Financial Times

Rubber - the "born again plantation crop"
By Clinton Rodrigo
Rubber was propagated by seed at the Sri Lanka-Henerathgoda Botanical gardens in Gampaha over a century ago by an European planter by the name of Henry Wickham. He personally brought the rubber seed to Sri Lanka from the seedling jungle plantations in Brazil.

This country is thus accepted as the mother country that propagated the vast acres of rubber now planted extensively in the South East Asian countries of Malaysia, Indonesia, Thailand and recently in Vietnam. But Sri Lanka now exports only an insignificant amount - less than even 2% - of the world's requirement of natural rubber. The reduction in rubber acreage and quantity has been due to the persistently poor profitability from this crop. Some decades back rubber prices soared during the China-Sri Lanka Rubber-Rice pact days. It was then considered a rubber boom as we hope it is now.

It is consequent to that mega development that I consider rubber now to be a 'Born Again' crop. A kilogramme of this product now sells at about Rs. 120 when just a year ago it was less than half this price and this was the case in recent years.

This falling price pattern scenario quite obviously made rubber growers switch to tea and very recently consider even the planting of oil palm as a substitute. This changeover followed the pattern that essentially Malaysia and even Indonesia adopted in its changeover from rubber to oil palm in large extents.

This was all due to the loss factor that the rubber growers all over the world have to face. Hence these growers had no alternative but to diversify into more lucrative and profitable plantation crops, as an alternative to losses in producing rubber. Rubber plantations were not making adequate profits at that time mainly due to stiff competition from international synthetic rubber.

This scenario has changed with the synthetic rubber product costing more due to the increase in world oil prices since oil is the main raw material in the manufacture of synthetic rubber. Another important factor is that of the Rubber Research Institute of Sri Lanka came up with excellent clones like the high yielding RRIC 100, RRIC 102 and RRIC 121 yielding double the Malaysian clones. These clones are considered the highest yielding in the world.

This automatically brought down the cost of production (COP) - whilst simultaneously raising the selling price and resulting in greater profits. The rubber tree has to be grown for optimum production of latex at an elevation of below 1,000 ft above sea level. Sri Lankan rubber plantations are in the Sabaragamuwa, Kalutara and Kegalle districts with less grown in the drier Kurunegala and Moneragala districts.

The last named two districts are not ideal for growing rubber. Rubber needs an adequate quantity of water or rain. While the first three regions receive about a 100" of rainfall a year, the other two districts get only about half this rainfall figure. The rubber industry produces a range of products like condoms, surgical gloves, aeroplane tyres and foam rubber products which use only natural rubber as opposed to any alternative or synthetic rubber.

The US is also seen showing an interest in a new product called "Lanka Preen" rubber that resembles a clean and well-manufactured sophisticated latex crepe rubber. Thus I feel rubber is once again becoming the main plantation crop in the world due to its multifaceted uses. It is going to even surpass tea. Latest trends in tea show production exceeding consumption. Most youngsters are moving to other alternative beverages like the Colas and coffee in preference to tea.

The cost of production (COP) of tea exceeds the sale price, which means a loss to the grower. Sri Lanka should expand its current two percent production of rubber - in global terms - to a minimum 10 percent quickly if the country is to make an impact on the global rubber market. This means that former rubber lands should be brought back to rubber if this country is to benefit from the rubber boom.

The government and the Plantation Ministry should recognize the value of rubber now, provide all possible tax holidays, incentives and subsidies that will induce growers to get back to rubber We only have to look at the demand that would generate from China and India, the world's most populous states which don't produce rubber and depend on other rubber-producing countries for their needs from anything made out of rubber, to realise the growing potential for rubber.

(The author was a former Senior Regional Chairman of the Janatha Estates Development Board and a Director of its Central Board, and now works as agricultural consultant)

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