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Sunday, 8 February 2009

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Price recovery not expected in the short term

If prices of rubber remain low for a long period it will create a vicious cycle that would harm the rubber industry in the long term, the Director, Rubber Research Institute (RRI) Dr. Ashoka Nugawela said.

The rubber prices improved slightly but at the last auction again it dropped and TPC1 dropped to Rs. 127 and RSS1 to Rs. 136. A sustainable price recovery cannot be expected until the economies of the developed countries recover. Today we experience the consequences of the slow down in the major economies, low purchasing power of the people and the resulting decline in demand for goods and services, Dr. Nugawela said.

The stimulus package introduced by the government recently will not reverse this trend but will help the small and medium holders to get a price at least to cover the cost. The farm gate price of rubber is around Rs.20 less than the auction price and therefore Rs. 20 subsidy proposed by the government would help the growers to get around Rs. 150/ kg, he said. Dr. Nugawela said that under this market situation the growers will neglect the cultivation, abandon use of fertiliser and uproot the plantations.

This is the biggest threat the industry faces and appropriate measures have to be taken to prevent such consequences, he said.(GW)

 

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