Dr. K N Raghavan IRS, Executive Director, Rubber Board, India
The Indian natural rubber (NR) industry is passing through one of the worst ever crises of late mainly on account of the steep fall in prices, shortage of skilled labour and climatic vagaries. Dr K N Raghavan IRS, who has taken charge recently as the Executive Director of Rubber Board, India, has ambitious plans to increase NR production and productivity to achieve the target of 7,50,000 MT kept for 2019-20 by involving the Rubber Producers Societies (RPS’s) in this effort in a major way. In an exclusive interview to Rubber Asia, he elaborates on these plans and discusses many other crucial issues facing the Indian NR industry. All avenues are being explored to increase the area under rubber cultivation and to take NR production to new heights, he says. EXCERPTS:
Let’s at the outset convey our sincere wishes to you on your new assignment as the Executive Director of the Rubber Board. We know that you have a challenging stint ahead, especially in the backdrop of the crisis phase the NR industry is going through of late. Against this backdrop, we would like to know your immediate priorities as well as medium/long-term plans for the ailing NR industry in India, both the upstream and downstream sectors.
The first priority is to take steps for improving the production of Natural Rubber (NR) in the country. Statistics available with Rubber Board show that NR production which amounted to 9,13,700 MT in the country in 2012-13 has fallen to 6,48,000 MT in 2018-19. Thus there is a fall of 2,65,700 MT in production during 2018-19 when compared with that of 2012-13. The floods that created large-scale losses through the length and breadth of Kerala during the last year certainly contributed to the low production. But it cannot be denied that there has been a steady fall in production during the six years since 2012-13, which is a source of worry. Hence the first and most important priority would be to increase the production of NR.
We plan to accomplish this by taking stock of rubber plantations where tapping is not taking place at present through our network of Extension Officers and the Rubber Production Societies (RPS’s). We will explore the possibility of stimulating tapping by offering the services of tappers bank and by promoting the concept of tapping rubber trees once a week. In those cases where owners of plantations are not able to resume tapping and indicate their willingness to allow contract tapping of rubber trees, the RPS’s would be encouraged to take up this task. The target that we have kept for 2019-20 is to produce 7,50,000 MT of NR and we are confident of achieving this objective.
For the medium term, the objective is to improve productivity and quality of NR, particularly with regard to production from the North East region of the country. This is bound to be achieved by popularising the practice of rain guarding of rubber trees so that tapping can take place even during the period of rains. Another step that is on the anvil is to create a bank of rubber tappers who are trained in the correct method of tapping of rubber trees. The measures taken by the Rubber Board to improve the quality of rubber sheets produced in this region by setting up Group Processing Centres (GPC’s) have met with success. This is proposed to be extended to all rubber growing areas in the North East region, with the help of companies under the Rubber Board as well as by promoting efforts of individual entrepreneurs. The Rubber Board companies would also lend assistance in marketing the better quality rubber sheets produced so that the benefits reach the producers without fail.
The long-term goal is to ensure that domestic rubber plantations produce sufficient rubber to meet demands of the manufacturing industry in India. To attain this objective, more area needs to be brought under rubber plantations all over the country. Similarly, the old and senile plantations would need to be replaced through replanting. Hence the long-term goals are sought to be achieved through planting of rubber trees in new areas and by replacing senile/old trees through replanting.
It is heartening that the Government of India has come out with a draft National rubber policy which has Rubber as an agricultural commodity, a long term demand of the rubber industry. Appreciate your comments on how it will impact the revival and growth of the Indian rubber industry.
Natural Rubber Policy was formulated by the Government of India after consultations with various segments of rubber industry. Clause 3.1 of this policy states that the Government would explore, in consultation with the Ministry of Agriculture and Farmers Welfare and the Department of Revenue, the possibility of treating NR as an agricultural product for all practical purposes and income from rubber production as agricultural income.
The policy has also clarified that it has been pointed out by various stakeholders that treatment of NR as agricultural product for domestic policies would not be inconsistent with its exclusion in the Agreement on Agriculture of the World Trade Organisation (WTO). Hence, as things stand now, while it cannot be said that NR has been brought under the category of agricultural products, there is a move in that direction by the government.
Bringing NR under the category of agricultural products would bring in plenty of advantages to the rubber growers as it would have implications of bank finance, taxation matters etc. This would also make them eligible for benefits under the agricultural promotion schemes at national and state levels. These financial and other incentives would serve to motivate rubber growers and create a positive atmosphere for stimulating the rubber industry in the country.
The upstream NR sector is facing a lot of negatives like high volatility of prices, spiralling labour cost, shortage of skilled labour, climatic vagaries and growing imports. How do you view these developments?
Volatility of NR prices is the greatest source of worry and apprehension for growers. This is a sector where more than 95% of the growers cultivate small and marginal holdings and hence they feel the impact of the price fluctuations more acutely. A rise in prices of NR is invariably followed by rise in cost of labour which does not come down when the prices start moving south. Hence there is an overwhelming need to show more moderation in fixing cost of labour when prices are on a upward trend, though this is easier said than done.
The Rubber Board is aware about the difficulties caused by the shortage of skilled labour and has initiated measures to tackle them. This involves conduct of special training programmes for tappers imparting the latest and best practices to them and forming tappers banks that can be approached by the growers. This would go a long way to assuage the difficulties faced by rubber growers in this regard.
The challenges posed by changes in climate are well documented and subject of detailed ongoing research. Rubber Research Institute of India has been developing new clones which are capable of meeting the challenges caused by vagaries of change in climatic pattern. This is a continuous process and RRII has the technical capacity to keep up to the demands brought by this situation.
Regarding imports, the picture is slightly different now. In 2012-13 the demand for NR by the rubber consuming industry was 9,72,705 MT while domestic production was 9,13,700 MT. In other words domestic production of NR met nearly 94% of the demand of the consuming industry. However, when it came to 2018-19, domestic production fell to 6,48,000 MT, while the demand of consuming industry increased to 12,11,940 MT. Thus, domestic production could meet only 53% of the demand of consuming industry. Hence, it is only natural that the consuming industry would resort to import of NR to meet their requirements. Further, the international price of block rubber has been staying considerably lower than the domestic price of sheet rubber and this has also contributed to NR imports.
Of late, reports say that growers are largely switching over to other crops and desisting from harvesting of rubber in the backdrop of falling prices. Is this correct and if yes, what are the measures the Rubber Board proposes to incentivise the growers to be active in NR production?
As stated in response to Question 1, there are plantations where tapping of rubber is not taking place. I have already outlined the measures such as popularising the concept of tappers banks and exploring the possibility of contract tapping through the RPS’s that the Rubber Board is planning to introduce to stimulate tapping in such plantations. Government of Kerala has in place a scheme for incentivising rubber production, wherein verification of production is done by the field officers of the Rubber Board.
Regarding switch over to other crops, it is not unusual for farmers to plant crops which have shorter maturity period that offer better returns in the short run. However, it does not appear that large-scale replacement of rubber plantations by slaughtering existing trees and substituting them by farming of other crops is happening.
When do you think the NR prices will make a turnaround? Please elaborate.
Prices of commodities have been showing a cyclical variation of periodic spikes followed by troughs. This is governed by changes in demand and supply of the commodities concerned. NR prices have also been following the same pattern. So it is only to be expected that the present phase of low prices would be followed by a period of high price for NR as well.
It is difficult to predict an exact timeline for the beginning of an upswing in NR price. Projections by ANRPC indicate that prices would hit an all-time high by middle of next decade, which means that they would commence their northward move in another 1-2 years. It is expected that by that time the demand for NR would start going up while the production would hit a plateau, thus pushing the prices up. This trend can be expected to last for 6-8 years, by which time cycle would come to a close.
In the downstream sector, what India can do in terms of coming out with more value-added products at affordable prices and compete with cheap imports?
Value addition in area of NR has tremendous potential. This is an area where greater emphasis should be placed during the coming years. Rubber Parks, which have been set up in some states, most notably in Kerala and Tripura, provide the required infrastructure which can be used by entrepreneurs who seek to manufacture value added products using NR. The availability of common amenities, especially in the area of effluent treatment, coupled with the advantage of functioning in the same location as other other producers, would help in matters relating to logistics and contribute to bring down the cost of production. The facilities available in these parks would facilitate production of quality products at affordable prices.
However, it is seen that presently the facilities available in these parks have not been fully utilised. Hence there is a greater need to give more exposure and publicity to the amenities that are provided in these parks and devise schemes that would attract more entrepreneurs to use them. Here, the Rubber Board would be working closely with the management of Rubber Parks to help achieve this objective
What are your plans to energise and reactivate the RPS’s by enhancing/diversifying their roles?
The RPS’s have rendered yeomen service to the cause of Rubber farmers. This was a novel concept which brought the farmers in a geographical area together pursuance of a common cause and helped them to create infrastructure and other facilities for common use.
As stated earlier, the Rubber Board proposes to utilise the RPS’s for rejuvenating the rubber farming sector in the country by effective intervention for improving the productivity and quality of rubber produced. The network of RPS’s and the field/extension offices is so elaborate that they have reached even the smallest nooks and corners of the rubber farming sector. RPS’s would be able to assist the Rubber Board in our efforts to improve the production of NR in the country by assisting measures such as creation of tappers banks and initiation of practices involving contract tapping. Further, they can also help to facilitate the setting up of GPC’s which directly help to improve the quality of NR produced, especially in the North East region.
Presently, RPS’ constitute the sole organisational network for the ordinary farmer; further they also provide the link between the Rubber Board and the grower community. Hence a healthy and active network of RPS’s is essential for maintaining the growth and vitality of NR sector.
Appreciate your views on extending rubber cultivation into non-traditional areas. Also would like to know the performance of the NR sector in the North-East.
As stated earlier, demand for NR from the side of the consuming industry during 2018-19 was 12,11,940 MT, while the domestic production was only 6,48,000 MT. The highest quantum of NR production was recorded in 2012-13 when it touched 9,13,700 MT. Demand for NR from the consuming industry is expected to increase during the next decade when industrial output is bound to move up in tandem with the growth of economy. Hence there is an urgent need to increase the NR production in the country to meet the demand of consuming industry. This can be accomplished, in the short run, by improving the productivity and output of existing plantations and removing the senile trees and replacing them through replanting. However, in the long run, there exists a requirement to extend rubber cultivation to new areas.
Rubber cultivation in Kerala, which accounts for more than 78% of country’s production of NR, has hit a plateau, with there being near complete saturation. Hence the Rubber Board has been promoting rubber plantations in non-traditional areas. RRII has contributed in this regard by producing clones which can help the growers to tackle challenges posed by differences in soil and climatic conditions in non-traditional areas. It is widely acknowledged that NR cultivation has taken firm roots in the North Eastern states. Presently, the seven states in the North East together contribute 13% of the country’s total NR production.
The Rubber Board is looking to expand the area under NR cultivation in the North East while simultaneously taking measures to improve the productivity and quality of NR produced. The growers there would be enlightened about the benefits that could accrue from use of better tapping techniques and rain guarding. Along with this, measures would be taken to ensure that sheet rubber and block rubber produced there meet with the quality requirements of the tyre industry. There exists scope for extending the area under cultivation in most states in the North East which would be utilised to meet the growing demand for this vital raw material for industry.
Simultaneously, there would be efforts to have increase rubber cultivation in non-traditional states such as Maharashtra, Goa and Odisha. The RRII is in the process of conducting studies regarding viability of developing Guayule rubber cultivation in India and to develop standard cultivation practices. If successful, this would help to spread rubber cultivation to states such as Rajasthan and Gujarat as Guayule rubber grows in arid and semi-arid environment. Thus, all avenues are being explored to increase the area under rubber cultivation and to take NR production to new heights.
What are your expectation about about the forthcoming IRM 2020?
India Rubber Meet offers a platform where all sections of the NR industry including the growers, dealers, processors, and manufacturers can come together and discuss the various issues associated with the sector. The presence of delegates from other rubber producing countries and representatives from international/multi-lateral agencies concerned helps to understand the global situation and provide a global perspective as well. Thus, this event is in the nature of a meeting place where all the sections of industry can meet and understand the issues faced by each other and work towards finding solutions. Opportunities are available to forge business relationships and for bilateral meetings on the side. The papers presented and the discussions and deliberations thereon helps the delegates to gather greater insight about each segment of the industry.
IRM 2020 is slated to be held at Chennai during the first quarter of 2020. The previous editions of IRM have been successful, both from the point of participation of delegates as well as from the scope and depth of discussions that took place. It would be the objective of the organisers to ensure that, in addition to maintaining the momentum generated during the previous editions of IRM, the next meeting breaks new ground both with regard to delegate participation and in having more focused and result-oriented deliberations.