The rubber industry of the country, like all other NR producing countries, is currently enjoying a bonanza in the form of record rubber prices, although the rubber products sector in particular the medium and small scale industries are in a state of confusion. The factors that contributed to the unprecedented rise in the prices are quite well known and have been discussed in details in previous articles. The key factor being the extent of the demand-supply gap. Both the demand and supply depend on large number of factors, many of which are easy to identify.
Increased output resulting from favourable weather and political stability in leading rubber producing countries and revival of abandoned rubber plantings due continued high prices and on the demand side, slowing down of the GDP growth following sharp rises in oil prices and related aspects are some aspects that are bound to have an impact on the long term stability of rubber prices.
The NR shock may also promote the tendency of NR consuming countries to go for more and more SR in place of the high-cost NR component in their products and the growing demand for reclaimed rubber and the hunt for alternatives to NR are also matters of great concern for NR producers.
Alternatives to NR
Triggered by the unprecedented NR price rise, hunt for alternatives to NR has gained a renewed vigour across the rubber consuming countries in the world. In fact attempts are being made to retrace the trails of past developments on a variety of plants and shrubs, known to have rubber content in them, which may serve as economically viable natural alternatives to the Hevea brasiliensis (Rubber tree)
In the hunt for NR alternatives, it had been the desert shrub Guayule that came to the centre stage in the wake of NR short supply, whenever it happens. The major hurdle in the way of its commercial exploitation had been the comparatively higher processing costs and cheaper availability of NR. But it appears that the situation has changed today with the NR prices sky-rocketing and creating shock waves in the global rubber industry. It is believed that Guayule has also the distinct advantages of not having any protein allergy problem and many products like tyres can also be made out it.
Another potential alternative is an annual plant, Taraxacum kok-saghyz or Russian dandelion, conveniently known as TKS. This plant, TKS, has the latex sap in its roots and can be densely cultivated. Harvesting the sap can be automated and the annual crop supply can be adjusted to demand, unlike the perennial tree Hevea. It is estimated that about one million pounds of rubber could be produced annually with 10,000 acres of TKS crop. The by products of the extraction is reported to be about 2.3 million gallons of ethanol, an alterative fuel that could be sold to offset the cost. In any case, it has been reported that it requires significant amount of agronomic work before commercialization. Sunflower and rubber producing tobacco plants are also emerging as potential challengers to NR.
National NR Policy
The foregoing discussion indicates the possibility of wide fluctuations in the price of NR, though it may not be in the near future. Sri Lanka, accounts for less than 2% of global production and supply of NR. Therefore, government’s ability to influence world prices is extremely difficult. Yet, there is much the government can do to safeguard the domestic rubber industry. One big question is; are we prepared for any violent fluctuations in prices and a repeat of the crisis that triggered the rubber price to fall to a 30 - year low in 1999. In Malaysia, under the 9th Malaysian Plan (9MP) launched recently, the Government has identified rubber as a strategic crop. Adequate replanting funds have been allocated to ensure that the annual replanting target is achieved. This, they believe is one way to prevent rubber prices from fluctuating too much. In, Sri Lanka, we have already seen latex crepe that was fetching Rs. 400/= per kg in forward sales in July this year, going down to about Rs. 215/= per kg in mid September.
The NR industry therefore needs a national dynamic policy to ensure it’s long term viability and to meet the growing demand of the domestic rubber products sector which is currently reeling under the NR shock. In Sri Lanka, the total rubber planted areas has declined from about 270,000 ha. in early 60’s to reach about 115,000 ha. in 2005. The rubber production that was in the region of 155,000 mt in 1978, also declined steadily to reach a level of about 90,000 mt in the mid 90’s. Although there has been an upward trend since 1993, the South East Asia financial crisis again exposed the weaknesses in our industry strategies, plans and operations. Nevertheless, with the economic recovery in Asia/Pacific and Asia once again emerging as a dynamic region, and NR prizes becoming very attractive, Sri Lanka’s rubber industry also showed signs of growth, recording a total production of 104,000 mt in year 2005 with a productivity of about 1000 kg/ha. From a global perspective, the problem with a perennial crop like rubber is that the supply cannot be regulated on annual basis according to changing market conditions. Sri Lanka should therefore, adopt a national rubber production policy. This should take into account all aspects linked to production like planting, harvesting, processing, manufacturing, marketing etc. The accepted National Rubber Production Policy should be strictly adopted by all those who are partners in the development of the Sri Lankan NR industry. The estate sector with about 30% of the rubber extent under their management should also fall in line.
One of the important strategies that should be adopted under this policy is to identify technologies for bridging the gap between the present national productivity level of about 1000 kg/ha and the achievable productivity level of about 2500 kg/ha/year and ensure adoption of such technologies by the estates as well as the smallholder sector.
First step in this strategy should be a national survey to identify the plantings/holdings with low productivity levels and also to identify the cause for low productivity in such plantings/holdings. These may be due to individual, organizational or technological deficiencies. Having identified these, the next step would be motivation and skills development/training and advisory services for effective adoption of modern, accepted production technologies, that are relevant to the identified needs for enhanced productivity.
The mature yields and harvest index may be increased by technologies related to exploitation. The advent of Ethephon as a yield stimulant has also enabled earlier exploitation of trees at girths smaller than conventional girths. A minimum of 50 cm was for long considered the norm before exploitation could commence. The current thinking is that commercial areas could be exploited at smaller girths provided adequate management input are supplied. In fact with controlled use of low concentration of ethephon, trees of a girth of 42 cm or over are being exploited economically in some countries. Exploitation devices such as “RRIMFLOW” effectively used in some countries can be used at least in low productivity rubber plantings until a firm policy on it’s use in Sri Lanka is worked out.
A policy of phased out national replanting programme should be formulated and strictly enforced. The estate sector is expected to follow an annual 3% replanting programme, but this does not happen. This sector has a huge backlog for replanting. As the prices are attractive, there is a tendency to prolong the replanting cycle. A 30-year span is considered as the economic life of a tree. Let us not deviate from this for short-term benefits. This is the time for the Government to enforce and encourage the growers to go for the much needed replanting. Planting materials with yield potential in the region of 2,500 to 3,000 kg/ha/yr are available in Sri Lanka. If these can replace the old trees, the average productivity can be raised from about 1000 kg/ha to about 2,500 kg/ha. Moreover, the newer clones are more vigorous in growth and tappability can be achieved 12 to 18 month earlier than was seen with older clones. Therefore, this should be considered as a national programme and adequate replanting funds allotted to cover the entire replanting cost and phased out replanting should be made mandatory.
The next important strategy needed in the national NR policy is the expansion of rubber cultivation in non-traditional areas since new areas suitable for successful rubber are no longer available in the traditional rubber growing tracts for large scale production. The potential replanting areas under some regional plantation company’s management have gone into oil palm. The Southern province has large extents of land with vast potential for rubber growing viz. the Moneragala, Bibile and Hambantota. The Moneragala Rubber Development Project that has already been set in motion aims at bringing 40,000 hectare unused and abandoned land under rubber cultivation based on smallholder farm model with private sector support, phased over a 10- year period. This is expected to provide additionally above 80,000 mt of rubber per year. Annual targets of 5,000 hectares that has been fixed requires sorting out of action plan and implementation to achieve targets. With the present extent of 115,000 ha, the planned planting of 40,000 ha in Moneragala brings the total extent to 155,000 ha by year 2016. Still, there is a deficit of about 115,000 ha if we are to regain our position of 270,000 ha in early 60’s, when Sri Lanka had been the 4th leading global rubber producer. We have long way to go from the present 9th position. Uneconomical Tea lands in the low and mid-country are also potential areas for rubber planting.
Skill Development /Training
The success of any business depends on productivity in all areas of its focus. Land and human productivity in rubber plantings/holdings depend heavily on new knowledge, technology and people skills. Technology adopted by our competitors change rapidly and skill levels of competing countries are quite high. In respect of productivity, India with similar agro-climatic conditions as in Sri Lanka occupies the leading position in global rubber productivity, productivity achieved in 2005-2006 being 1,796 kg/ha. The problem in Sri Lanka is lack of new knowledge, appropriate skills and application of modern technologies is a systematic manner. Therefore, there is a need to develop adequate mechanism to assess the skills requirement of the workforce, regularly. Adequate training opportunities will have to be provided in all sectors of the rubber industry and for all levels of skills to meet the development needs of the industry. Unfortunately, may of our policy makers and industrialists do not appear to give training the priority it deserves. Training is only given when there are spare resources. When business picks up, training takes a backseat. Training of human resources of all ages and discipline involved in rubber development must therefore be included as an integral part of the government’s national policy for rubber.
Let us hope and live in hope that the fortunes of both the rubber producers and consumers will not fluctuate aggressively and the current boom will continue and will not bust soon. An encouraging factor is “ Emerging Asia has once again been the world’s most dynamic region in early 2006 driven by buoyant China and India”, as said by an economic expert, recently.