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by Dr. L.M.K. Tillekeratne
Director, Rubber Research Institute of Sri Lanka 

Even though the price of all grades of rubber in the market including concentrated latex are very attractive and record highest ever prices since World War II, some of the plantation management companies and smallholders are still not convinced enough to commence replanting programme of their rubber lands without knowing the possible future changes of the prices of this commodity.

At present sheet rubber is fetching between Rs. 90 to Rs. 95 per kg. while crepe rubber is selling at about Rs. 125 per kg. The price of sole crepe today is over Rs. 150 per kg. These prices are very attractive to both smallholders and plantation management companies who were affected badly since the South East Asian financial crisis in mid - 1997, thereby the price of NR in the world market dropped by 50% within a period of 12 months.

During this period most of the rubber lands belonging to plantations and some smallholdings too were abandoned without tapping while some of the plantations replanted their lands with crops like oil palm. At this juncture, some organizations were under the blind opinion that rubber is a "sunset industry" and it will never gain a demand again. Some were advocating to uproot rubber and sell for firewood. But, after careful analysis of variations of the demand and supply situation for NR in the world market, and also taking into consideration the craze in US and European countries to use natural products for health reasons and also considering the growing demand for NR in the local market, RRI predicted that the future of NR will soon become attractive and hence for the farmers to somehow maintain their rubber plantation without neglecting. RRI was strongly opposing the replacement of rubber in the South of Sri Lanka specially in Galle and in Kalutara districts with oil palm concerning its possible environmental impacts. The dream has come true and the rubber prices have improved to record levels today as we have predicted. But unfortunately the availability of rubber lands for tapping is very small for us to reap the economic gain from the improved rubber prices.

According to the available statistics, the demand for NR in the world has increased by 1.2% (that is by 17.63 million MT) in the year 2002, compared to the 4.2% drop recorded in 2001. This is a huge improvement. Reasons given for this improvement are the recovery of developed countries from the world recession and hence their increased rubber based industries. In North America, African countries and in the Asia Pacific Region rubber consumption during 2002 has shown a remarkable improvement. However, the increase in demand for synthetic rubber in 2002 is higher compared to the increase in the demand for NR.

But with the expected increase in petroleum prices caused by the war situation in the Middle East, it is predicted that the prices of petroleum by products will shoot up in the future. If so, a major portion of the increased consumption predicated for in 2003 would be NR which would help to improve the rubber prices further. However, the percentage of SR consumed in the world in 2002 is reported to be 59.6% which is a slight increase over the 59.4% consumed in 2001.

Further, according to IRSG, since 1997 there is no considerable development shown by the raw NR industry. But since 1995 todate the production of SR has gone up by 20%. If not for the el Nino effect which would effect the rubber harvesting in Asian countries, NR production might shoot up owing to the good prices paid for rubber these days. According to the predictions, even though restricting decisions have been taken by the Tripartite Agreement among Thailand, Indonesia and Malaysia, the farmers in Malaysia will continue to harvest the plantations to get the benefits of the attractive higher prices of NR.

Hence, the production of NR for 2003 is expected to go up by 7% during the year while the same is expected to rise by another 5.5% in 2004 too.

Therefore, there is no reason for the rubber farmers in Sri Lanka to worry too much about the future of rubber. At least now they must listen to the predictions of the RRI economists who are making these predictions after analyzing all the data available through IRSG or IRRDB.

Short-sighted policies such as selling harvestable rubber trees for firewood and MDF manufacture should be stopped immediately. Uprooting harvestable trees and even the trees below 20 years, without removing the root-stock should be treated as a national crime. This will not only restrict planting rubber in such fields for another several years due to white root disease, but also create a huge impact on the environment. Those who have been using root-stocks as the firewood for kilns will have no alternative for the future other than falling trees in forest reserves for the purpose. Under no circumstances plantation management companies or the smallholders should exceed the percentage uprooted for replanting beyond 3.3 - 3.5% of the total acreage.

The plantation companies must keep in mind that even if the world market prices of NR drop in the future there is a tremendous demand for NR locally now for rubber based industries which are earning over Rs. 18 billion per annum. According to the situation at present, the rubber products manufacturers import rubber for their own consumption at Rs. 15 - 20 above the local FOB price.

Based on the rising demand neither tea nor oil palm would be more economically attractive than rubber in the future.

Even the consumers of rubber wood for industrial purposes must immediately commence replanting rubber and other timber for their requirement as they have agreed in the contract with the BoI.

Lowering the extent replanted or postponing replanting programmes will definitely affect rubber based industries in the country while affecting the environment adversely. The plan of the Ministry of Plantation Industries to plant 2000ha of rubber this year in Moneragala with the support of the Southern Province Development Authority is an appraisable step taken by the Ministry to help the growing demand for rubber from the end products manufacturers. In order to fulfil this requirement, the RDD nurseries and the private nurseries must commence collection of seeds in Moneragala district for this purpose immediately. They are not available after March. Seed set in other rubber growing areas in August cannot be made use for the programme this year. There is no chance of importing seeds from elsewhere due to possible quarantine problems and also due to very short viability period of rubber seeds. However, with the blessings of the Ministry, the Rubber Development Department should plan to commence this programme at Moneragala without any further delays with full technical backing of the RRI partly by obtaining funding from the rubber manufacturing organizations if possible, who have already agreed to support such a scheme. But thinking of planting anything more than this hectarage for the year will not be realistic under the above conditions.

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