January is the peak season for natural rubber production in India, but this time monthly output in November was badly hit in the aftermath of a deep crisis in the market. As the local market recorded only Rs 114 for a kg of RSS­4 grade rubber, there is 25% fall in production in November, according to estimates by Rubber Board. The production was just 6,400 tones against 85,300 tones in the same month of 2013. If the trend continued, India will see steep fall in production during 2014­15, creating fresh crisis in the supply side. Total yearly output may fall 10­12 % in full year and it may initiate a multiplier effect in the market as tyre majors will depend more on import as overseas markets are cheaper. Experts say this could deepen the crisis further in the local market as there would be steep fall in prices and may lead to growers abandoning rubber plantations.

Benny Kuriakose, a local farmer told Business Standard that a major chunk of growers, mainly small and medium holders, had stopped tapping for the past couple of years and plan to dismantle the plantations."The average daily expense comes to the tune of Rs 1,200 ­1,500 per acre and wages and earnings are too low. So it is advisable not to tap the plantations that means sharp fall in production for the last six months." He added, "The crisis might intensify further as government's initiatives like procurement have failed miserably. Farmers have no way but to abandon the farms." To cap the climax consumption increased 12% in November at 85,000 tones and import had a jump of 19 % at 33,156 tones. This creates a paradox in natural rubber industry as the dependence on import will be a critical factor for the rubber based industries in India in future. Overall in April – November period import increased 15 % at 298,490 tones. As the growers abandon plantations India will have to depend on South East Asia for rubber. This, in long run, will affect the supply side and the prices as India will turn out to be a net importer of rubber. So the current situation endangers not only the very existence of one million plus farmers, but the availability of rubber in India in the future.

Source: Economic Times