Can the Rubber Market in Kerala, bounce back!

Spotlight on the rubber market in Kerala      (Do review the videolink  and the info below?)

Is the Union Government of India deliberately squeezing the small rubber producers of Kerala out of business ?

The rubber farmers of Kerala are a unique breed. They produce some of the best natural rubber in the world but complain that they are being squeezed out of business. 

The reason? Cheap rubber imports sanctioned by the Union Government of India have been making domestic rubber production uneconomical. Kerala's high labour costs and land values exacerbate the problem.

A well regarded IAS officer recast himself as a social and political reformer: Mr. P C Cyriac, formerly of the IAS and once Chairman of the Rubber Board of India is making an effort to rally the smaller rubber growers and lead them to a viable economic solution. His motivation? Mr. Cyriac has found a new mission in his challenging role role as the Kerala State Convenor of the Aam Aadmi Party.

An interview worth watching?

What follows below is an interview of Mr Cyriac concerning some ways he and his associates can facilitate relief to the small rubber growers of Kerala.

https://youtu.be/XpEQBaQf4cw

(The above  interview is in malayalam because its targeted at local rubber growers and tappers. Once the malayalam component starts you can access close captioning in English by clicking on the CC link on the top right of the frame).

Background information that elaborates on the video:

• Rubber still has a future in India because demand is expected to double in ten years. 

• Much of this demand is already being taken up by planting new rubber in low cost non-traditional areas (including high range tribal areas in the North East).

• In Kerala, the issue is more complex as the cost of land and labour are relatively high. Also the planted capacity of available trees are older. 

This means that:

• The larger rubber estates will over time prove uneconomical as the land they occupy is either reclaimed by the government, repurposed to more intensive forms of horticulture or (thanks to urban sprawl), used to house the homeless in Kerala.

• Mr Cyriac of the AAP is being supported by the Shramik Vikas Sangathan (SVS) to develop a strategy for the smaller rubber growing holdings in Kerala.  They may still be viable if:

• The AAP and SVS can add facilitate the setting up of small scale manufacturing units (owned by small rubber growers and workers. These micro enterprises could manufacture a variety of rubber products for in-state use or export.

Also on the agenda is:

• Producing high quality block rubber through group processing centers.

• The conversion of land to mixed use and thereby include high value horticulture as well.

• In the long run, Kerala’s financial muscle and educational instructure could combine with Kerala’s remaining rubber growers to become a center of research, innovation and new product development that licenses know-how to other rubber growing areas.

Rubber has a future: Rubber is a flexible and water-proof hydrocarbon polymer that has a key economic role. Particularly because its main competitor, plastic is not sustainable. 

Rubber when grown also produces oxygen and removes carbon dioxide.

More Fun Facts:

Rubber consumption is expected to double by 2030. 

India is currently the sixth largest producer of NR in the world with one of the highest productivity (694,000 tonnes in 2017-18). 

The production capacity in India is around 900,000 tonnes, of which around 75% is tapped. Out of the total area under rubber in India of around 8 822,000 ha, 614500 ha is a mature yielding crop. 

It is envisaged that the domestic production will be able to meet at least 75% of the NR requirement in 2030. Efforts would be made to get all the available mature areas under rubber tapped.

Today the traditional rubber-growing states Kerala and Tamil Nadu account for 81% of production. 

Major non-traditional rubber growing regions such as the North Eastern states of Tripura, Assam and Meghalaya, Odisha, Karnataka, Maharashtra and West Bengal are emerging.

Sheet rubber remains  the most preferred form of processing accounting for around 70% of processed rubber. Block rubber* and latex comprise17% and 12% respectively of rubber production in the country. 

Forty percent of rubber used in India is imported. Around 40% of the total NR consumption in India is at present met from import of rubber. This puts a price squeeze on high priced and high quality producers in Kerala.

(India is the world’s second largest consumer of Natural Rubber). Consuming  around 1.1 million tonnes. 

Sheet rubber, block rubber and latex account for 47%, 43% and 8% respectively. 68% of NR consumption in India is currently in the automotive tyre sector. New users of rubber may emerge as use of non biodegradable plastic drops..

 There is a huge export potential for rubber products in the country, which if promoted, shall indirectly increase the demand for domestic NR as also the export earnings. Export from rubber products was worth ₹ 20,915 crores in 2017-18. 

The Government wants to support rubber by helping to expand it in non-traditional areas. Greater support is expected from the Rubber Board in the non-traditional regions. 

Groups like the AAP and SVS maintain that large rubber cultivators must also promote other farm livelihood and rubber integrated agroforestry systems. 

Rubber policy is politically important because it impacts over a million small growers who are mostly in Kerala and Tamil Nadu. 

Globally and locally NR is largely grown by small landowners  and 91% of rubber planted area and 92% of production is in small holding sectors (below 10 ha). There are around 1.3 million rubber growers and 0.6 million workers in the rubber plantation sector in India. 

Labour welfare organizations like the Swaraj Solidarity Sangam (an affiliate of the National Federated Union, the Shramik Vikas Sangathan) are therefore very concerned about helping the industry in South India become more viable. Most of the growers in the non-traditional rubber growing regions are from tribal and other resource poor communities. 

There is a labour shortage of male/ skilled tappers: More women and migrant tappers are expected.. 

Cluster formation of tappers can achieve the twin objectives of providing regular employment to tappers and availability of skilled tappers to growers. 

Setting up of Tapper Banks as SHGs attached to RPS would be formalized and continued. 

Shifting from Sheet Rubber to Block Rubber**:  Global composition of processed forms of NR is dominated by block rubber on account of its consistency in properties and low cost of production.Block rubber is more preferred by consumers/manufacturers leading to 80% of imports being block rubber at present.

** Note on processing of block rubber

http://natural-rubber.blogspot.com/2015/01/How-To-Processing-of-Block-Natural-Rubber.html

Improvements needed:

1. We need more automated systems of grading rubber. This will allow growers to get the best  price (avoiding the ‘downgrading’ of rubber sheets in the visual grading system). 

2. Group Processing Centres (GPC)/Community processing centres would be promoted with facilities for processing latex, effluent treatment, biogas, etc. 

3. Latex/sheet/scrap collection through RPS/SHGs should be supported. This will facilitate better prices by avoiding intermediaries. Proper skill development for processing is also needed. Processing block rubber from latex coagulum must be promoted as well. 

*Full text of 2019 National Rubber Policy document as published by the Indian Ministry of Commerce: https://commerce.gov.in/writereaddata/uploadedfile/MOC_636871123490373426_National%20Rubber%20Policy%202019.pdf

Excepts from the above video:

An average farm is about one half to one hectare in Kerala.  

Tyre manufacturers import low quality rubber at reduced price from international markets and dump it here. 

The Centre is not doing anything to change this situation. 

But there is hope. Individual tappers are well off with the present prices. Products shared between tapper and farmer is also an option to be pursued. 

Another option to is to shift towards value added farming. Kerala government has introduced some schemes. 

Household production of rubber goods on a small scale can also be really profitable to farmers. 

Both natural and artificial rubber have their own features. For example, artificial tyres can be useful for making tubes in tyres when compared with natural rubber. 

While tyres that need to be strong require natural rubber. Aircraft tyres are made exclusively with natural rubber.

While truck tyres use artificial rubber along with two wheelers. Foreign countries have found great use for rubber. Globally rubber use is 60 percent artificial and 40 percent natural.

 In India we have more of natural rubber (66) percent and synthetic rubber (34) percent. When carbon emissions and environmental issues arise in today’s world, we need to use more natural rubber. 

One tonne of natural rubber removes 3.45 tonne of carbon dioxide and induces 2.35 tonne of oxygen. This process is known as carbon sequestration. Natural rubber is a good way to remove carbon dioxide and increase oxygen. 

We also have viable carbon trading mechanisms when we sell this rubber. From an ecological point of view, natural rubber is the best. If there are any limits to supply, then artificial rubber can be used. Modified natural rubber is also being used these days. 

Also when we produce synthetic rubber a lot of electricity, carbon dioxide and polluting substances are released into the atmosphere. Hence we should aim for complete removal of artificial rubber and use more of natural rubber.

If future shouldn’t be bad, one should shift to value added products. A new company entering rubber manufacturing should focus on small scale sector with low cost, increased efficiency, production vs quality. 

A wide range of products can be produced out of rubber. But for that we require a combination of technology, management, transportation and marketing strategies. If these come up then success is guaranteed.

The fact that more than 50,000 products can be made from rubber is a very motivating factor. 

Our famers are educated and aware, hence they strive to produce rubber of great quality. Even though we provide training to north east farmers, climatic conditions of the region play a negative role. The best climate for rubber is 10 degrees south and north of equator. In Kerala, Kanyakumari is ideal for rubber.

 In the 1990s it was the Kerala rubber farmers who stood first in productivity in the whole world. 

We do maintain good productivity. As there is low price in the market for rubber these days tapping is low and hence our potential is not being used. 

If ten lakh tonne was produced once now it is just 7 lakh tonne. 

When our farmers start producing products on their own, will we be able to compete with huge MNC’s?

For that we need to have effective marketing strategies, which can’t be the responsibility of ordinary farmers. 

In India, for artificial rubber there do  exist safeguard duties as imported artificial rubber producers like Reliance are taking over the field. 

Similarly tyre manufacturers complained about the imported tyres from China taking up space and hence central government accepted the demand. 

 It is time we focused on whether wet should focus on value added products. There is an emotional relationship that we have deep inside to rubber so we must be committed to finding a way forward.