Stretching the options for rubber

Given the exploding demand from tyre makers and shrinking availability of land, it makes sense to look abroad for tracts to grow rubber on.

The rubber industry and tyre manufacturers are stretching out in a different direction. Moving away from their usual demand for duty free imports, they are asking the Government to replicate China's experiment of acquiring land abroad to grow natural rubber and meet rising domestic demand in the Twelfth Plan. India's natural rubber consumption last year was 0.94 million tonnes, against production of 0.85 million tonnes. The demand-supply gap can only be expected to widen. The data on new plantations and replanting would seem to support the rubber industry's argument. Replanting has taken a hit with rubber prices ruling over Rs 150 a kg since March last year, as growers did not want to replace old trees that were still giving them returns aplenty. New planting, particularly in non-traditional areas, is not yielding the desired results, with productivity being lower than expected. The traditional areas of Kerala have reached a saturation point, with ever increasing demand for land for other purposes, such as realty, tourism and other plantation crops. In such circumstances, the best option seems to be look abroad.

China has begun acquiring rubber plantations in countries such as Laos, Cambodia, Ethiopia and Vietnam. It is attempting to build a strategic reserve in rubber, just as it has done for crude oil. This is aimed at giving it a controlling interest in natural rubber. It need not be at the mercy of one country or another to get the required supply of the commodity. India's rubber industries and tyre manufacturers would like the Centre to emulate China's approach.

India can use its credibility and good offices to acquire land in Africa or in the East Asian countries. On the other hand, it will also pose a new challenge to the Rubber Board to replicate its success at home. It should be remembered that the success stories around corporates acquiring land in Africa or East Asia to grow flowers, vegetables or oilseeds may not extend naturally to rubber. Flowers, vegetables and oilseeds provide quick returns on investments, whereas it takes seven years for a new rubber plantation to begin yielding. Therefore, some sort of bilateral investment protection pact between India and the country where lands are to be acquired will provide some security. Such a long-term view is the need of the hour, given the fact that land availability in the country is shrinking fast and the explosion of growth in automobiles puts the tyre manufacturers in an unenviable position.

(Source: http://www.thehindubusinessline.com/opinion/editorial/article2029623.ece?homepage=true)