Rubber growers on a high as prices peak

Prices of natural rubber have appreciated around 450 per cent in the last seven years, as the price of benchmark grade (sheet rubber), RSS-4, soared to Rs 118 a kg in the intra-day trading today. The tag ended the day at Rs 114 on account of the drop in prices in the global markets. The domestic market registered the lowest price in 1999, when the price of RSS-4 dropped to Rs 24.50. The lowest yearly average price was also recorded in the same year, at Rs 29.97.

According to Rubber Board statistics, the yearly average price in 1998 was Rs 30.13, which increased to Rs 31.09 in 2001. In 2000, the average price had put up a slightly better performance at Rs 31.25 and during the five years since 1995, the market had depreciated around 40 percent.

Prices of natural rubber had moved up beyond Rs 50 in 1995, as the average price stood at Rs 50.59 a kg when the highest price registered spurted to Rs 65.50.

In the next year, though the highest price tag was rather lower at Rs 58, the yearly average price escalated to Rs 51.22. But since then the average price had dropped and finally plunged to the lowest level at Rs 29.97 in 1999.

By the beginning of the new millennium, rubber prices bounced back and the average price again breached the Rs 50 mark in 2004, as it surged to Rs 55.71. During the last year, the yearly average price soared to Rs 60.68, when the highest price registered was Rs 71.25 as per the Rubber Board estimates.

According to city traders, the lowest recorded price was in 1999 at Rs 21 a kg and the appreciation since then is around 550 per cent. But the average price of rubber-based products, especially non-tyre, small and medium sectors, has increased around 100-200 per cent only. For example, currently, the prices of rubber chappals vary between Rs 50 and Rs 60, which was in the Rs 25-30 range six years ago. According to the traders, this was due to high-level competition in the business and the fact that most rubber-based product manufacturers are currently in the doldrums, especially small-scale manufacturers.

"We cannot shift the entire burden of natural rubber price escalation to the customer. There is strong resistance in the market whenever there is a price rise," a small-scale unit owner said. A large number of small-scale units have been closed for some time now and many more are on the verge of shutting down for the time being.

Prices of almost all inputs "� including natural rubber "� have increased 50-100 per cent over the last five-six years. George Varghese, general secretary, All Kerala Tread Rubber Manufacturers' Association, said around 50 units had closed down in the state during the last six months owing to spiralling raw material prices. He said the price of carbon black and rubber process oil had increased 100 per cent and zinc oxide had spurted 120 per cent, besides the hike in the natural rubber price.

The association recently increased the price tag of tread rubber to Rs 100 a kg, up by Rs 10. He added that around 100 units had closed down during the last two years because of huge raw material expenses. The association asked the government to withdraw the Rs 1.50 cess on each kg of rubber in order to salvage the small and medium sector units.

In the current year alone, the price of natural rubber has appreciated around 60 per cent, as the opening price of RSS-4 in 2006 was Rs 71.25 a kg. On January 31, the price was Rs 81, which went down to Rs 78.50 on March 8. It touched the $2 or Rs 90 mark on April 26, but in just three weeks, the market had touched the magical figure of Rs 100 on May 19. Since then there has been no looking behind.

Although the rubber growing areas in Kerala are in a jubilant mood, thousands of small- and medium-scale natural rubber-based units in other states, especially in Punjab and Haryana, have been facing a crisis that deserves urgent government intervention.