The Hindu Business Line : Demand-supply gap in rubber likely to stretch further

Kochi, Nov. 13 Given the handsome returns as the price of natural rubber continues to hover over Rs 100 a kg, farmers are unwilling to cut down their low-yielding aged rubber trees and re-plant them with new high-yielding clones.

“The yields from aged trees might be falling but the farmer is unwilling to undertake re-planting since the returns continue to be quite handsome and there is a time lag of seven years before the new plants begin to yield – a period of all expenditure and no returns,” Mr N. Radhakrishnan, former President of the Cochin Rubber Merchants Association, said.

Output falls

While natural rubber output fell by 9.5 per cent to 4,35,125 tonnes during the first seven months of the current fiscal, consumption has edged up three per cent to 5,36,100 tonnes. The demand-supply mismatch in the country, which had been relatively self-sufficient for the past two decades, has already crossed one lakh tonnes during the April-September period. And the situation is likely to deteriorate in the times ahead, sources in the industry warned.

As fewer areas have been coming under rubber plantations and the areas under aged trees have been growing, the demand-supply mismatch is set to widen to 4-5 lakh tonnes by 2014-15, Mr Radhakrishnan said. While supply is likely to stagnate at around 8.5-9 lakh tonnes, demand is expected to spurt to 13.5-14 lakh tonnes.

The shortage of crude rubber is expected to accentuate and prices of synthetic rubber are also likely to firm up. Unless the Rubber Board takes steps to bring more areas under rubber plantation and also ensure re-planting on a war footing, the situation is likely to go out of hand, Mr Radhakrishnan said.

Production shortage

But, the shortfall this year is not restricted to India alone but extends to most rubber producing countries of the world. Rubber production in the seven top producing countries – Thailand, Indonesia, Malaysia, India, Vietnam, China and Sri Lanka – which account for 93 per cent of the global production – fell by 5.1 per cent for the 12 months ended September against the corresponding period of last year.

The production shortfall has widened from the 3.7 per cent till August 2009. China was the only country that was able to combat the falling global trend and report a 19 per cent growth. Global warming and changing weather conditions are reported to be behind the falling in trend in global rubber output.

India lagging

Though India might be the fourth largest producer of natural rubber in the world, it is far behind global leaders such as Thailand and Indonesia as far as the total volume of production is concerned. This was also partly because productivity in India has begun to fall in recent years. India, which had a productivity of 1,654 kg/ha in 2003, second only to Thailand with 1,796 kg/ha, had grown rapidly to the top spot with 1,903 kg/ha in 2008.

However, with a growing backlog of areas that need to be replanted, productivity is expected to fall to 1,768 kg/ha in 2009. The backlog in areas which have to be replanted has grown to 1.2 lakh hectares, Mr Radhakrishnan said.