'Rubber Board not in favour of futures trading ban'
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On one hand, when global rubber shortage is taking a toll on the rubber industry, while India, having about 9% share in total global rubber production, is muddled in the debate over demand-supply issues and futures trading of natural rubber, all eyes are set on the government’s move in ensuring right price for the raw material to over a Rs.225 billion Indian tyre industry.
Speaking about some of the key factors, other than futures trading and import encouragement, that are affecting rubber prices, Sajan Peter, Chairman of the Rubber Board of India shared his views with Rutam Voraof Commodity Online about the current scenario of global shortage of natural rubber and the future strategy of the Board to ensure greater availability of the commodity for industry.
Excerpts:
Commodity Online: Looking at the current shortage of natural rubber (NR) in the global markets, what will be the focus area for the Rubber Board?
Sajan Peter: The focus of attention of the Rubber Board over the past so many years has been on enhancing production and productivity with a view to matching the demand - supply position of NR. Availability of land for expansion of area under NR in the traditional rubber cultivation belt in India is extremely limited and therefore the Board has been making affairs to extend rubber cultivation in non- traditional areas for the last two decades. Extensive areas marginally suitable for rubber cultivation are available in the Northeastern states.
During the 11th Plan period, the Board strengthened its infrastructure in this region to promote rubber cultivation on a still larger scale. Recently, a post of Additional Rubber Production Commissioner has been created at Guwahati to coordinate the development activities in the region. Coupled with this, efforts are on to promote replanting in the traditional area. A large number of plantations in traditional area have become senile and uneconomic. Large scale replanting with new high yielding cultivars is necessary to increase productivity of these holdings. The Rubber Board has recommended increase in replanting subsidy to motivate farmers for timely replanting.
CO: How does Rubber Board plan to promote rubber plantation among small planters, who have been facing increased uncertainty in the wake of uneven weather?
Peter: With the advent of globalisation, rubber prices have become highly volatile. It is the small farmers, who will be the worst hit in the event of a price crash. The ill effects of such a crash can be minimized to a large extent through increase in production and productivity of plantations. India, currently, enjoys the first position in productivity of NR among the major producing countries. It is note worthy that productivity in small holdings is higher than that of large plantations. But still there is room for improvement. Our average productivity at present is 1784 kg/ha. But there are a sizeable number of small holdings where the productivity is 2000 kg or more. It has been the constant endeavour of the Board to increase productivity, and numerous productivity enhancement schemes are currently being implemented. In the liberalised regime, the Indian rubber grower has to compete in the global market, where quality of the produce and cost competitiveness are the primary concerns. The Board has been addressing these issues successfully.
CO: What is the action plan on developing plantation area in N-E states of India?
Peter: About 4.5 lakh ha is suitable for rubber cultivation in the seven Northeastern states, of which only 90,000 ha have so far been tapped. Efforts are on to double the present area in ten years and schemes for financial support are in place for this purpose. The total financial assistance for new planting and replanting in NE region is Rs.30,000/- per ha. Growers, who own up to 20 ha of rubber are eligible for this. Integrated Village Level Rubber Development Scheme and allied schemes are also being implemented.
CO: Tyre makers have demanded relaxation in import duty on rubber and a ban on futures trading in rubber. What is Rubber Board’s stand on this?
Peter: The stock of NR in our country as on 01 April 2010 is nearly 2.50 MT and as such there is no shortage of rubber in the domestic market. This high stock can easily offset any projected deficit this year. The Board is firm on its stand that no relaxation in import duty is called for at present.
The Rubber Board is not in favour of a ban on futures trading in rubber either. But the Board has strongly recommended that the daily cap be limited to 2% (1 % + 1%) so as to reduce the scope for excessive price fluctuation. This is particularly in the context of a very high farm gate price available to growers to the tune of 92% +.
(commodityonline.com)
9 April 2010 – The China State Reserve Bureau announced that it would sell 30,000 tonnes of natural rubber from state reserves on 14 April via open bidding.
The move by the Bureau is aimed at stabilizing rubber prices and to relieve the current supply pressure, both from lower domestic production and tight overseas supplies.
Continuous drought in southwestern China’s, Yunnan province, has affected 100 percent of its 167,000 hectares rubber plantation, which will possibly cause dry rubber output to decrease by 20,000 metric tons in 2010
Rainfall in Yunnan’s rubber growing area has dropped sharply since last October, with rainfall volume decreasing about 60 percent from previous years.
With the water shortage, the rubber producers were forced to put off field planting this year and taking other measures such as delaying start time for rubber tapping and reducing frequency of rubber tapping.
Yunnan is the second largest rubber producing region in China, next to Hainan, with production reaching 302,000 tonnes in 2009.
The current dry spell in major rubber producing regions in Southeast Asia, especially in Thailand and Malaysia, is not only pushing prices to new heights but also causing supply tightness.
China had bought 105,000 tonnes of natural rubber from the domestic market last year for its state reserves in a move to protect farmers’ interests and regulate supply.
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