The document summarizes the impact of liberalization policies on Kerala's natural rubber industry. Prices crashed from over Rs. 60 per kilo to Rs. 23 due to removal of import restrictions. Most rubber growers, used to government support, could no longer break even at such low prices. While some diversified crops, others were forced to sell land. The future remains uncertain as domestic prices now depend on unstable international markets. However, organizations like Rubber Producers' Societies are helping growers improve efficiency and quality to earn higher returns. With support, Kerala's rubber growers are adapting to survive the ongoing crisis in the industry.

1. Rubber hit by liberalization
During the 1980s natural rubber sold in India at one-and-
a-half times the international price. Post liberalization the
chickens came home to roost. Prices promptly crashed
from over Rs 60 a kilo to an all-time low of Rs 23.
Recently they revived to about Rs 48 per kilo. The impact
in Kerala of this roller coaster price ride was devastating.
Kerala's complacent growers were hitherto protected
from competition by hefty import duties and government
support prices. In the future domestic prices were to be
completely dependent on external factors. Quantitative
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2. restrictions were removed on 31 March 2001, and the
WTO agreement took over.
The crash in prices brought all rubber businesses to a
standstill. Rubber growers had two options. They either
accepted life with competitive, fluctuating international
prices, or left the rubber business. Most left.
"After rubber prices fell, I sold the five acres near my
Kottayam house and bought land in Kasargod and
Kannur," said Lalachen. He is now cultivating coconut and
betel nut trees there. "At Rs 25 a kilo, you could not
break even, because that is the production cost."
The future is not going to be easy either, say sources in
the United Planters Association of South India (UPASI),
Coonoor. Since domestic prices are higher than
international prices, multinational corporations are
expected to make inroads. The removal of quantitative
restrictions will lead to dumping of both natural rubber by
Sri Lanka, Vietnam and Indonesia, and rubber products
such as tyres by China and Korea.
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3. Kerala accounts for 92 per cent of the country's total
natural rubber production. For many years Indian rubber
prices were protected from the vagaries of international
market prices. 98 per cent of imported rubber was
channelised through the government State Trading
Corporation.
Even when export prices fell, the Government managed
to keep prices stable, through intervention by the STC
and cooperatives - and by sometimes bearing the losses.
So rubber growers with huge land holdings, especially the
Syrian Christians in Central Travancore, were very well
off indeed. Even small growers with two acres under
rubber could afford a two-storeyed house, a car and a
public school education for the kids. Cash flowed in, and
the future looked good. The State enjoyed a monopoly,
offered protection, and that was unlikely to change.
Unfortunately, it was too good to last.
All rubber growers, even holding less than two acres, are
dependent on at least two hired tappers. A tapper is paid
35 paise for every tree. Add to that the cost of fertilizers,
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4. soil-erosion measures, maintenance of smoke houses,
other processing costs, and it all mounts up. The grower
then has three options. He can choose to cease tapping,
cut down on crucial inputs, or sell the land.
"I apply manure only once a year now," admitted
Augustine Mathew who owns four acres in Pala. "As a
result, the yield from 100 trees has been reduced from
20 kilos to 18 kilos. But I cannot invest in fertilizers
unless the price of rubber remains stable between Rs 45
and Rs 50. I have often had to stop tapping."
Binny Mathew also owns around four acres in Pala. At Rs
45 a kilo, he could run his home on the income from
rubber production alone. Today he does not make sheets
because of the processing costs. Instead, like many
others, he sells the latex. "Our standard of living depends
heavily on the price of rubber. There was a crisis when
prices fell below Rs 30 a kilo," he recounted. "I have
children studying in CBSE schools, a house and a car to
maintain. I couldn't pay my bills. Now I also grow
coconuts on 20 acres in Malabar District."
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5. But he concedes that his lifestyle has taken a
hammering. New international trade rules apart, the
Malayali rubber grower also has an attitude problem.
"The hands-on Punjabi farmer is always working in his
fields with his family, no matter how large his land
holdings," says R K Krishnakumar, Rubber Promotion
Commissioner, Rubber Board, Kottayam. "But rubber
growers in Kerala were always more landlord and less
farmer."
Hands-on farming, in fact, stopped with the first-
generation rubber farmers. Since then, generations of
rubber growers have been dependent on hired labour.
Even with the fall in prices, this has not changed.
"We are not asking growers to tap the trees themselves,
although that would be the ideal situation," Krishnakumar
added. "But we do ask them to be good managers - at
least be on site when work is going on."
Unfortunately, the family working in the field is
unthinkable for the average Malayali rubber grower.
"Rubber growers are not willing to adjust to the post-
economic reform regime," says a rubber expert. "The
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6. price could well fall back to Rs 20 a kilo again." Kerala's
rubber grower is more worried about his lifestyle than
increasing efficiency and reducing production costs. Also,
very few increased acreage. Even when prices were high,
money was never invested back into the plantation or on
new land. And with constant subdivision of land, families
have less and less.
The only real investment made was in human capital,
namely education. Families that bred professionals have
handled the crisis better because of supplementary
incomes. Binny's brother is a professional who works
abroad. Even 40-year-old Augustine works as a liaison
officer in a crump factory that manufactures rubber
blocks. But the future is not uniformly bleak. At the
Janatha Model Rubber Producers' Society (RPS) in
Kottayam, six women are stacking aluminium dishes
layered with treated latex in a room. The `smoke room'
is shut and operating.
Members keep walking in - some to buy new knives and
polythene sheets. Others want to know the date of the
next workshop for rubber growers. Secretary Jacob K A
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7. has his hands full, especially after the fall in the price of
natural rubber. More hands-on grower involvement,
better management at the ground level, and help from
the government can ensure the industry manages to
survive. Growers are getting more involved in production.
With this uncertainty, they cannot afford to remain just
landlords.
One key measure is forming Rubber Producers' Societies.
The RPS takes latex from the growers and processes it
into RSS-Grade 1 sheets. It bears all expenses of
processing - smoke house, dishes, roller etc. The sheets
are sold mostly to crump factories, traders, and those in
the tyre re-treading business.
Although the current price of natural rubber is Rs 47 a
kilo, a RPS can get at least three rupees more than the
market price if it produces better quality sheets. More
money goes to growers. The RPSs under the aegis of the
Rubber Board also conduct workshops on lowering costs
of production, judicious application of fertilizers and
pesticides, conservation of rainwater and other
measures. This can improve tapping by 30 per cent
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8. resulting in more latex. The Rubber Board too is hopeful.
"If GDP growth is predicted at six per cent, we're ensured
a stable high price," says Krishnakumar.
Growers like Binny hope so. Planting another crop is
hardly an option. No other fetches the same daily
income. Other crops are also more labour intensive.
Rubber is ideal for rain-fed Kerala. Money pours in from
the sixth year of tapping, and continues for 25 years.
Old, unproductive trees are then sold as timber for
enormous sums.
The government too can help, according to UPASI. It
should ensure rubber is classified an agricultural product,
rather than an industrial raw material, to benefit from the
WTO Agreement on Agriculture (AoA). Since natural
rubber is still not included in the AoA, the bound rate on
import duty should be raised from the current 25 per
cent to 100 per cent for latex and 150 per cent for
natural rubber sheets - especially because of our higher
domestic price; and other subsidies provided.
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9. "Yes, some of us did lead an unreasonable lifestyle,"
admitted one chastened grower, "but no one imagined
such a crisis." However, the crisis is here to stay. And
Kerala's rubber growers are slowly changing to survive it.
They can with a little help from the government.
Shwetha E George
Kottayam, Kerala
From Grassroots Feature Network
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