Fortunes are stretching a bit too thin for rubber

It is a given that natural rubber has brought with it good fortunes to Kerala. But then, that’s an old story. Import glut, climate change, and finally the pandemic, have rattled the sector several times over the last couple of decades, sapping Kerala’s enthusiasm for the rubber crop. Fluctuating prices, combined with soaring input costs, have made these rubber holdings far from profitable.

And, these plantations will probably never turn profitable unless they diversify, according to Santosh Kumar, Executive Director, Harrisons Malayalam Group. “Cultivation of rubber, a commodity that is in abundant supply world over, is an extremely labour-intensive operation,” he noted.

Youngsters keep off

Also, youngsters are keeping off the sector. “This fading enthusiasm is clearly evident from the sharp drop in the ratio of replanting. A thorough restructuring of the existing plantations, allowing alternative crops and non-plantation activities in a certain percentage of land, is crucial for a profitable model,” added Mr. Kumar. Officials with the Rubber Board too admit to a growth in the number of holdings that have ceased harvesting. “This is particularly because the replanting of saplings has become too expensive and there is a shortage of skilled tappers,” said an official.

As per conventional estimates, about 11 lakh farmers are growing natural rubber in Kerala while the area of tappable rubber plantations extends up to seven lakh hectares. As many as three lakh workers are required to tap latex from these trees. The availability is much lower.

“Workers are shying away from tapping, not because of poor wages, but aversion to the rigours of physical labour. Mechanisation is the only way forward,” he observed. The growers, meanwhile, regard themselves as a pawn in the global price war of rubber. “Because we are often small, disparate producers. we do not have the power to influence the supply chain,” said Babu Joseph, general secretary, National Consortium of Regional Federations of Rubber Producer Societies India.

Prices on a free fall

In Kerala, the months after monsoon are the traditionally high-production period. Things, however, have been different this year. The prices have been on a free fall, reaching a 16-month low of ₹148.5 per kg (RSS grade 4) in the Indian market. The price of latex, which soared during the pandemic period due to huge demand from glove makers, has come down to below ₹100.

The figures do not exactly match the stories of agrarian hubris that have long dominated Kerala’s rubber heartlands. Instead, the common narrative is a struggle against low prices and high debt after years of credit-fuelled expansion of the crop.

Production stopped

Growers are now exposed to a painful reckoning, resulting in widespread panic in the State that accounts for nearly 75% of the total production in India. Staring at an uncertain future, many of them have been forced to stop production for the time being.

The falling prices, according to farmers, have come as a double whammy, as about 60% of the rubber plantations in the State are due for replanting. If no action is coming forth at this point, this will only exacerbate the situation.

Problem of uncertainty

“Since rubber farming works on long timescales, the worst thing for growers is uncertainty. Most farmers do not have the asset base to get through this period,” said Mr. Joseph. The downturn, although a bit slower than in the international markets, is attributed primarily to a weak Chinese demand and the European energy crisis, along with high inflation and an import glut. Analysts have also pointed out that the domestic tyre industry has an ample inventory, especially in the form of block rubber from Ivory Coast and compounded rubber from the Far East.

The board has stepped in and launched consultations with stakeholders to bring some stability to the market. It, however, may take some time before the impact of such measures kicks in. If it does not, the fragmentation of holdings is a distinct possibility in the long run.

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