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Rubber hit by liberalizationDuring the 1980s natural rubber sold in India at one-and-a-half times the international price....
restrictions were removed on 31 March 2001, and theWTO agreement took over.The crash in prices brought all rubber business...
Kerala accounts for 92 per cent of the countrys totalnatural rubber production. For many years Indian rubberprices were pr...
soil-erosion measures, maintenance of smoke houses,other processing costs, and it all mounts up. The growerthen has three ...
But   he   concedes    that   his   lifestyle    has    taken   ahammering. New international trade rules apart, theMalaya...
price could well fall back to Rs 20 a kilo again." Keralasrubber grower is more worried about his lifestyle thanincreasing...
has his hands full, especially after the fall in the price ofnatural rubber. More hands-on grower involvement,better manag...
resulting in more latex. The Rubber Board too is hopeful."If GDP growth is predicted at six per cent, were ensureda    sta...
"Yes, some of us did lead an unreasonable lifestyle,"admitted one chastened grower, "but no one imaginedsuch a crisis." Ho...
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Rubber in-kerala

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Rubber in-kerala

  1. 1. Rubber hit by liberalizationDuring the 1980s natural rubber sold in India at one-and-a-half times the international price. Post liberalization thechickens came home to roost. Prices promptly crashedfrom over Rs 60 a kilo to an all-time low of Rs 23.Recently they revived to about Rs 48 per kilo. The impactin Kerala of this roller coaster price ride was devastating.Keralas complacent growers were hitherto protectedfrom competition by hefty import duties and governmentsupport prices. In the future domestic prices were to becompletely dependent on external factors. Quantitative 1
  2. 2. restrictions were removed on 31 March 2001, and theWTO agreement took over.The crash in prices brought all rubber businesses to astandstill. Rubber growers had two options. They eitheraccepted life with competitive, fluctuating internationalprices, or left the rubber business. Most left."After rubber prices fell, I sold the five acres near myKottayam house and bought land in Kasargod andKannur," said Lalachen. He is now cultivating coconut andbetel nut trees there. "At Rs 25 a kilo, you could notbreak even, because that is the production cost."The future is not going to be easy either, say sources inthe United Planters Association of South India (UPASI),Coonoor. Since domestic prices are higher thaninternational prices, multinational corporations areexpected to make inroads. The removal of quantitativerestrictions will lead to dumping of both natural rubber bySri Lanka, Vietnam and Indonesia, and rubber productssuch as tyres by China and Korea. 2
  3. 3. Kerala accounts for 92 per cent of the countrys totalnatural rubber production. For many years Indian rubberprices were protected from the vagaries of internationalmarket prices. 98 per cent of imported rubber waschannelised through the government State TradingCorporation.Even when export prices fell, the Government managedto keep prices stable, through intervention by the STCand cooperatives - and by sometimes bearing the losses.So rubber growers with huge land holdings, especially theSyrian Christians in Central Travancore, were very welloff indeed. Even small growers with two acres underrubber could afford a two-storeyed house, a car and apublic school education for the kids. Cash flowed in, andthe future looked good. The State enjoyed a monopoly,offered protection, and that was unlikely to change.Unfortunately, it was too good to last.All rubber growers, even holding less than two acres, aredependent on at least two hired tappers. A tapper is paid35 paise for every tree. Add to that the cost of fertilizers, 3
  4. 4. soil-erosion measures, maintenance of smoke houses,other processing costs, and it all mounts up. The growerthen has three options. He can choose to cease tapping,cut down on crucial inputs, or sell the land."I apply manure only once a year now," admittedAugustine Mathew who owns four acres in Pala. "As aresult, the yield from 100 trees has been reduced from20 kilos to 18 kilos. But I cannot invest in fertilizersunless the price of rubber remains stable between Rs 45and Rs 50. I have often had to stop tapping."Binny Mathew also owns around four acres in Pala. At Rs45 a kilo, he could run his home on the income fromrubber production alone. Today he does not make sheetsbecause of the processing costs. Instead, like manyothers, he sells the latex. "Our standard of living dependsheavily on the price of rubber. There was a crisis whenprices fell below Rs 30 a kilo," he recounted. "I havechildren studying in CBSE schools, a house and a car tomaintain. I couldnt pay my bills. Now I also growcoconuts on 20 acres in Malabar District." 4
  5. 5. But he concedes that his lifestyle has taken ahammering. New international trade rules apart, theMalayali rubber grower also has an attitude problem."The hands-on Punjabi farmer is always working in hisfields with his family, no matter how large his landholdings," says R K Krishnakumar, Rubber PromotionCommissioner, Rubber Board, Kottayam. "But rubbergrowers in Kerala were always more landlord and lessfarmer."Hands-on farming, in fact, stopped with the first-generation rubber farmers. Since then, generations ofrubber growers have been dependent on hired labour.Even with the fall in prices, this has not changed."We are not asking growers to tap the trees themselves,although that would be the ideal situation," Krishnakumaradded. "But we do ask them to be good managers - atleast be on site when work is going on."Unfortunately, the family working in the field isunthinkable for the average Malayali rubber grower."Rubber growers are not willing to adjust to the post-economic reform regime," says a rubber expert. "The 5
  6. 6. price could well fall back to Rs 20 a kilo again." Keralasrubber grower is more worried about his lifestyle thanincreasing efficiency and reducing production costs. Also,very few increased acreage. Even when prices were high,money was never invested back into the plantation or onnew land. And with constant subdivision of land, familieshave less and less.The only real investment made was in human capital,namely education. Families that bred professionals havehandled the crisis better because of supplementaryincomes. Binnys brother is a professional who worksabroad. Even 40-year-old Augustine works as a liaisonofficer in a crump factory that manufactures rubberblocks. But the future is not uniformly bleak. At theJanatha Model Rubber Producers Society (RPS) inKottayam, six women are stacking aluminium disheslayered with treated latex in a room. The `smoke roomis shut and operating.Members keep walking in - some to buy new knives andpolythene sheets. Others want to know the date of thenext workshop for rubber growers. Secretary Jacob K A 6
  7. 7. has his hands full, especially after the fall in the price ofnatural rubber. More hands-on grower involvement,better management at the ground level, and help fromthe government can ensure the industry manages tosurvive. Growers are getting more involved in production.With this uncertainty, they cannot afford to remain justlandlords.One key measure is forming Rubber Producers Societies.The RPS takes latex from the growers and processes itinto RSS-Grade 1 sheets. It bears all expenses ofprocessing - smoke house, dishes, roller etc. The sheetsare sold mostly to crump factories, traders, and those inthe tyre re-treading business.Although the current price of natural rubber is Rs 47 akilo, a RPS can get at least three rupees more than themarket price if it produces better quality sheets. Moremoney goes to growers. The RPSs under the aegis of theRubber Board also conduct workshops on lowering costsof production, judicious application of fertilizers andpesticides, conservation of rainwater and othermeasures. This can improve tapping by 30 per cent 7
  8. 8. resulting in more latex. The Rubber Board too is hopeful."If GDP growth is predicted at six per cent, were ensureda stable high price," says Krishnakumar.Growers like Binny hope so. Planting another crop ishardly an option. No other fetches the same dailyincome. Other crops are also more labour intensive.Rubber is ideal for rain-fed Kerala. Money pours in fromthe sixth year of tapping, and continues for 25 years.Old, unproductive trees are then sold as timber forenormous sums.The government too can help, according to UPASI. Itshould ensure rubber is classified an agricultural product,rather than an industrial raw material, to benefit from theWTO Agreement on Agriculture (AoA). Since naturalrubber is still not included in the AoA, the bound rate onimport duty should be raised from the current 25 percent to 100 per cent for latex and 150 per cent fornatural rubber sheets - especially because of our higherdomestic price; and other subsidies provided. 8
  9. 9. "Yes, some of us did lead an unreasonable lifestyle,"admitted one chastened grower, "but no one imaginedsuch a crisis." However, the crisis is here to stay. AndKeralas rubber growers are slowly changing to survive it.They can with a little help from the government.Shwetha E GeorgeKottayam, KeralaFrom Grassroots Feature Network 9

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