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Globalisation, Natural Rubber and Tripura: Exploring the Linkages

Indraneel Bhowmik
Holy Cross College, Agartala, 29th October, 2011

The Discourse

Introduction Objectives & Structural Framework The Global Rubber Economy Rubber in Tripura Economics of the Rubber Farm Linkages Concluding Remarks

The Issue
Hevea brasiliensis 93 % production far away from home Vital ingredient of modern life Use positively correlated to development & automation Highly traded in the international market Globalisation- 1990s Uruguay Round of gatt- 1988 Wto- 1995 Free flow of goods & services Tripura Non traditional area Different from the Kerala model Multi-level impacts

Globalisation

.integration of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance and people.. Several Facets- cultural, social, political, economic & environmental Economic globalisationa] export & import of goods and services, b] flow of capital, c] transfer of technology & d] movement/ migration of people

Objective Explore the Impact of Globalisation in Tripuras Rubber Sector Analyse the effect of the Price Movement Structure Section I- Introduction Section II- The Global Rubber Economy Section III- Rubber in Tripura Section IV- Economics of the Rubber Farm Section V- Concluding Remarks Methodology Secondary Data Growth Rates

The Global Rubber Economy - I

Natural Rubber (NR)

Constituent for almost 50000 articles Commercialisation since late 19th century- Colonies of exploitation Specific geo-physical need for production-Supply-prerogative for some selected countries Synthetic Rubber (SR)Petrochemical feed-stocks WW II Developed Nations

Proportional Distribution Years 1975 1980 1985 1990 1995 2000 2005 2010 NR 32 30 33 35 38 41 42 44 SR 68 70 67 65 62 59 58 56

Resurgence of NR
SR not a substitute Oil shocks Health Sector innovations Environmental Issues

The Global Rubber Economy- II


Malaysia- Traditional Producer Developed countries- Higher Per capita Consumption Consumption of NR= f(GDP, Population)

Changes in the New Economic Order

Chinas emergence

Largest Consumer since 2001 Per capita consumption- 0.83 kg in 1990 5.80 kg in2009

Thailand Largest Producer Indonesia- Largest Area India- Highest Yield Traditional Producers Export of Value Added Products

The National Standing

2nd largest consumer & 4th largest producer

Only major producer with dominant NR (73%) Per capita consumption- 0.55 kg in 1990 1.05 kg in2009

Average Daily Employment in plantations increased from 280000 in 1990 to 445000 in 2009 Receipts of rubber board increased by more than five-fold since 1993-94 Index of agricultural production for Rubber - 311.5 in 1994-95 570.7 in 2008-09 Index of productivity for the same period increased from 174.8 to 229.0 Index number for wholesale prices of Natural Rubber increased from 118.2 in 2001-02 to 447.6 in 2009-10; second highest after minerals

The Ground Situation Sector in 2009-10 Indian Rubber


Traditional AreaKerala & Kanya Kumari District of TN
State/ Zone Total Area (ha) Production (T) 1.Traditional 544953[79.38] 770205 [92.64] 2.Non Traditional (= a+ b) 141562 [20.62] 61195 [7.36] a) North-Eastern Tripura Assam Meghalaya Nagaland Manipur Mizoram Arunachal Pradesh b) Other States Grand Total (= 1+2) 101685 [14.81] 55415 [8.07] 28102 [4.09] 9196 [1.33] 4141[0.60] 2723 [0.40] 908 [0.13] 1200 [0.17] 39877[5.80] 686515 [100] 38600 [4.64] 25080 [3.02] 7071 [0.85] 4545 [0.54] 1090 [0.13] 630 [0.08] 136 [0.02] 138 [0.02] 22595 [2.72] 831400 [100]

Kerala s Dominance Growing Share of Non-traditional Areas Tripura- 2nd largest since 2009

Rubber in Tripura
The Development Process Introduced by state Forest Department in 1963; afforestation Confined to the public sector Potential rehabilitation of the jhum cultivators TFDPC formed in 1976-77; 1st rubber based rehabilitation at Warrangbari, Cash Subsidy Scheme, 1980 TRPC in 1983; specific objective of settlement of landless tribal people Tripura Block Plantation Project-1992-93; collaboration between Rubber Board and DTW, GoT with sponsorship from World Bank. Growth of private plantation under Rubber Board initiative High growth in mid 1990s; slowdown after Asian Economic Crisis 1997 Revival of the international NR sector since 2001, renewed interest from private sector Craze after booming prices TRM- 2006 Stakeholders- SCs, STs, petty businesspersons, agriculturists, merchants, traders and state PSUs ; residents and corporate firms from other states or regions of the country. Lacks very big estates; mostly small holdings Turnover of Rubber Sector in Tripura- Rs. 450-500 crores

Total Area, Tappable Area, Production and Yield of NR in Tripura

Year Total Area Tappable Production (ha) Area (ha) (Tonnes) (31/03)
1972-73 1980-81 1990-91 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 103 2746 17320 27164 28375 29737 30575 31754 32561 33661 36213 38346 41165 50070

Yield

11395 11895 11000 14418 17701 14958 13184 16937 19957 N.A 23275

8946 9360 9980 12999 17849 14905 15364 17122 21575* 20299 23280*

785 787 907 902 1008 996 1165 1011 1081 1000

th of Grow 0 ha 900

Total Tappable Output Yield Area Area 1972-73 to 1980-81 41.04 1980-81 to1990-91 18.42 Time Periods 1990-91 to 2000-01 2000-01 to 2008-09 5.41 6.51 9.37 10.59

Growth Rates of Total Area, Tappable Area & Production


YIELD VARIATION
*- 2.36 % for India
q

1.22*

Significant differences (F= 157.15***) qGap consistently more than 40 percent Factors
qAgro-climatic

Average annual growth rate of area highest during 1970s; quite high in 1980s qGrowth rates for tappable area and production higher than total area currently qLower rates in 1990s- problem of free access; Kidnapping & murder of rubber professionals qImproved situation after 2004
q
v v

conditions qDifferent clonal variety


v

RMA 600 & not RRII 105

qDifferences

Law & Order Price Incentive

Increased Production- due to Tappable area & not Yield


q

in cultural practices & agromanagement techniques qQuality of tapping q Untrained Tappers

Farm Economics
Economic Life- 32-35 years; Two distinct phases- immature (6-7 yrs) & mature (25 to 28 yrs). qTwo types of cost- Material Cost & Labour Cost. qThe establishment cost- approx Rs. 120000 / ha; prime share in first year qLabour expenditure- max during the mature phase; Tapping - Rs. 40000/per annum/ ha; Materials & implements- Rs. 15000/- per annum/ ha qReturns- approx Rs159000/- per annum/ha [ Yield- 1000 kgs & av. price Rs. 159/kg in 2010] [Av price of Rubber (2011)- Rs. 208/kg] qBusiness income- Rs. 100000/- per annum/ha during mature stage qSmall farmers- additional Rs 40000/- per annum/ha if owner operator qSupplementary return rubber wood qPay back period- less than 11 years q Favourable BC Ratio & IRR
q

Three ways of marketing 1] Self processing of latex to sheets and sale to dealer 2] Rubber Producer Society by a group of famers- sharing of processing cost 3] Sale of crude latex at the farm gate

Highly dependent on the domestic price of NR

Economic Issues

Dp (NR) = f [Wp (NR)], particularly after the economic reforms Small growers exposed to vagaries in the world market Monetary value of NR in Tripura- more than 20 times between 1994-95 and 2010-11

R= 0.977

Ri s

in

n Tre g

Global Financial Meltdown Determinants of Global PriceState of the economy, Global Supply & Demand of NR, Weather, Price of Crude Oil,

Short Run FactorsUnemployment & Stagnation in IW Debt Crisis in Europe Volatility in Crude Oil Prices Political Instability in the Arab World

Linkage- Panorama

Plantations - extremely viable economic opportunity Inclusion of STs in the development process- Asset Base Increased Farm gate Price- Internet Utilisation of degraded forest lands & large number tilla lands Addition to the state GDP Fostering of green cover High rubber prices- additional impetus for growth Rubber goods manufacturing unit- augmented demand Scope of Value-addition: surgical gloves, contraceptives, cycle tyres, footwears, etc Interest from international trading agencies- Fair Trade Investors meet- CII, etc PGDRT- Tripura Universitys

Linkage: Tribulations
q q

Mad Rush- Occupation of reserved forests- Illegal plantation Indiscriminate rubber plantations- normal loss of biodiversity

Associated evils of monoculture

q q

q q q

q q q

Spurious investors - supply poor quality planting materials Non-certified planting material- adverse affect on productivity, production and profitability Low Yield- low skilled labourer for tapping, poor education and awareness level of the rubber farmer Very low wage incentive for the trained labour Most tappers without formal training Lack of professionalism- trained tappers appoint untrained assistants Workers have no share in additional profit from high price Traces of absentee landlordism- urban owners Limited(???) scope of value addition in the state

Concluding Remarks

Rubber economy of Tripura has more or less satisfied the pre-conditions of take off and its drive to maturity can be assured with favourable policy mix.

Policy Suggestionsi] strengthening the human resource base of the stakeholders;

ii] strict pursuance of a wage policy with incentives to the trained worker; iii] initiate short-term courses on plantation management; iv] development of Tripura specific rubber cultivar clones; & v] conduct a rubber census to prepare a database for necessary interventions

Boom in the international market of NR- time to reap the fruits but with caution The non-traditional rubber growing zone stands to gain because of land saturation in the traditional areas nature of NR provide a global linkage to Tripura which if well exploited is likely to be the engine of growth, but if not treated with adequate care and restrain then the expected results will boomerang. .........rubber planters of Tripura have to understand the nuances of globalisation

THANK YOU

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