Maximising profits from rubber lands

By Dr. L.M.K. Tillekeratne

Rubber farmers of Sri Lanka, both in the small holders sector and in the estate sector are quite happy now with the increased price of rubber in the world market since the beginning of the year 2003. The price of all grades of Natural rubber (NR) before the last quarter of 2003 was around Rs. 40 per Kg, which was not sufficient for the rubber farmers to meet even the tapping and processing costs. Hence most of the rubber land owners neglected their estates or lands without conducting tapping. It was during this period that the rubber production of Sri Lanka fell below 100,000 Mt per annum. Even the efforts taken by the government to give a concession to farmers by way of abolishing the Cess of Rs. 10.49 per Kg imposed on rubber exports was not substantial for them to cover their cost of production. It was during this period that some people believed that the rubber industry is a sun set industry without a future and hence thought of diversifying prime rubber lands into crops like tea and oil palm especially in the southern province of Sri Lanka.

Even during this bad period, the production of rubber in India, Thailand and even in Vietnam increased vastly. The only secret behind this increased production in these countries while the prices were low was their higher productivity. In these countries, the average national productivity of rubber reported were well over 1500 Kg/ha/yr while the same in Sri Lanka was around 900 Kg/ha/yr until about 2003. But with the improvement of the rubber prices, all the abandoned fields were taken for tapping and rain guards were used by some plantations and the small holders to minimise crop losses during rainy months and as a result the national productivity of rubber in Sri Lanka too has now risen to about 1050 Kg/ha/yr. If the national productivity is raised to over 1500 Kg/ha/yr by applying modern technology developed by the RRI, there is no reason for the rubber farmers to worry any more with the fluctuating rubber prices in the world market. This is how the rubber industry in Thailand, Vietnam and in India survived when the prices were low.

In other words, the income from rubber lands depends on two factors, the world market rubber price and the level of productivity. The world market rubber prices are manipulated by the European and US and other consumers and they are based purely on demand and supply. The only factor controllable at the farmers end is the yield per hectare or the productivity. Hence, rubber farmers who are expecting higher income from their rubber lands must try all means of using modern technology in their estates aiming at maximum productivity. Then only they can survive without depending on the world commodity price fluctuations. If not, their efforts go waste and their plantations will have to suffer again if by any chance the world market rubber prices drop down to very low levels, which is very unlikely to happen in the near future. According to International Rubber Study Group predictions, there will be a shortage of 3.5 Mn Mt in the world by year 2020. This short fall will increase to nearly 6 Mn Mt by year 2030. Further, the demand for rubber in Sri Lanka today is also fast increasing and hence even if the world rubber price drops, the demand for rubber in Asia by then will be such that the rubber farmer in Sri Lanka can get a guaranteed attractive price locally from those industries.

What are the new technologies developed by the RRI and the steps needed to be taken by the rubber farmer to increase productivity?

In order to increase productivity of rubber lands the most essential initial step to be taken by the farmer apart from selecting a good land for planting is the selection of quality rubber plants from recommended high yielding clones for planting. Planting a substandard rubber plant in the field will be a liability to the farmer for thirty years.

It should be mentioned here that the quality of planting materials available in Sri Lanka in some of the estates is very poor due to the use of unsuitable bud wood for bud grafting from over aged obsolete nurseries. If the correct stock nursery plant and correct bud wood is not taken there is no point in talking about the quality of the budded plant produced and its potential yield after five to six years. Number of healthy trees in clearings should be over 450 per ha at the time of commencing exploitation. If it is low, again the yield will get badly affected. In order to enforce farmers to maintain high stands in the field in future before releasing the instalments of subsidy a physical count of the trees present in the field are also taken into consideration in addition to girth measurements. Regular manuring of the young plants is also essential to obtain a high productivity. If manuring is not done systematically, there will be uneven growth of the rubber plants in the field and hence tapping all trees at once cannot be conducted as scheduled.

Even to mark the new trees to be exploited, a stencil should be used to make sure that the tapping angle is 30 degrees and not above or below. If the cut is too steep and over 30 degrees, the drying of the latex on the panel will be faster and hence the yield will be less. If it is below 30 degrees, latex will spill over from the panel there by incurring losses. Hence in order to get highest yields, tapping has to be done by skilled tappers and not by normal sundry workers. Regular weeding of the farms and applying fertilizer to trees in the recommended way also contributes to the high productivity of rubber lands.

One of the main obstacles for harvesting rubber in Sri Lanka is rain interference. In order to avoid that RRI recommended Rain guards must be used in the wet zone. If not, not only the farm incur crop losses, but when double tapping is conducted to recover crop losses in estates, most of the rubber trees undergo tapping panel dryness thereby making them unproductive.

If all these recommendations are carefully carried out, increasing the productivity of rubber lands to over 1500 Kg per ha per year is quite simple. If everybody does that importation of over 10,000 Mt of raw rubber to Sri Lanka to cater to the rubber products industry could be curtailed easily.

With the increase in the selling price of RSS rubber and latex since November 2002 which was around Rs. 150/Kg and the rubber production in the country also recorded a steady increase. Rubber prices in the local auctions shot up to above Rs. 200/Kg in the first week of February, 2006. Latex crepe no. 1X was forward sold in July this year for over Rs. 400 per Kg. These are all good news for the rubber farmer. However, due to defaulting of orders by some Asian rubber consumers, the price of RSS dropped down to Rs. 160 per Kg. Rubber farmers need not be worried over this artificial situation that occurred in the world market. According to trade information this is due to the defaulting of orders by China. What ever the reason would be, there is no reason for the rubber prices to go below Rs. 150/Kg. Even at this price, a farmer maintaining a hectare of rubber according to RRI recommendations should get a profit of not less than Rs. 30,000 a month. In addition to that at the time of uprooting trees after 25 years of tapping, he should get at least Rupees half a million for his old tress.

Profitability of rubber plantations depend directly on the cost of production of the rubber manufactured out of the latex harvested from the plantation. Hence in order to maximize profitability, COP must be kept at the lowest possible level.

An important parameter affecting the cost of production of rubber is the tapping cost, which is over 75% of the cost of manufacture of rubber in the factory. Tapping cost depends directly on the intake of tappers. Even though the full wage is paid for tappers for collecting anything over 4.5 Kg of dry rubber, there is potential for them to bring intakes as high as 20 to 25 Kg. If that is the case they should be paid extra for every Kilo of extra rubber they harvest from their blocks. In RRI owned estate at Agalawatta, and in many other estates under private management, Rs. 15.00 per every Kilogram of rubber over 8 Kg is paid as an incentive to tappers. This is becoming more and more attractive to tappers and hence the average intakes in most of the rubber estates are reported to be on the increase thereby lowering the cost of manufacture of rubber. Hence by minimizing the COP of rubber and by increasing productivity of the rubber lands the Grower can get a handsome income in the future too, without depending on the price quoted for this commodity at the European or Kobe commodity exchanges.

(The writer is the former Director of RRI)