As compared to 2009, this represents a substantial increase of around 75%. The growth has come about mainly on account of the sharp increase in rubber prices which climbed to a peak in 2010. The prices stood at `206.50 per kg on December 31, 2010 as compared to `139 per kg on December 30, 2009.
Commenting on the turnover from the commodity, a Rubber Board official pointed out that the value will be slightly overstated as the price of the higher grade rubber is used for calculations. But the data on rubber price usually refers to the higher grade price, he said.
Since Kerala accounts for 90% of the rubber produced in the country, bulk of the wealth created would benefit the state-based growers. North-Eastern states together have a share of 4.6% while Karnataka and Tamil Nadu account for 2.57% and 2.97% respectively. Rubber is also grown on a limited scale in a few other eastern and western states.
Two interesting aspects about wealth creation in the sector is that a large proportion of the gains is cornered by small growers because small growers account for 94% of the total rubber produced in the country. Secondly, rubber is one of the very few products in which the difference between the price that the grower gets and the market price is minimal.
“If you take an average price taking into account the different quality grades of rubber sold, the growers are getting around `196 per kg when the published market price is `206 per kg,” said N Radhakrishnan, president, Cochin Rubber Merchants Association . He said the prices grew 8 times in this decade. “Not even gold has registered such a growth,” he said.
Changes in climatic conditions have affected the supply of rubber in the domestic as well as the international markets. The fact that supply cannot be increased in a short time span as new plantations take seven years to mature has inflated the price. On the other hand, the additional capacities created by tyre companies in the country have led to a higher demand for rubber.
The rubber sector in the country has achieved the highest productivity of 1,776 kg per hectare per year. This has helped the growers to further augment their income. Unlike in the past when prices touched record levels, the price rise this time has not led to a consumption boom. Biju John, proprietor, CPM Spices Corporation , a leading rubber trader in Kottayam, said growers are using a major portion of their income for investments this time. “Investments in real estate and capital market have gone up,” he said.
House construction activity has gone up substantially in central Kerala. He was of the view that automobiles sales have gone up because low-cost loans are available. According to him, rubber production is likely to be lower than the estimates done by Rubber Board.
The central government collects a cess of `1.5 per kg of rubber while the state government collects sales tax. Thousands of dealers, transporters and rubber tappers depend on this “money tree” for their survival.
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