For Prelims: Natural rubber structure, Export and import of natural rubber, and the national rubber policy. 

For Mains: Use of natural rubber, Economic significance of natural rubber, and Advantages and Disadvantages of natural rubber. 

Why in the news?

Farmers and other groups have recently protested because the price of natural rubber (NR) in the Indian market has fallen to a sixteen-month low.

What do we know about natural rubber?

  • Commercial Plantation Crop: The latex of a tree known as Hevea Brasiliensis is used to make rubber. A special status is given to rubber around the world for defense, national security, and industrial development. Rubber is largely regarded as a strategic industrial raw material.
  • Conditions for Growth: Although it is an equatorial crop, it can also be grown in tropical and subtropical regions under certain circumstances.
  • Temperature: Above 25°C with a moist and humid climate.
  • Rainfall: More than 200 cm.
  • Soil Type: Rich well-drained alluvial soil.
  • For this plantation crop, a sufficient and affordable supply of skilled labor is required.
  • Major Producers Globally: Indonesia, Malaysia, Vietnam, China, Thailand, and India.
  • Major consumers: India, USA, Japan, Thailand, Indonesia, China, and Malaysia.
  • Natural rubber is a material with exceptional strength, flexibility, and water-proofness. 
  • It creates seals for refrigerators and engines, as well as tyres for our cars, shoe soles, and insulation for wires and other electrical parts. 
  • It is utilized in sports balls, clothing, condoms, and the common elastic band.

How is India's rubber production faring?

Production:

  • On the banks of the river Periyar in Kerala, the British established the country's first rubber plantation in 1902.
  • With one of the highest productivity rates, India is currently the fifth-largest natural rubber producer in the world.
  • In comparison to 2020–21, the production of the material increased by 8.4% to 7,75,000 tonnes in 2021–22.
    • Additionally, it continues to be the world's second-largest consumer of the substance.
    • Currently, imports account for about 40% of India's total natural rubber consumption.
  • Top Rubber Producing States: Kerala > Tamil Nadu > Karnataka.

Government initiatives

  • Government-led programs for rubber production include the Rubber Plantation Development Scheme and the Rubber Group Planting Scheme.
  • In rubber plantations, 100% Foreign Direct Investment (FDI) is permitted.
  • The National Retail Federation released a Rubber Policy in March 2019.
  • Numerous provisions in the policy support the Natural Rubber (NR) production sector and the entire value chain of the rubber industry.
    • It is founded on the short- and long-term strategies determined by the Task Force established in the rubber sector to address issues faced by rubber growers in the nation.
    • Through the implementation of the plan for the Sustainable and Inclusive Development of the Natural Rubber Sector in the Medium-Term Framework (MTF), the Rubber Board conducts research and development activities to support the NR sector for the welfare of growers.

What has Caused the Sharp Fall in Prices?

  • Poor Demand and Other Factors:  Owing to high inflation, weak Chinese demand, and the European energy crisis.
    • The industry has suffered greatly as a result of China's relentless zero COVID strategy, which accounts for about 42% of global volume.
  • Import from other countries: In the domestic tyre industry, block rubber from Ivory Coast and compounded rubber from the Far East are both in plentiful supply.
    • 73.1% of the total amount of natural rubber consumed was used in the auto-tire manufacturing industry.

How does the Falling Price affect the Farmer?

  • Crop Shifting
  • Since most people in rural areas depend solely on the cultivation of rubber, they may switch to other crops as a result of the price decline.
    • It may even result in the division of rubber holdings.
  • Effect on Small and Medium Enterprises: Small and medium-sized businesses produce the majority of the product, so the price decline could make their future uncertain and force them to temporarily halt production.
  • Panic in Kerala: As the local economy is dependent on the production of rubber, the state accounts for nearly 75% of the total output; thus, the declining price could cause serious panic in villages of Kerala.

What do we know about the Rubber Board of India?

  • It is governed by the Ministry of Commerce and Industry and has its headquarters in Kottayam, Kerala.
  • The Board is in charge of supporting and encouraging research, development, extension, and training initiatives related to rubber in order to advance the rubber industry in the nation.
  • The Rubber Board oversees the Rubber Research Institute.

Way Forward

  • The government must raise import taxes to make compound rubber competitive with natural rubber.
  • Raising the replanting subsidy and the crop support price under the price stabilization scheme will help the government meet the demands of the farmers.