Consumers must come forward to rescue rubber industry

by Dr. Priyani Seneviratne

If there is one thing the rubber growers talk of these days, it is the "Rubber Price". But unfortunately most of them do not realise that there is hardly any point in discussing the price, as we cannot influence it. Our production is less than 2 percent of the world rubber production and hence we are obviously price takers.

If you look at the price of rubber for the period of 10 years from 1994, the increase is only marginal. Steady increase is seen from 2003 till 2008 followed by drastic fall from about Rs. 350 to about Rs. 150 for RSS1.

Then in 2011 the price reached an unexpected Rs. 600. Though that price lasted for only a month or two, it mislead the rubber farmers. Even today they talk about that price and any price that is below Rs. 600 is considered a 'lower price'.

The rubber price has always been fluctuating though the ideal situation would be to have a fixed price, or a range for a perennial crop such as rubber. Rubber is a commodity that no expert in the world so far could predict the price. In most occasions the predictions were wrong. Rubber price does not seem to simply depend on supply and demand. There are a hundred and one minute factors which influence the price per kilo.

Objective

The main objective of this article is not to discuss the price or the pattern of price fluctuation or to predict how it would be in the years to come. It is to give the rubber consumers an insight, into their role in making the rubber industry of Sri Lanka sustainable.

But one thing is certain; the current low price is temporary as it has always been in the past. It will certainly improve in time to come and we will have to wait till such time with our fingers crossed.

What we should have done to make the rubber industry independent of the fluctuating prices, was to take steps to improve the productivity of rubber clearings. If the productivity is higher, at least close to the potential productivity, then we don't have to worry about the price per kilo.

The rubber farmers and the planters in the country are so fortunate that there is a huge gap between the present productivity and the potential productivity. If we were already harvesting the potential yields, then we may not have much of an option towards sustainability.

The stand per hectare, the growth condition of the trees and the harvesting quality as main contributory factors for productivity.

In the existing clearings, stand or number of trees per hectare can be corrected if the clearings are below two years of age and if suitable advance planting materials are available.

The quality of the tree has limited chance of improvement. If the age of trees is above five years, then the vegetative growth phase of the rubber tree is over. Even if the age of the plant is below five years, if the quality of the plants is poor or below standard, growth cannot be improved by applying manure or attending to any other agro-management practices.

But if the trees are still in the 1st or 2nd year upkeep, and are of good quality, then growth can be improved to a possible maximum by attending to recommended agro-management practices. It will guarantee the potential yield, provided that harvesting practices are maintained as recommended by RRISL.

Productivity

The current national productivity of rubber in Sri Lanka is 1400 kg/Ha/y. India is recording its highest, 1800 kg/Ha/y. The potential yield of many of the recommended clones in Sri Lanka, are in the range of 2500 - 3000 kg/Ha/year.

There are rubber fields in both small holder sector and in estates under the Regional Plantation Companies which record 3000-4000 Kg/Ha/year. When the yield of these fields is analysed it is always revealed that the stand is complete and the growth condition of the trees is very satisfactory and up to the recommended levels. More importantly the harvesting practices is maintained at a high level, specially the frequency of harvesting.

Cultivators

Looking at these facts helps us to deduce that the long term solution for the current problems in the industry is to establish and maintain high quality clearings. As it would double the productivity easily, the price per kilo will be immaterial in making profits.

But the condition of the existing clearings is unsatisfactory in more than 50 percent of the cases. Therefore, only slight improvements can be expected by adopting recommended harvesting practices. The percentage increase in the productivity will depend on the current condition of the clearings.

On a survey conducted by RRISL in 2012, the data revealed that the average life span of each tapping panel is only 4 1/2 years compared to the recommended six years, under d2- 'every other day' harvesting frequency. There were extreme cases of 3-3 1/2 years per panel. In such cases the percentage of dry trees was as high as 60-70%. These clearings will be very unprofitable and hence must be replanted properly as early as possible.

In Sri Lanka about 70 percent of rubber cultivators are small holder farmers. Some of them own only about a 1/4 of an acre, and it is the only income and the hope that they have. Many of them cannot afford to wait till the end of the month to sell their small quantity of rubber.

They sell 2-3 times every month. Their economic state is such that they cannot wait till the rubber sheets are dried enough to be sold. Among the small holders, there is another group who have to pay the tapper, watcher, Kangani and the manager. When the rubber price is low for long periods, they cannot sustain in the business. So with difficulty they will go for the alternative crops such as cinnamon and tea.

Importing rubber is a smart option for the consumers, but we all have a duty to our country and must help all levels of the community.

Thus the consumers have a duty not to abandon the countries' rubber industry in times of need. The consumers often say that no one talked about the price when it reached sky high (Rs. 600 in 2011).

Perhaps the reason for it could be that the number of people affected by the high price is very small compared to the number affected by the low price. And it maybe, that the party affected by the higher price belongs to the privileged category of society.

When the price of raw materials increases, consumers don't normally wait till it comes down, but take every possible step to survive. One such step that can be taken, is increasing the price of the product while taking measures to cut down on COP. On the other hand, the rubber farmers have no option with regard to their existing clearings, specially the small holder farmers those who own 1/4 acre to one acre.

But large estates that carry out annual replanting programs can work towards productivity improvement which is the permanent solution for the low price or price fluctuations, though it is long term. In hypothetical situation where all small holder farmers get together and insist that they won't sell their rubber sheets unless they are paid Rs.325.00/kg, it could be assumed the manufactures would not mind that price. Not being too stringent about the price would help the manufactures indirectly, while protecting the poor farmers who supply the raw material needed to do business. It is important to note that the extremely low price will affect rubber production if the growers cannot sustain. Similarly, the other extreme of very high price compels the rubber manufactures to make decisions on whether to continue the business.

The annual rubber production in Sri Lanka, which is about 132 million kg, is too small a quantity to talk big. But, I believe that the rubber manufactures in the country have an important role to play. Their active involvement to solve the current crisis will be more effective than waiting for the government to fix a floor price and pay the difference. The government of Sri Lanka has invested more than enough in the rubber industry, but receives a poor return. It is the responsibility of both the farmers and the consumers in the country to run a sustainable industry.

The rubber industry is currently being subsidised twice. Each new and replanted hectare is paid Rs. 150,000 and Rs. 175,000 as the subsidy. Also the government has subsidised fertiliser including the rubber fertiliser, which was purchased at normal rates earlier.

The Rubber Development Department has island wide field staff to help rubber farmers. The Rubber Research Institute provides the technology, services and testing. Both these institutions come under the government as well.

Thus in conclusion it can be said that the turn has now come, for the rubber consumers to come forward and rescue the rubber industry of Sri Lanka.

Source: Agricultural Economics Unit, RRISL
The writer is Deputy Director - Research (Biology), Rubber Research Institute of Sri Lanka, Dartonfield, Agalawatta.