Maximising profits from rubber lands
Dr. L.M.K. Tillekeratne, Former Director, RRI
RUBBER PRICES: Rubber farmers of Sri Lanka, both in the smallholders
sector and in the estate sector are happy now with the increased price
of rubber in the world market since the beginning of 2003.
The price of all grades of Natural Rubber (NR) before the last
quarter of 2003 was around Rs. 40 per Kg, which was not sufficient for
the rubber farmers to meet even the tapping and processing costs.
Hence most of the rubber land owners neglected their estates or lands
without conducting tapping. It was during this period that the rubber
production of Sri Lanka fell below 100,000 Mt per annum.
Even the efforts taken by the Government to give a concession to
farmers by way of abolishing the Cess of Rs.10.49 per kg imposed on
rubber exports was not substantial for them to cover their cost of
production.
It was during this period that some people believed that the rubber
industry is a sun set industry without a future and hence thought of
diversifying prime rubber lands into crops like tea and oil palm
especially in the southern province of Sri Lanka.
Even during this bad period, the production of rubber in India,
Thailand and even in Vietnam increased vastly. The only secret behind
this increased production in these countries while the prices were low
was their higher productivity.
In these countries, the average national productivity of rubber
reported were well over 1500 Kg/ha/yr while the same in Sri Lanka was
around 900 Kg/ha/yr until about 2003.
But with the improvement of the rubber prices, all the abandoned
fields were taken for tapping and rain guards were used by some
plantations and the smallholders to minimize crop losses during rainy
months and as a result the national productivity of rubber in Sri Lanka,
too has now risen to about 1050 Kg/ha/yr.
If the national productivity is raised to over 1500 Kg/ha/yr by
applying modern technology developed by the RRI, there is no reason for
the rubber farmers to worry any more with the fluctuating rubber prices
in the world market.
This is how the rubber industry in Thailand, Vietnam and in India
survived when the prices were low.
In other words, the income from rubber lands depends on two factors,
the world market rubber price and the level of productivity. The world
market rubber prices are manipulated by the European and US and other
consumers and they are based purely on demand and supply.
The only factor controllable at the farmers end is the yield per
hectare or the productivity. Hence, rubber farmers who are expecting
higher incomes from their rubber lands must try all means of using
modern technology in their estates aiming at maximum productivity.
Then only they can survive without depending on the world commodity
price fluctuations. If not, their efforts go waste and their plantations
will have to suffer again if by any chance the world market rubber
prices drop down to very low level, which is very unlikely to happen in
the near future.
According to International Rubber Study Group predictions, there will
be a shortage of 3.5 Mn Mt in the world by year 2020. This short fall
will increase to nearly 6 Mn Mt by year 2030.
Further, the demand for rubber in Sri Lanka today is also fast
increasing and hence even if the world rubber price drops, the demand
for rubber in Asia by then will be such that the rubber farmer in Sri
Lanka can get a guaranteed attractive price locally from those
industries.
What are the new technologies developed by the RRI and the steps
needed to be taken by the rubber farmer to increase productivity?
In order to increase productivity of rubber lands the most essential
initial step to be taken by the farmer apart from selecting a good land
for planting is the selection of quality rubber plants from recommended
high yielding clones for planting. Planting a substandard rubber plant
in the field will be a liability to the farmer for thirty years.
It should be mentioned here that the quality of planting materials
available in Sri Lanka including in some of the estates is very poor due
to the use of unsuitable bud wood for bud grafting from over aged
obsolete nurseries.
If the correct stock nursery plant and correct bud wood is not taken
there is no point in talking about the quality of the budded plant
produced and its potential yield after five to six years.
Number of healthy trees in clearings should be over 450 per ha at the
time of commencing exploitation. If it is low, again the yield will get
badly affected. In order to enforce farmers to maintain high stands in
the field in future before releasing the installments of subsidy a
physical count of the trees present in the field are also taken into
consideration in addition to girth measurements.
Regular manuring of the young plants is also essential to obtain a
high productivity. If manuring is not done systematically, there will be
uneven growth of the rubber plants in the field and hence tapping all
trees at once cannot be conducted as scheduled.
Even to mark the new trees to be exploited, a stencil should be used
to make sure that the tapping angle is 30 degrees and not above or
below. If the cut is too steep and over 30 degrees, the drying of the
latex on the panel will be faster and hence the yield will be less.
If it is below 30 degrees, latex will spill over from the panel there
by incurring losses. Hence in order to get highest yields, tapping has
to be done by skilled tappers and not by normal sundry workers. Regular
weeding of the farms and applying fertiliser to trees in the recommended
way also contributes to the high productivity of rubber lands.
One of the main obstacles for harvesting rubber in Sri Lanka is rain
interference. In order to avoid that RRI recommended Rain guards must be
used in the wet zone.
If not, not only the farm incurs crop losses, but when double tapping
is conducted to recover crop losses in estates, most of the rubber trees
undergo tapping panel dryness making them unproductive.
If all these recommendations are carefully carried out, increasing
the productivity of rubber lands to over 1500 Kg per ha per year is
quite simple. If everybody does that importation of over 10,000 Mt of
raw rubber to Sri Lanka to cater to the rubber products industry could
be curtailed easily.
With the increase in the selling price of RSS rubber and latex since
November 2002 which was around Rs. 150/Kg and the rubber production in
the country also recorded a steady increase. Rubber prices in the local
auctions shot up to above Rs. 200/Kg in the first week of February,
2006.
Latex crepe no. 1X was forward sold in July this year for over Rs.
400 per Kg. These are all good news for the rubber farmer.
However, due to defaulting of orders by some Asian rubber consumers,
the price of RSS dropped down to Rs. 160 per Kg. Rubber farmers need not
be worried over this artificial situation that occurred in the world
market. According to trade information this is due to the defaulting of
orders by China. Whatever the reason would be, there is no reason for
the rubber prices to go below Rs. 150/Kg.
Profitability of rubber plantations depend directly on the cost of
production of the rubber manufactured out of the latex harvested from
the plantation. Hence in order to maximise profitability, COP must be
kept at the lowest possible level.
An important parameter affecting the cost of production of rubber is
the tapping cost, which is over 75% of the cost of manufacture of rubber
in the factory.
Tapping cost depends directly on the intake of tappers. Even though
the full wage is paid for tappers for collecting anything over 4.5 Kg of
dry rubber, there is potential for them to bring intakes as high as 20
to 25 Kg. If that is the case they should be paid extra for every Kilo
of extra rubber they harvest from their blocks.
In RRI owned estates at Agalawatta, and in many other estates under
private management, Rs. 15.00 per every kilogram of rubber over 8 Kg is
paid as an incentive to tappers. This is becoming more and more
attractive to tappers and hence the average intakes in most of the
rubber estates are reported to be on the increase thereby lowering the
cost of manufacture of rubber.
Hence by minimising the COP of rubber and by increasing productivity
of the rubber lands the Grower can get a handsome income in the future
too, without depending on the price quoted for this commodity at the
European or Kobe commodity exchanges.
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