Rubber industry outlook positive

Outlook for the rubber industry would be positive for the year 2011.

Kelani Valley Plantations Chairman A M Pandithage in the company's 2010 annual report said that outlook for the rubber industry would seem positive in 2011 in the face of encouraging market prospects for rubber.

He said the rubber market has been pushed to its present level by production shortfalls in major producer countries and increased demand driven largely by the automobile industry particularly in India and China.

This is a rare and unprecedented convergence of unlikely circumstances and any expectation of this position being sustained at these levels, for any length of time would be unduly optimistic.

"Historically with time, all commodity markets adjust to supply, demand and pricing dynamics.

In this context, it is important to consider the likely impact of the impending worker wage increase on future production expenses, while the recently imposed enhancement in the energy tariff adds a further burden to an industry already weighed down by rising input costs. The combined impact of these factors is likely to erode to a large extent the benefits that may be derived from improved commodity prices," Pandithage said.

"The plantation industry would be an obvious area to address and already we have seen the emergence of the State initiatives in the formulation of national policy," he said.

However it is imperative that strategies are clearly articulated and implemented early to ensure the sustainable growth of this industry.

It is equally important that State driven plantation policy initiatives address the multi-faceted challenges faced by this sector in their totality, rather than searching for piecemeal solutions, he said in the annual report.

IH