Rubber : Lost Bounce

The centre’s announcement of the minimum support price (MSP) for rubber has pleased no one. It has brought trading to a virtual standstill in the markets in Kerala, which accounts for 90 per cent of the country’s total rubber production. Earlier this month, the government announced an MSP of Rs 32.07 per kg for sheet rubber of the RSS4 grade and Rs 30.90 per kg for all other sheet grades, classified as RSS5. However, almost 30 per cent of the sheet rubber traded in the market is of the ungraded variety having quality levels below RSS5, and has a market price of Rs 24-28. The Rubber Board’s clarification that sheet rubber is not to be sold below the price for RSS5 has made purchases impossible, as such trades are illegal under the Rubber Act. Sheet rubber produced by 9 lakh small growers accounts for over 75 per cent of the total volume traded. The fresh convulsions in the domestic market come even as global rubber prices languish at 30-year lows due to a supply glut, forcing major producers to announce a 4 per cent production cut for 2002 and 2003.