Kerala government's subsidy skids off track as rubber prices fall

KOCHI: Falling prices of natural rubber may upset the Rs 300-crore subsidy scheme announced by the Kerala government to provide relief to nearly a million small growers of the commodity.

When the scheme, which sets a fixed price of Rs 150 a kg for small growers by paying the difference with the current price as subsidy, was announced a month ago, the RSS-4 variety rubber price was around Rs 129 a kg. Today, it stands at Rs 119. The Rs 10 fall means the government has to pay the farmers Rs 31 as subsidy instead of Rs 21 as envisaged a month ago. As a result, the number of beneficiaries under the scheme will be reduced.

After the initial hiccups of registration, thousands of growers have come forward to enroll in the scheme. Many have started submitting bills after selling the produce. The subsidy amount is to be paid directly to the bank account of the grower.

“The scheme has encouraged farmers to bring some lots of rubber to the market. But it is still in small quantities,“ said a major rubber dealer Biju John.

Though the tapping has been revived on a small scale, the output is still low. The production has remained low for the last few months and the tyre companies have been relying more on imports to bridge the gap. International price of rubber has dropped below Rs 100 a kg. The block rubber is selling even low at Rs 85 a kg, making it an attractive proposition for the importers.

Rapid decline in crude oil prices too may have an impact on the natural rubber prices as it will make synthetic rubber cheaper.