Rubber plantations in India is in a crisis with the demand falling and prices becoming unremunerative. With the price of a kilo of rubber fluctuating between Rs 26 and Rs 30 (1US$ = Rs 42.80 ) farmers are hard pressed and are looking for alternatives. Prices have come down from Rs 50 per kilo in 1996 to the present level due to recession in the economy cutting down demand for natural rubber.
India was earlier deficit in rubber. Shortfall in domestic supply kept prices high and farmers expanded area under natural rubber and also upgrade plantations. Conditions changed in the last few years when for the first time in a decade domestic production outstripped demand. This was due to general industrial slowdown and specifically in the automobile industry. The resultant downtrend in domestic prices came in tandem with a steep fall in international prices, following the East Asian meltdown.
Until 1992, the government used to maintain a buffer stock for natural rubber, and when the price fell below the benchmark price, the government would intervene and purchase and add to its buffer stock. But after the liberalization program was initiated, the government decided to give up maintaining a buffer stock but would intervene in the market if prices fluctuated sharply. Now even government intervention may not be of much use.
The rubber farmers has sought a ban on imports of rubber. However, the user industry's grouse has been that Indian prices have always ruled above international prices. The drop in the value of currencies of the rubber producing countries - Thailand, Malaysia and Indonesia - have pulled down overseas prices considerably. International prices have declined by about 40 per cent in the past one year.
THE world rubber consumption is expected to grow by three per cent a year to reach 18.3 million tones by 2001, according to the elastomer industry forecasts by Assembly of the International Rubber Study Group (IRSG) concluded at Bali, Indonesia . The ratio of natural to synthetic rubber consumption is expected to remain at around 40-60 per cent during the period.
The growth in natural rubber consumption is expected to fall to 1.4 per cent in 1998 and then improve to 2.7 per cent and 2.8 per cent in 1999 and 2000, respectively. Natural rubber production is forecast to rise by 1.1 per cent in 1998, 2.8 per cent in 1999 and 2.6 per cent in 2000. Global stocks, therefore, will fall to an all-time low by the year 2000.
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