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RUBBER STAKEHOLDER NEWS : ‘What is lost cannot be recovered; we have to look ahead’
(Last Updated: 20 Sep 2018)

 

‘What is lost cannot be recovered; we have to look ahead’

KOCHI, SEPTEMBER 19

 

Kerala’s plantation sector is reeling under the impact of widespread damage and crop losses caused by the recent floods. However, the crisis can turn into an opportunity if future growth is channelised along ecologically sustainable and economically viable lines, says Thomas Jacob, Chairman of the Association of Planters of Kerala (APK).

Such an approach, he says, will generate employment and income. He firmly believes that this can be achieved by encouraging inter-cropping and multi-cropping, abolition of agricultural income tax and conservation of soil and water.

The biodiversity of the Western Ghats can be further strengthened if cultivation of fruit crops, bamboo and indigenous tree species known for their timber value is allowed in the plantation sector, he said in an interaction. Edited excerpts:

Will the plantation sector be the same again in terms of activities or the way growers practised farming?

Kerala’s plantation sector has a legacy of more than one-and-a-half centuries; it is perhaps the only industry in the State that withstood and re-emerged from the floods of 1924.

The industry has suffered huge losses, of which some are irreversible. It is interesting to note that the landslides reported in the plantation sector have not originated in the core plantation area.

As far as farming practices are concerned, the primary focus of growers has always been on conservation of resources like soil, water and natural flora and fauna without which the cultivation of plantation crops would not be possible.

The heavy rains and subsequent floods have steeled our resolve to conserve and strengthen resources like soil, water and biodiversity without which the sector may not be able to survive.

How have the rains/floods affected the plantation sector?

All the plantation crops have been drastically affected. The losses are three-fold — crop loss, losses to production infrastructure and losses to ancillary infrastructure.

The total estimated crop loss is above 800 crore, which may accentuate further depending on the recovery period.

The losses to production infrastructure are estimated to be approximately 450 crore and we are yet to quantify the losses to ancillary infrastructure.

If you analyse the weather reports for the last five years, it can be seen that the State had experienced drought conditions of moderate to severe nature in 2015 and 2016.

In 2015, there was deficit rainfall of 26 per cent, and in 2016, a deficit of 43 per cent. In 2018 there is already excess rainfall of over 40 per cent.

That means within a short span of five years, Kerala is experiencing extreme weather conditions, which is a tell-tale sign of climate change.

All plantation crops are extremely weather sensitive and any shift in the weather conditions can affect production and productivity.

The shift of the South-West monsoon to the excess rainfall situation has adversely affected all the crops. The tea industry has already lost 7 million kg in production.

Overall production for the current year will be 30 per cent lower. Cardamom is the worst affected crop, nearly 25 per cent of the plants have to be replaced and the production will be 50-55 per cent less.

Rubber production will be reduced by 20-25 per cent and coffee may record a deficit of 15-20 per cent.

Which are the commodities that are worst affected?

The maximum damage has been reported from the cardamom sector, especially Devikulam, Udumbanchola, Kumily, Vandiperiyar, Peermade, Elappara and Thodupuzha areas. The storm experienced in the initial phases of the monsoon has caused severe damage to yielding plants, wherein nearly 25 per cent of the yielding plants will have to be replanted.

Extensive damage has been reported to the indigenous shade trees which may take years to replenish.

The high intensity rainfall during the second phase of the monsoon has resulted in an epidemic outbreak of rhizome rot and capsule rot.

It is estimated that production will be 50-55 per cent lower compared to the previous year. The current crop loss alone could be above 400 crore, but as per the estimate, the overall season loss could be above 1,000 crore.

What kind of relief has the government provided to affected growers?

The Government has taken effective steps to rebuild the communication network and healthcare systems on a war footing basis.

As far as the relief measures are concerned, the State Level Bankers Committee has recommended a moratorium on agricultural loans for a period of 12-18 months.

The growers have reported the extent of damage to the concerned revenue authorities. As the magnitude of damages is too severe, long-term relief measures for the growers are yet to be finalised.

Is the relief adequate? Has APK suggested any other relief measures that the Government needs to take up?

APK has requested the Centre to immediately disburse already recognised and pending financial support from all the Commodity Boards to the growers.

It has also requested to declare MSP for all the plantation commodities, as per the formula adopted for cereal crops.

As the damages to production and the ancillary infra structure are too severe, it may not be possible for growers or the State Government to completely fund the reconstruction. Hence, the Association has requested the Central Government to provide a grant for reestablishing the production infrastructure and long-term soft loans for reconstruction of the ancillary infrastructure.

As there has been damage of soil conservation and water conservation facilities, it has been requested that the State extend financial support for rebuilding the same.

For bringing back the natural shade tree canopy, it was requested to provide support through the Social Forestry Scheme for planting trees indigenous to the Western Ghats.

How long do you think the plantation sector would need to get back to normal?

Damages due to the current crisis can be divided as short term as well as long term. We expect tea production to resume by mid-October to early November.

Rubber production may reach normalcy by December, as the majority of rubber trees have defoliated and it may take nearly 60-75 days for normal operations.

As far as the cardamom sector is concerned, the diseases are getting under control and remaining rounds of cardamom harvest will be over by end December/January.

However, replanting of damaged plants may not be completed this year. The black rot identified in coffee has come under control and normal operations may be started by end October.

The plantation sector has been going through severe financial crisis due to the high cost of production and low price realisation since 2012. The majority of the plantations are struggling to raise even working capital.

The extent of current damage is so severe that the plantations have neither the financial capacity nor the economic viability at this point. Moreover whatever crop is already lost, the industry will not be able to recoup.

The majority of damage to infrastructure — both production and ancillary — has created a permanent scar on the face of plantations in Kerala.

As far as the damage to production and ancillary infrastructure is concerned, the resurrection depends on availability of funds and support from the Government as the growers individually may not be able to meet the expenditure.

 
Published on September 19, 2018

 

Tyre firm margins hit as floods impacTyre firm margins hit as floods impact rubber tapping in Kerala

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Chennai: The devastating floods in Kerala have sharply impacted natural  (NR) production and will pinch the tyre industry’s raw material margins.

Tyre firm margins hit as floods impact rubber tapping in KeralaKerala accounts for more than 85% of total domestic NR production and even before the flood-related disruption there was already a shortage. According to Rajiv Budhraja, director general, Automotive  Association (), “The gap between NR production and its demand is widening and in the first quarter (April-) of current fiscal, more than 40% of the demand for NR had to be met from imports in view of domestic deficit.” With rains disrupting tapping in July and August, this deficit will only widen.
“In the month of July because of continuous rain there was very limited tapping and in August there has been virtually no production of natural rubber,” he added. “Arrivals in the market are practically nil or negligible.”

On the other hand, there has been an upsurge in demand from OEMs for commercial vehicles and tractor tyres which are both very intensive in natural rubber. Result: the gap between demand and domestic availability is widening. “The industry expects a gap of over a half a million tones during the ongoing fiscal,” added Budhraja.

For , this could mean a cost surge as they make do with imported raw material.“There has been an approximately 5% surge in domestic  but early signs of production coming back to normalcy have been encouraging.” Dittoed Satish Sharma, president, Asia Pacific, Middle East and  region, : “The overall raw material basket is going up, and we expect that it will be up nearly 5% in Q2, as compared to the first quarter,” said Anant Goenka, MD, CEAT.

 

The trouble is, the flooding may have caused medium to longer term damage to the rubber plantations.

“Each rubber tree has a life span of over 25-30 years,” said Budhraja. “So that assessment also needs to be done on a priority basis to see how natural  is affected going forward into the future.”

The good news though is that the domestic industry routinely plans for monsoon disruptions with an import-led plan B.

“During the monsoons, the production of rubber does get impacted every year. Our reliance on imports increases during the monsoons, and the same has happened this time as well. The landed cost of imported rubber, at the current level of the rupee, will not put us at a disadvantage vis-a-vis local rubber,” said Apollo’s Sharma.t rubber tapping in Kerala

 

India: Wanted, a national rubber policy

This vital sector has seen its fortunes fluctuating over the years and is in dire need of a comprehensive national policy.

 

 Rubber policy Slippery slope   –  THE HINDU

The long awaited release of the government’s first ever report on a national rubber policy (NRP) has still not come out. Apparently, differences of opinion among members of the expert committee representing various stakeholder groups had been the major reason for withholding the document for more than three years.

Meanwhile, mounting pressures from the Kerala Government and natural rubber (NR) producers’ interests led to the constitution of a task force by the government on March 22 to submit a report for the revival of rubber sector. Unfortunately, a consensus on the need for a NRP remained elusive due to the conflict of interests arising from a higher regional concentration of NR production vis-a-vis the diffused pattern of rubber consumption.

The strategic need for evolving a NRP in India stems from the unique characteristics of the sector borne out of its evolutionary dynamics over time.

The emergence of India as a major player in the world rubber economy had been unique for the interconnectedness among the segments rooted in the domestic market orientation that evolved under a protected policy regime since the early 1940s. This is in sharp contrast to the development of export-oriented ‘rubber enclaves’ in other major producing countries with the exception of China. In essence, the domestic demand-driven interconnectedness with limited exposure to export markets and external competition had been the hallmark of India’s rubber sector.

Post reforms

However, the trade policy reforms initiated since 1991-92 and the consequent exposure to foreign competition through the multilateral and RTA routes have changed the scenario. The challenges of market integration characterised by a surge in imports of rubber and rubber products are played out in the domestic market than in the export markets.

It is the unorganised smallholder rubber and non- segments that have borne the brunt of of the market integration process. The volatility of NR prices and the fluctuations in farm income have hit the conventional farm management practices including replanting.

One outcome this trend has been a steady growth in the share of senile trees (more than 50 per cent) in the total tapped area in the country. The negative growth rates in NR productivity in Kerala (- 2.8 per cent) and all India (- 2.7 per cent) between 2007-08 and 2016-17 show that the policy prescriptions have failed. Similarly, the crisis-ridden non-tyre segment has been hit by the volatile raw material prices and growth in imports. On the external trade front, a negative balance of trade of India’s rubber sector since 2007-08 has been in contrast to the positive balance of trade during the past four decades. In 2016-17, India’s negative balance of trade in rubber and rubber products was $415 million. So the segmented approach has failed in addressing the challenges of the sector.

Unlike other major NR producing countries the export intensity of India’s rubber sector had been negligible. The estimated export intensity was only 22.5 per cent even during 2014-15. Hence, sustaining a self-reliant rubber sector having applications ranging from household articles to the space programme is a major policy challenge. Nevertheless, the need for a NRP looms large in the context of market integration process sustained by the non-negotiable trade policy commitments under the multilateral and regional pacts.

Though India has recognised the relevance of a sustainable rubber sector as early as 1942 there is no replicable model to address the challenges of market integration. China’s ‘Going Global’ strategy initiated in 2002 is a valuable template. The establishment of China Natural Rubber Association in 2007 and the Rubber Valley Project by China Industry Association in 2011 provided the institutional framework.

India cannot afford the luxury of witnessing a gradual disintegration of its rubber sector built over the past seven decades for the sake of free trade. A comprehensive NRP is not only inevitable to recognize the strategic importance of sustaining a self-reliant rubber sector but also to identify the inherent strengths and accumulated weaknesses of the embedded structure to capture synergies in the era of market integration.

(The writer is former Joint Director of the )

Rubber growers fume as Centre tweaks rule to let in more imports

In a largely unpublicised move, the Union government has said port restriction will not be applicable to the import on natural rubber (NR) for all varieties, a move which will depress the domestic NR.

Express News Service

KOCHI: In a largely unpublicised move, the Union government has said port restriction will not be applicable to the import on natural rubber (NR) for all varieties, a move which will depress the domestic NR prices. The restriction has been lifted for imports through the Chennai Port and Nhava Sheva (Jawaharlal Nehru Port).

However, the port restriction shall not be applicable to imports under advance authorisation.
The advance authorisation allows duty-free import of inputs (NR in this case), which are physically incorporated in the export product (making normal allowance for wastage). These include the fuel, oil, energy, catalysts which are consumed/utilised to obtain the export product. The relaxation allows tyre makers to import the large quantity of NR and advance authorisation gives them six months’ time to export the final product. Growers reckon the move will affect the domestic prices of NR.

Santhosh Kumar, senior vice-president, Harrisons Malayalam Ltd (HML), said almost 30 per cent is imported under this scheme now. “Depending on the price, more quantity can be imported,” he said.
According to him,  the importers also get six months to export the final product.

For RSS-3 grade of rubber, the price in Bangkok was Rs 111/kg on June 13 while the price in India was Rs 123/kg. “Importers can use this scheme when the prices suit them, as is the case now,” said Joshy Joseph Maniparambil,  Kerala Farmers Federation (KeFF) general secretary, said, “We had requested not to include Chennai. Unfortunately, they have included the Chennai Port too. This will have a sudden effect on the local prices as most of the tyre industries are located in and around Chennai.”
Santhosh Kumar too flagged a flaw in the scheme.

“Under the scheme, which was drafted in 1971, it is presumed a tyre contains 44 per cent of natural rubber. So, for a 100 kg import, they can get away by exporting two tyres. However, technology has changed and the synthetic content in the tyres is so much a tyre now contains only 18-20 per cent of NR,” he explained.
This means, with the same quantity of rubber imports, a company can sell three tyres locally even while meeting the export commitment of two tyres.

 
 

“We need to bring in changes to the rule, given the changes in technology and the drastic reduction in rubber content in the tyre industry,” he said. Rajiv Budhraja, Automotive Tyre Manufacturers’ Association director general, could not be reached for his comment.

 

 

 

 

 

 

Research body voices concern over cheaper imports of natural rubber

Natural rubber sheets being dried in sunlight near Kochi, Kerala. KK Mustafah   -  The Hindu

KOCHI, JUNE 7

The Indian rubber industry’s over-dependence on imported, cheap natural rubber may be highly unsustainable, posing serious challenges for its growth and competitiveness, said Rubber Research Institute of India.

There are clear indications that the industry is losing its momentum and its contributions to the economy are on the decline in recent years, a study carried out by the RRII said.

There are structural changes happening to the industries of major natural rubber exporting countries and availability of cheap rubber in the international market cannot be taken for granted, it observed.

Natural rubber has a dominant role in the rubber industry, as it constitutes 66 per cent of the total amount of rubber the industry consumes. In recent years, rubber production has been on the decline as a result of growers abstaining from tapping the trees because of non-remunerative price.

Despite declining domestic production, rubber consumption and the industry continued to grow, albeit at lower rates, with substantial imports. The longer the decline continues, the more difficult it will be to reverse the trend because of the perennial nature of the crop, the study said.

Indian rubber industry is too important for the economy to be left to the uncertainties and vagaries of supply issues in the global market for long.

The study, therefore, suggested proactive steps to sustain the domestic rubber production base with adequate public investment are urgently required to ensure sustained domestic supply to the industry.

In a major relief to farmers who are reeling under stress of low rubber price, another study by the institute suggested cultivation of cocoa as a potential inter-crop for mature rubber under tapping.

RRII has successfully demonstrated the initiative on a small landholding in Kerala representing the central traditional rubber growing tract in India.

 
Published on June 07, 2018

 

 

 

 

Worn down by raw material shortage, tyre industry wants rubber import barriers lifted

KOCHI, MAY 29

The tyre industry has expressed concern over the widening imbalance between domestic production and consumption of natural rubber.

According to Automotive Tyre Manufacturers Association, rubber production-consumption gap of 4.7 lakh tonnes projected for the current fiscal (2018-19) is a historic high and domestic availability scenario is getting dimmer. ATMA has asked for urgent measures to make rubber available to the industry by making imports easier.

The gap between domestic production and consumption has been widening in the last few years. From a shortfall of 60,000 tonnes in 2011-12, to 4. 1 lakh tonnes in the last fiscal and is projected to grow to 4.7 lakh tonnes in the current.

Domestic production is projected to be 40 per cent short of requirement. This is a matter of grave concern as the tyre industry has lined up investments in line with growth in auto industry. “Needless to say the import dependence of industry for rubber will further go up to meet the domestic requirement”, said Rajiv Budhraja, Director General ATMA.

The industry has been bearing the brunt of heavily taxed rubber imports to keep the factories running. While rubber import is imperative to meet the domestic demand, the policy environment is highly restrictive. The Custom duty is at 25 per cent much higher than the rate of duty levied by any other importing country. Moreover imports are permitted at only two designated ports (JNPT and Chennai). Such non-tariff barriers add to the landed cost and logistics time.

There are further road blocks in accessing rubber. The industry needs to adhere to pre-import condition for import against (tyre) export obligation. Further export obligation period (for tyres) has been reduced from 18 months to only 6 months making it tough to access a raw material which is in short supply domestically, he said.

It has asked the Ministry of Commerce & Industry for duty free import of rubber equivalent to the projected domestic deficit as high import duty is hurting the price competitiveness of the industry. The industry consumes 65-70 per cent of the rubber produced in the country. However it is facing scarcity as availability of rubber is significantly curtailed in the ongoing lean months.

On priority, the industry has asked for import of rubber on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of gap between domestic production and consumption. It has also asked for removal of port restrictions and other restrictive measures which make the field uneven for the domestic industry vis-à-vis international counterparts.

 
Published on May 29, 2018

 

India: Tyre companies up prices by 1-3%

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