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Monday, January 24, 2022

Price fluctuations turn rubber barons into common man

KOCHI: Anybody from outside Kerala visualizes the image of a planter from the rubber district of Kottayam as someone wearing branded clothes, living in a posh house, spending lavishly on food and jewellery and driving a swanky car, which he changes frequently.

During the heyday when the rubber industry was booming with prices constantly looking up, the general air of prosperity spread to neighbouring cities as well. The trade in Kochi, the commercial capital of the state 80 km away, benefitted immensely. The sight of planters coming in luxury cars with their family to shop for jewellery and clothes was a common sight.

In the last three years situation has changed for the worse with frequent fluctuation in rubber prices. Today around 95% of the 11 lakh growers who fit into the small category are tightening their belts following rapid plunge in the price levels since last September.But the happy days seem to have petered out.

No wonder the trade is feeling the pinch. Even the big planters seem to be resisting the urge to splurge. “We have noticed a dip in our sales in Kottayam, Idukki and Pathanamthitta districts in our top end cars,” points out Eldo Benjamin, vice president sales and marketing of Nippon Toyota, the main dealer for Toyota vehicles. Its premium Innova and Fortuner have brisk sales among the planters who use it as family cars.

“My income from rubber has shrunk. But my expenses still remain the same. My eldest daughter is in the eighth standard and her school fees come to 20,000 in addition to school bus charges. Besides, I have loans to repay. So the only way out is cut down on fancy clothes and food,” says Sunny Augustine, who earns his income from 4 acres of rubber plantation in Kottayam.

“Many are holding on to the present cars and are thinking twice about changing it,” Eldo added, indicating that they are feeling the heat of falling rubber prices.

Why cars, even the household goods sales have taken a beating. Says Jerry Mathew, managing director of home appliances retail chain Lan Mark: “Our sales contribution from places like Kanjirappally and Pala in Kottayam has dropped drastically particularly income from fridges and washing machines. The central Travancore area used to contribute 40% of our sales. But, not any more.” Already jewelers are witnessing a 30 to 40 % drop in sales due to gold price increase. The rubber-price crisis worsens their situation.

According to Roger Pulimmoottil, MD of Pulimmootil Silks, in Thodupuzha, a bustling town in the neighbouring Idukki district, a 20% fall in business is noticeable. “When the rubber pricesgo up, middle class family purchases around 5,000 worth of clothes. But such instances have become less frequent.”

Sluggish cash flow has pulled down the realty prices in the rubber-growing areas. Consequently, those planters who are thinking of selling a part of their estates are left high and dry. “From 50,000 to 1 lakh a cent, the prices have dropped to 30,000 to 10,000,” says a small grower Babu Joseph.

Grower M J Cyriac, gets to tap 500 trees a day out his 1,000.

The daily output, he says, has dropped from around 70 kg to just over 20 kg of rubber sheets. Considering that he gets to tap around 20 days a month, his monthly income, after taking care of the tapping charges of 2.5 per tree and cost of fertilizers and chemicals, has dropped from around 1 to 2 lakh ( based on earlier higher prices) to around 25,000 to 30,000. Normally the growers get around 100 tapping days. This year, the number of tapping days has dwindled to 70 because of persistant heavy rains. To add to the woes, excess rain led to shrinking foliage thus squeezing the production.

The rubber prices touched a high of 240 in August 2011. Volatility increased in the subsequent years.

But the growers had no reason to complain when the prices were hovering in the range of 170-180 per kg. The prices had fell to 150 per kg for a brief period in early 2013. But after September, 2013, things began to take a turn for the worse. The prices touched a low of 142 in February, far below the breakeven level.

The growers can’t easily shift to other crops. The reason: there are no dependable crops that will provide a steady income. Though pepper prices are up, its production has come down in Kerala.

Recent decision for procurement by state agencies may bring temporary relief.

But the moot question is how long that can be sustained.

India Times

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