The Hindu : Plea to continue export incentive for natural rubber

Online edition of India's National Newspaper
Friday, Mar 19, 2004

Kerala

Kerala

Plea to continue export incentive for natural rubber

By Our Special Correspondent

KOCHI, MARCH 18. The Kerala State Cooperative Rubber Marketing Federation has pleaded for the continuance of export subsidy to natural rubber, at least for the next five years, to sustain the growers and to bring stability in the domestic market.

Talking to reporters here, the Rubbermark president, K.K. Abraham, pointed out that the Automotive Tyre Manufacturers Association (ATMA) had approached the Union Commerce Ministry with a plea to wind up the subsidy in view of the shooting up of the prices of natural rubber and also because of liberal stocks for the manufacturers.

However, Prof. Abraham said, the Government had been lowering the import duty of natural rubber and this would be nil in a couple of years when the WTO stipulations come into full force. There would be a flooding in the domestic market and this would be detrimental to the one million growers here, he said.

The Rubbermark, which had created a record of sorts by exporting 50,000 tonnes of natural rubber so far, is the biggest apex body of the rubber growers in the cooperative sector having 38 member societies and over 13 primary cooperatives in central Kerala. Over two lakh marginal rubber farmers are members of these societies.

He said the Union Government declared the minimum price for natural rubber in September 2001 as the price prevailing then was uneconomic due to imbalances in supply and demand. Even the declaration of minimum price had no effect in bringing up the price as the domestic supply was in far excess of the demand. It was then that the Government started thinking on export lines and provided an incentive as the international rates were also at the lowest slab. It was not a direct subsidy but the Government was only compensating the farmers for the packaging and transportation charges which should be in line with international standards.

Up to February this year, the country had exported 67,000 tonnes and Rubbermark had become a dependable source for supply of natural rubber. It had the status of an export house.

The recognition of India as a reliable source of natural rubber in international market would propel it to a position where it could control the prices. Now the Indian rubber was fetching $50 less than the international price for exports, he said.

K.N. Raghavan, managing director of Rubbermark, pointed out that export of natural rubber was not detrimental to the interests of the consuming industry, as export was viable only if international market prices were higher than the domestic prices in spite of the export incentive.

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