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February 25, 1999


Import ban raises fresh hopes in Kerala rubber growers

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D Jose in Thiruvananthapuram

Nearly 900,000 small and marginal rubber growers in Kerala, reeling under an unprecedented price crash, have heaved a sigh of relief with the Central government deciding to ban import of natural rubber under the advance licensing scheme and to licence the Kerala government for exporting latex.

The two measures have given a boost to the market with the per-kg price marginally increasing from Rs.26.75 on Monday to Rs 28 on Tuesday. This is almost equivalent to the international price recorded this week. Market sources consider this as a positive sign as the price had touched a seven-year-low of Rs 24 last week.

Although the rubber growers in the state do not expect that the measures would push up the price to the benchmark price of Rs 34.05 fixed by the Central government in September 1998, the Kottayam-based Rubber Board officials and marketmen feel that the Central decision to ban import would help the depressed market sentiments.

The Indian Rubber Dealers Federation secretary E T Varghese told Rediff On The NeT that import of nearly 155,000 tonnes under the advance licensing scheme (export against import) from 1995 to 1999 was the major reason for the steep fall in the rubber price in the last few years.

According to Varghese, the impact of the decision this year will be minimal as several tonnes of natural rubber already ordered are in the pipeline. The licence-holders have imported only 13,238 tonnes. They are expected to meet the obligation of importing rubber they have contracted with international agencies against exports.

If the ban continues it would definitely have an impact in the long run.

Rubber Board officials at Kottayam said that the Central order envisages that the advance licence-holders will now have to procure their requirements from the State Trading Corporation at or below international prices.

Rubber Board chairman K J Mathew said that the decision would restore confidence in the market. It will give a boost to the depressed market, he added. However, he refused to risk a guess as to what extent the rubber price would increase due to the ban on imports.

Rubber growers do not think that the ban would bring succour to the growers only when the accumulated stock of 293,000 tonnes is liquidated.

This is possible if the major consumers maintain a stock for at least two months. They now maintain a stock for only 15 days.

Rubber Merchants' Association sources at Kochi were quoted as saying that the stock has been increasing as the production has been going up steadily. The consumption, on the other hand, has been witnessing only a marginal increase all these years.

The projected production of natural rubber this year is 640,000 tonnes as against the estimated consumption of around 590,000 tonnes, according to the association sources.

The Kerala government, which got the licence for exporting latex, is planning to export 1,500 tonnes. This is expected to boost the demand for rubber sheets showing a positive impact on the price.

The government was given the licence to export the latex by the Union government recently. The Kerala agricultural secretary Sajan Peter said that the government was planning to involve its three agencies to export the latex by making good the loss they are likely to suffer in the process.

The major problem for export is that the agencies will have to ensure usage of containers conforming to international standards and appoint agents for exports. Both the exercises involve considerable investment, he added.

The ban on import under the advance licence scheme was one of the three major demands made by the rubber growers in Kerala to push up the price.

The other two demands include procurement of natural rubber at the benchmark price of Rs 34.05 per kg and exclusion of rubber from the Indo-Sri Lankan free trade agreement.

A delegation of the Congress-led United Democratic Front opposition is already in New Delhi to plead with the Central government to exclude rubber and other plantation and cash crops from the list being prepared as per the agreement between the countries.

The UDF decided to send its team as the government refused to lead an all-party delegation. However, the state assembly had passed a unanimous resolution urging the Central government to exclude these items from the list, as the government felt it would break the backbone of Kerala economy.

The government had presented its case in this regard before the Union Commerce Secretary P P Prabhu when the latter visited the country last week.

Kerala is the major producer of rubber in India by accounting for production of 514,000 tonnes out of 549,000 tonnes production throughout the country.

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