The Kerala government’s market intervention operations in the crashing natural rubber (NR) market seems to be ineffective as the procurement has not been picked up, yet.
The local price is on a downward trend, though the procurement had officially been kicked off on the 4th of this month. So far procurement agencies like Kerala State Co-operative Rubber Marketing Federation Limited ( Rubber Mark) and the Rubber Producers Societies (RPS) together procured below 500 tonnes because of lack of funds.
So, the market intervention operation does not have a positive impact on the price line of the commodity. The prices of bench mark grade RSS -4 is still hovering below the level of Rs 150 and today it quoted a rather desperate level of Rs 147/Kg. This creates a depressive mindset in the High Range districts of Kerala as the growers demand at least Rs 165/Kg to cover the production cost.
Since the price had a sharp fall for the last six months the government had announced a scheme to improve the market in February. According to the scheme Rubber Mark , the nodal agency , Kerala State Co-operative Marketing Federation (Marketfed) and RPSs would procure rubber at a price tag which is higher by Rs 2/kg, than the daily market price.
The government had planned to procure rubber till the market price reaches Rs 171/Kg, which is the average price of natural rubber in last three years. The government had earmarked Rs 10 crore for procurement and Finance minister K.M. Mani announced that whatever fund required for procurement would be released from time to time.
The market had reacted positively to the announcement and the price improved quickly up to Rs 160. But as the market intervention operations were not picked up on the expected levels, the price began to fall and it is below Rs 150 right in the middle of the off season.
Though the government had announced the scheme in the first week of February, Rubber Mark kicked off the procurement only on 10th of this month. As the summer heat is extreme in Kerala rubber tapping has been stopped in a major chunk of plantations and procurement agencies are not getting much rubber, said an officer of Rubber Mark.
All the agencies together collected roughly 500 tonnes so far, he said. Though RubberMark started procurement on 10th of this month, their collection below 50 tonnes only. A top officer of RubberMark told Business Standard that through the state government announced the scheme, the fund is yet to release to the agencies. “We are not in a position to give money to growers as we have not received the fund. So procurement is very slow as we can not disburse the price amount to farmers,” he added.
Marketfed chairman V. Sathyaseelan earlier urged the government to increase the handling charge that had been set for the procurement agencies by at least Rs.1/Kg. As per the current arrangement, the agencies will be provided Rs.6, of which Rs.2 should be provided to the farmers. He said that the handling charge of Rs.4 per kg was insufficient and that the agencies could suffer losses.
Because of reasons like this, procurement agencies do not show much enthusiasm in this exercise as it may incur huge loss to these institutions as it happened in earlier occasions. Timely release of funds from the government might not occur, so we have to incur huge losses, officer told Business Standard. Marketfed managing director, Tomin Thachankery told Business Standard that so far Marketfed had collected roughly 50 tonnes .
But Market fed had not yet received the fund from the government. We expect it to be released soon. Unless we get the funds it will be very difficult for us, he said. The government plans to procure 10,000 tones of rubber through the market intervention operations.
Market sources said that the announcement of the government only to appease the voters in the elections as the drop in rubber price is a genuine issue in at least 8 Lo k Sabha segments of the state. Since funds are not available with the procurement agencies, this will be a big failure. Though the state government expect financial support from the center, the center is not much keen on the market intervention operations.
The decreasing trend in price is mainly due to the lack of local demand in the market. Import is still a better avenue for the local industries as Bangkok market quotes Rs 139/Kg today. According to experts unless genuine industry demand exists in the market prices will not pick up, market intervention exercise will be a failure as not only the procurement agencies but the growers are not showing much interest in it, they said.
Source: Business Standard
