COST AND RETURNS OF NATURAL RUBBER PRODUCTION IN KERALA

Abstract

Given the ongoing crisis in India’s natural rubber sector, which is known for its remarkable performance in the past, there has been demand for state intervention from natural rubber growers. Any policy intervention however calls for the reliable data on cost and returns of natural rubber production, which is presently not available. The present study is an attempt at estimating the cost and returns of NR production. The study begins by highlighting some of the important dimensions of the ongoing crisis- unprecedented decline in the price, productivity and production. While the sector has been faced with heightened import competition, the state support for the sector appears to be on the declining trend. Drawing from the primary data collected from districts-Kottayam and Thiruvananthapuram, the study comes with different estimates of costs like operating cost, total cost, and total economic cost per acre and per Kg of rubber produced. The operational cost per acre of rubber is found to be Rs 37936 in Kottayam and Rs 48816 in Thiruvananthapuram and per Kg of rubber it is Rs 91 in Rs 87 in Kottayam and Thiruvananthapuram respectively. The total cost per acre is estimated at Rs 48424 in Kottayam and Rs 64155 in Thiruvananthapuram. With this total cost per acre, cost per Kg of rubber produced turns out to be Rs 117 in Kottayam and Rs 118 in Thiruvananthapuram. The above estimate may involve an underestimation of about 20-25 percent when compared with the cost involved as per the practices recommended by the Rubber Board and that we observed in case of about 11% of the growers who did not compromise on various operations in the plantations. The underestimation could be attributed to the generally observed behavior of the growers to cut down various cultural operations during crisis on account of reduced cash flow. We have also generated different economic cost scenarios by taking into account, returns from inter crop, subsidy received, potential income from the sale of rubber wood and finally the interest on the value of land used for cultivation. The estimated ratio of returns to cost is found to be greater than one in both the districts. Yet, it is important to note that the estimated net operating income per acre is only Rs 16732 and Rs 19681 respectively in Kottayam and Thiruvananthapuram. The net total income from an acre is estimated to be much lower at Rs 5685 and Rs 4343 respectively in Kottayam and Thiruvananthapuram. At the going market price, the recorded net operating income and net total income for those with holding size below two hectares and depending entirely on rubber cultivation for their livelihood is likely to be below the poverty line. In the current context, the need to ensure remunerative prices along with measures that contribute to cost minimization, higher yield and improving output quality by revamping the R&D, extension, training and developmental activities of the Rubber Board with a new orientation cannot be over emphasized.