Despite the onset of November, rubber prices in Kerala are not seeing the usual rise, even though production has decreased compared to previous years. Typically, when production drops, prices tend to go up, but the current lack of demand is suppressing this trend. According to the Rubber Board’s official rates, the price of RSS4 grade rubber is ₹187.
However, traders are purchasing at lower rates, ranging between ₹179 and ₹184 in most regions, as they anticipate further price declines. In several areas, prices are already falling below the state government’s announced support price of ₹180, adding to the concerns of rubber producers.
The international price of rubber is currently lower than the domestic price, with the Bangkok rate for RSS4 at ₹176 per kilogram. Due to this, rubber companies are prioritising imports, with the strategy focused on increasing imports and driving down the domestic price as much as possible.
Tyre companies currently have an abundant inventory, which is why they are reluctant to make significant interventions in the market. However, the expected increase in vehicle sales following the GST reform is likely to benefit tyre companies. This is anticipated to drive tyre sales growth in the third quarter, which in turn could lead to a rise in rubber demand.
The support price of rubber should be increased, say rubber farmers. In February last year, the rubber support price was raised to ₹180 from the Price Stabilization Fund. However, farmers argue that ₹180 is still too low, as it costs around ₹200 to pay someone for tapping.
Farmers' organisations maintain that the support price will only be meaningful if it is set at a minimum of ₹230. During the election, Chief Minister Pinarayi Vijayan had promised to raise the rubber support price to ₹250, but since then, no significant steps have been taken in this direction.
Farmers in Kerala have been struggling with the decline in rubber prices for the past few years. In response, the previous UDF government introduced the Price stabilization fund. The UDF government had set a support price of ₹150 per kg, meaning the government would provide a subsidy to farmers to cover the difference between the market price and the support price. The Pinarayi government later increased this to ₹170, but it was promised that the support price would eventually rise to ₹250.
Currently, the price of rubber stands at ₹179, meaning only a ₹1 subsidy is required. Given that this is a relatively small amount, there has been little effort to implement it at present. Kerala is home to approximately 9.5 lakh rubber farmers. According to the State Economic Survey 2024, rubber cultivation in the state spans 5.5 lakh hectares, with a production of 5.99 lakh tonnes.
