Rubber production falters; Minister calls for crisis forum
16 Jun 2014 - {{hitsCtrl.values.hits}}
Sri Lanka’s Plantation Minister Mahinda Samarasinghe has called for a special stakeholder forum to discuss the present crisis situation faced by the country’s rubber sector originating from lower demand at the international market place.
According to Colombo Rubber Traders Association (CRTA), the rubber auction prices have fallen 50 percent over the last three years. The current latex rubber price (latex crepe 1x and 1) hovers around Rs.300-320 per kilo whereas the prices were at Rs.600 in 2011.
“The rubber industry is not doing that well. Therefore, I want to start a forum where all industry stakeholders could come together and discuss the present issue on a continuous basis until the situation gets better,” Minister Samarasinghe, delivering the keynote address of the 95th Annual General Meeting of CRTA, said.
Smallholders produce the majority of Sri Lanka’s rubber output—about 63 percent— while estates including the Regional Plantation Companies account for the rest.
According to CRTA Chairman M.S.Rahim, natural rubber prices are expected to decline further as a result of slowdown in major economies, excess production coming from new producers and the stockpiles which are estimated at 300, 000 tonnes in China, the largest consumer of natural rubber.
According to the Central Bank, Sri Lanka’s rubber production declined by 14.2 percent to 130, 421 metric tonnes in 2013 compared to 2012. In 2011, the rubber output stood at 158, 000 tonnes.
Most of the rubber traders have run out of stocks. It won’t be long that rubber-based manufacturers will have to import majority of their requirement
According to CRTA, one of the key reasons for the drop in production is possibly the lower productivity of smallholders who account for total of 79, 395 hectares, of which data on yield per hectare is not currently available.
“The point I wish to draw your attention to is that yields from these large extent cultivated will be well below the average yield of the larger tracts of smallholdings consisting of 2 acres above,” Raheem said.
He also added that growers in less than 2 acres category have no means of producing RSS grades and will end up selling their latex to dealers or latex consuming glove manufacturers at farm gate prices.
On the other hand, he pointed out that Regional Plantation Companies who manage 46, 892 hectares with 31, 763 in tapping produced a total of 26, 479, 164 kilos, which yielded an average of 833.62 kilo per hectare.
“Four of the larger companies have reported yields of 900-1000 kilos per hectare in spite of reported bad weather during the period,” Rahim noted.
Meanwhile, the margins of Sri Lankan rubber producers are getting thinner amid escalating cost of production.
For smallholders, the production cost of RSS kilo is estimated at Rs.148 while for Regional Plantations Companies the number stands at Rs.220, as a result of the Plantation Workers’ Collective Agreement which every two years revises up the wages of plantation workers.
The rubber industry is not doing that well. Therefore, I want to start a forum where all industry stakeholders could come together
According to Regional Plantation Companies, the cost of production rose by Rs.20-25 per kilo following the latest plantation worker wage increase.
“The amount of Colombo rubber at the auction is getting lesser day by day. Most of the rubber traders have run out of stocks. It won’t be long that rubber-based manufacturers will have to import majority of their natural rubber requirement,” Rahim cautioned.
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