Falling prices: ‘Rubber belt’ loses 3,500 crore

KOCHI/KOTTAYAM: Plunging rubber prices in central Kerala has dampened the Christmas market in the towns like Kottayam and Pala, the rubber-heartlands of the country. Rubber-growing areas of Kerala account for 90% of the nation’s natural rubber production (7.44 lakh tonnes in FY14), with the ‘rubber belt’ of Kottayam, Pathanamthitta and Idukki being the main contributors.
“The average price of RSS-4 grade rubber was Rs 166 per kg during the financial year 2013-14, which declined to Rs 119 during November 2014. Hence, there is a decline of roughly Rs 3,500 crore in the annual earnings of rubber farmers in Kerala,” said Jom Jacob, deputy director, department of statistics and planning, Rubber Board, the nodal agency for promotion of rubber farming and related industries in the country.
“Compared to last Christmas season, there is a drop of 60% in sales this year,” said Mathew Kuruvithadam, managing director of Kuruvithadam Agencies Pvt Ltd, a leading dealer in white and brown goods. “The lull in sales is not limited to the appliances market, other segments too are affected. Though there is remittance flow from expatriates in other parts of the world, the local economy is driven mainly by agricultural income, which is from rubber,” said Kuruvithadam.
The local economy’s loss of Rs 3,500 crore is noticeable if one walks the streets of Kottayam. With rubber farmers tightening their purse strings, the town is wearing a different look this Christmas. The traffic jams and crowds are missing and by 7pm, the town seems deserted with salespersons standing guard in small retail shops. Notable is the absence of roadside vendors. Autorickshaw drivers also call it a day as most bars are not doing business.
Venugopal R, managing partner of Aiyappas Textiles in Kottayam, said the textile market has been sluggish since last Onam (2013). “The market has not returned to its normal level. The fall in rubber price has been an additional pinch,” he said, adding that this had forced the firm to cut down the advertising expenditure.
Luxury car sales too suffered a decline. “Compared to the rest of Kerala, especially the automobile sector, the central Travancore registered a slight dip,” said AV George, chairman of AVG Group of companies.
Gopala Krishnan, who owns Bestotel Bakery in Kottayam, said bulk cake orders came down this year. Though sales declined, he is waiting for the final count after Christmas. “Maximum sales happen on December 24 and 25 and reaching a conclusion before Saturday would be foolish,” he said.
The average price of RSS-4 grade rubber was Rs 166 per kg during the financial year 2013-14. This dropped to Rs 119 during November 2014. This resulted in a decline of roughly Rs 3,500 crore in the annual earnings of rubber farmers in Kerala.