KOCHI: Natural rubber prices have fallen to a six-year low, taking the sheen off the subsidy scheme of the Kerala government, which was aimed at providing a relief to the small growers.
Natural rubber prices have fallen to a six-year low, taking the sheen off the subsidy scheme of the Kerala government, which was aimed at providing a relief to the small growers.
The government had announced a Rs 300-crore subsidy scheme for the growers over a month ago when the natural rubber price was at Rs 129 a kg. On Tuesday , it touched Rs 112, showing signs of further fall as the economy of China, the largest consumer of rubber, is in doldrums.
The scheme envisages assured payment of Rs 150 a kg of rubber for farmers having up to 2 hectares, with the difference between the current market price and the government fixed price as subsidy. Kerala produces nearly 90% of the commodity in the country.
As per the data of the Rubber Board, nearly 2.1 lakh small growers have registered their names for the subsidy scheme, which is paid directly to the account of the grower on the submission of sales receipt. Already 5,000 growers have submitted their bills for the subsidy . Kerala Chief Minister Oommen Chandy is expected to launch the subsidy payment officially at a function in Thiruvananthapuram on Wednesday .
When the scheme came into force, the subsidy payable was around Rs 21 and now it has gone up to Rs 38. The dealers say that the prices will soon drop to Rs 110 as indicated by the November rubber futures in NMCE.
” At Rs 20, the government could provide subsidy to 1.5 lakh tonnes. When the subsidy doubles, it will be sufficient only for 75,000 tonnes,” said George Valy , president, Indian Rubber Dealers Federation.
He felt that the official launch of the scheme could encourage the growers to tap more rubber after the Onam festival. Right now, the supply is tight with many growers preferring to forego tapping as, at the present price level, the commodity is economically nonviable.
The current international price of RSS-3 grade rubber is Rs 20 lower than the domestic price. The block rubber in international market is available at Rs 30 less. These factors have encouraged imports despite the government increasing the import duty by 5% to 25%. Last year, India imported over 4 lakh tonnes of natural rubber, which is a record.
“The subsidy scheme of the state government will provide only a temporary relief. To really help the growers, the Centre should curb imports. The commerce ministry should also procure rubber like they do for other commodities,” said PC Cyriac, former chairman of Rubber Board.
From 77,762 tonnes, the imports have spiralled to over 4,14,606 tonnes in a span of six years. In the same period, the production dropped from 8,64,500 tonnes to 6,55,000 tonnes. The imports have gone up 433% when the production dropped 24%.
