Bane of Cyclical Prices

Natural rubber contributed almost 45% to the agricultural GDP of Kerala, which accounts for 90% of India’s Nr output. the state’s rubber plantation sector has over one million growers and half a million workers. It is the only source of livelihood for nearly 1.5 million families. Now this sector is facing peril, says Dr KJ Joseph, professor at the trivandrum (Kerala)-based centre for Development studies (CDS)

- KS Nayar

Dr Joseph, who says the views expressed in this interview are strictly personal and not that of CDS, points out that commodities like natural rubber are known for the ups and downs in their prices. In case of NR, for example, the price has hit the bottom. In April 2011, it fetched Rs 243 per kg, the highest-ever, but then fell to Rs 94/kg in January 2016. This is a fall of 61.32% just within five years.

The total revenue from rubber has now become a quarter of what it was five years ago. With the decline in production and marginal restrictions on imports, the prices began to move upwards and reached Rs 134 per kg on June 9 June this year.

“History teaches us that given the cyclical nature of prices and other associated features of primary commodities like plantation crops, hardly any country in the world has achieved remarkable levels of prosperity by focusing on primary commodities,” he said.

While appropriate price stabilisation measures could help mitigate the misery of those engaged in the sector, a sharp decline in prices like what the NR sector is facing now is bound to have long-term impact on the economy of Kerala and the NR sector in particular.

It is likely to affect the State’s economy because NR accounts for a major share of its agricultural GDP. At the on going market price, the net income that the growers with average holdings size (0.5 hectare) receive is lower than the income of those below the poverty line. Such a situation will have serious short-run implications on the livelihood of those engaged in the sector.