," Vipin Jain, chairman (northern region), All India Rubber Industries Association, said. "Time and again, we have been petitioning the government to pay heed to our concerns, but to no avail."

Rubber Board, the government's rubber trade promotion body, has scaled down this year's export target after the spate of viral fever kept rubber tappers away from work between July and September.

The Board has trimmed its export target to 50,000 tonnes from the earlier 70,000 tonnes this year pegging the floating stock quantity at 80,000 tonnes. Industry estimates put the floating stock figure at a paltry 20,000 tonnes.

There is a total mismatch between the growth rates of domestic production and consumption, Jain said. Also, there is a lot of volatility in domestic rubber prices, which are moving Rs 4-6 a day, he said.

"Farmers today have become very clever, they first access the market prices and then decide whether to sell or keep the stock," he said.

"Majority of the hoarding done in the rubber industry today is at the growers' side," Jain said. "Many farmers in Kerala today own Mercedes cars, more than those in Punjab. There is no natural price discovery mechanism in the domestic rubber market today," said Jain. He said the farm-gate realisation for farmers in India is better than any other farmer across the world.

Growers, however, have dismissed the consumer industry's concerns on the supply situation in the country. "There is no supply crunch of natural rubber with stocks at 225,000 tonnes as of January 31," said N Radhakrishnan, president, Cochin Rubber Merchants' Association. However, he said speculation is prompting growers to hold back stocks thereby resulting in a supply crunch.

A senior Rubber Board official said this year's natural rubber production was seen down 3.2 per cent from last year between 825,000 and 830,000 tonnes, and consumption is estimated at 860,000 tonnes. As on February 25, the country has imported 82,000 tonnes rubber, whereas exports stand at 41,000 tonnes, the official said.

In 2006-07, India produced 852,895 tonnes of natural rubber, whereas domestic consumption for the commodity stood at 820,305 tonnes.

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