Sri Lanka has to increase natural rubber production
The Sri Lankan economy is significantly dependent on its agriculture sector. Importation of agricultural commodities for which Sri Lanka has already created a brand is currently a widely debated subject. Importation of pepper, palm oil and natural rubber latex are some recent examples.
The implications of the importation of food or agri- based industrial commodities cannot be generalised as it can vary from one agricultural commodity to the other. When it comes to crops like cinnamon, pepper and coconut it was apparent that the policies encouraging imports tarnished the brand names the country had established over a period of many years. Import of such agricultural produce unique to Sri Lanka and re-exporting them under the tag “produce of Sri Lanka” resulted in the tarnishing of the brand name and hence the premium prices we tirelessly earned in the past. The immediate impacts of such trading is lowering the demand for such produce made in Sri Lanka, lowering the income levels of growers of such crops, denying valuable foreign exchange to the country and negatively impacting the national economy. The long term ill effects of tarnishing the brand name we had developed are significant and irreparable.
With this background the newly appointed government had hinted that the natural rubber imports to the country too will have to be stopped. A decision of this nature has to be taken only after careful analysis of the current status of the rubber industry since impacts of policies on import of agricultural commodities vary on a case by case basis.
Rubber industry status
Sri Lanka produced 158,000 MT of natural rubber in 2011. Of this, nearly 128,000 MT was used within the country for value addition. The balance quantity produced was exported as raw rubber. It is a no-brainer that value addition has to be undertaken to reap the maximum economic benefits to the country from any agricultural/plantation produce. Value addition leads to generation of more foreign exchange and creating additional employment opportunities. Unfortunately, the natural rubber production in the country has steadily declined since 2011 and it fell to just 82,000 MT in 2018. On the other hand with the development of the rubber product manufacturing sector in the country the demand for natural rubber had gradually increased to 135,000 MT in 2018. Thus, our natural rubber production is far behind the demand created by the rubber product manufacturing sector of the country. Out of the 82,000 MT of natural rubber produced in 2018, around 14,000 MT had been exported as semi processed raw rubber leaving only 68,000 MT of locally produced natural rubber for value addition. Therefore, the gap between the local demand and the local supply, i.e. 135 – 68,000 MT, which is around 67,000 MT had been imported to the country to cater to the needs of the local rubber product manufacturing sector. When the current trends in local natural rubber production and consumption are carefully evaluated it could be predicted that more and more natural rubber will have to be imported to the country in future if there are no necessary interventions to increase local natural rubber production. The natural rubber based value added products manufactured in Sri Lanka are numerous – i.e. tyres and tubes, industrial, surgical and examination gloves and other articles.
Identifying a natural rubber-based end product, developing or hiring the technology to manufacture it, production of it in sufficient quantities with highest quality at a competitive price and deliver at correct time need long term investments and commitment of the manufacturers and cannot be achieved during a short period of time. Once the market is established for such manufactured products to sustain it the continuous supply of quality raw material on time is mandatory. The manufacturers cannot tell their buyers they will not be able to supply a particular consignment due to lack of raw material especially in a highly competitive business like the rubber product manufacturing industry. In such an event there will be so many other competitors in the world waiting to grab the opportunity. Therefore, if Sri Lanka decides to stop import of raw rubber to the country as and when it is needed it will be a death blow to the country’s rubber product manufacturing industry. It is mandatory that the product manufacturers have the approval of the government to import their raw rubber requirement if it cannot be met through local production.
Like with cinnamon and pepper the imported raw rubber is not re-exported in the raw form. It is used within the country for value addition.
Hence, there is no need to ban import of raw rubber to the country on the same basis considered for crops like cinnamon and pepper. Anyhow, it has to be emphasized that there is a fear among the rubber growers of the country that raw rubber is imported to the country by the rubber product manufacturers even if available locally since it could be purchased at a lower price from countries like Cambodia and Vietnam. If this actually occurs at a significant level the demand for local natural rubber would obviously decline pushing the local natural rubber prices down. In the likelihood of this scenario the government will need to introduce strict measures to control the imports of raw rubber only to match the gap in requirement of individual product manufacturers.
Bridging the gap
The ultimate solution for the short supply situation of natural rubber to the local industry is to increase the national rubber production and to be self-sufficient in this commodity. The strategies to be adopted to achieve this target can be improvements in land productivity in the short term and expanding the natural rubber extent in the country in the long term.
Improving land productivity
In Sri Lanka most of our rubber cultivations are confined to the South Western part of the country. This part of the country is blessed with a high and a well distributed annual rainfall. Though a high and a well distributed annual rainfall is a favourable factor when it comes to planting and the growth of the rubber plants, it is a hindrance for rubber tapping/harvesting. Rubber harvesting is not possible in more than 100 days of a year due to the impact of rain. Studies have estimated that about 30 per cent of the potential rubber crop cannot be harvested due to the interference of rain on rubber tapping. Though the rain guard technology could be successfully adopted to minimize this crop loss its adoption rate among the rubber growers in the country is extremely poor.
The prevailing low farm gate price of natural rubber does not drive the rubber growers to use chemical fertiliser in their rubber cultivations. The current rubber cultivation in the traditional rubber growing areas of the country is in the third or the fourth generation. This fact together with high rainfall and steep terrain has resulted in poor soils in our rubber lands. In this scenario judicious use of chemical fertiliser is essential to harvest potential yields from our rubber cultivations. Not adopting the fertiliser recommendations may lead to about 25 per cent loss of crop from our rubber cultivations.
Another problem faced by the rubber growers is the lack of adequate skilled rubber harvesters. This results in rubber cultivation not being harvested for latex. Also growers are compelled to use unskilled harvesters leading to poor yields and poor quality of tapping resulting in shortening of the potential 24 year tapping cycle. Having realised the potential negative impact on the rubber industry, the RRI developed and recommended low frequency tapping systems together with the use of yield stimulants to minimise crop losses due to harvester shortages. It is estimated that the yield losses due to tapper shortages and use of unskilled harvesters to be more than 20 per cent in our country.
The factors identified above, i.e. interference of rain on tapping, lower chemical fertiliser usage and harvester shortage collectively results in a significant drop in natural rubber production in our country. However, technologies are already available to overcome the above factors that limit national rubber production. The political leadership of the country together with the relevant state institutions could develop a programme to enhance the adoption rate of the above technologies in the rubber cultivations of Sri Lanka. Even with a 50 per cent adoption rate of above technologies the national natural rubber production could be increased by around 30,000 MT per year in the short term. Further, natural rubber cultivations have now been expanded to the intermediate zone of the country, i.e. Moneragala and Ampara districts. The rainfall in this area is relatively less whilst the temperature and light intensity are relatively high. Under such environmental conditions high rubber yields could be obtained from rubber cultivations by commencing the rubber tapping process very early in the morning, i.e. around 3 to 4 am. This is also a strategy that could be adopted in the short term to enhance national natural rubber yields.
Expanding rubber cultivation
Natural rubber is traditionally grown in the south western part of Sri Lanka where there is little or no further suitable land available for further expansion of rubber cultivations. Extensive studies carried out by the RRI to look into the possibility of expanding rubber cultivations to the mid country and intermediate zone have given encouraging results. There are vast amounts of underutilised land available in the intermediate zone of the country where rubber could be successfully cultivated. Countries like Malaysia and Indonesia utilised such land in their countries to establish oil palm cultivations to be given to the poor farmers in the area for them to manage and enjoy the economic benefits as an out grower model targeting poverty alleviation. Such programmes have helped to develop the economy whilst alleviating poverty in those countries. The World Bank has provided financial support for such programmes and Sri Lanka too will be able to seek financial support from such institutions to boost the economy of the country.
Future goals
The rubber industry in the country is currently not performing to its full potential. The yields and production are at low levels and neither the rubber growers nor the country is economically benefitted. However, there is tremendous potential to increase yields and production for the betterment of the growers and the country. Increased natural rubber production will definitely benefit the fast developing rubber product manufacturing sector of the country. Adding value to the total national rubber production in the country will maximise the benefits to the country through enhancing foreign exchange earnings and creating employment opportunities. Until the natural rubber production in the country is increased using both short and long term strategies discussed above and reaches self-sufficiency there is a need for controlled imports of natural rubber to sustain the rubber product manufacturing sector of the country. Introduction of government regulations to equate the prices of the imported rubber to the prevailing local prices through a taxing mechanism may safeguard the Sri Lankan rubber growers.