Last Year Rubber Prices example essay topic

Will Sri Lanka's rubber industry bounce back? An improvement in prices has been responsible for an increase in rubber production last year and the first seven months of this year. This has resuscitated new hopes of a revival of rubber production and the development of a viable and productive rubber industry. Whether this is possible in view of a secular decline in rubber production for over three decades, is an interesting question. Increase in production; In 2002 rubber production recorded a modest increase of 5 million kilograms after years of declining production. Last year's increase in rubber production of 5.2 per cent is a comparison with the previous year's production that was the lowest ever.

This increasing trend of last year has continued into the first seven months of this year, when rubber production increased by 2.3 per cent to 53.8 metric tons. It is likely that rubber production this year could be around 95 million metric tons. This would be about a 10 per cent increase from that of 2000. Prices; The recent increase in production has been owing to an improvement in rubber prices from April last year.

Several factors account for the improvement in prices. The price of synthetic rubber has increased perhaps due to a rise in petroleum prices. The major rubber producing countries of Asia have come to an agreement to curtail rubber production by 4 per cent, while the demand for natural rubber from China has increased. These factors are likely to exert an upward pressure on prices, a welcome change from the crash in rubber prices with the Asian economic crisis in 1997.

Last year rubber prices increased by about 25 per cent in rupee terms. Latex crepe prices doubled between December 2001 and December 2002. Since 1997 rubber prices declined to levels that were lower than the cost of production. This curtailed rubber tapping till there was an upturn in prices. Currently it is contended that rubber is the most profitable plantation crop.

If prices continue to rise the profitability of rubber is assured. Secular Decline; Despite the improvement in prices, the expectation of the rubber industry attaining the heights it once held is most unlikely owing to the decline of the industry in the past four decades. Some of the declining trends cannot be reversed. As far back as in 1960 rubber production reached a peak production of 160 million kilograms. Since then it declined and in 2000 rubber production was only 87 million kilograms. In 2000 the country's rubber production was only 54 per cent of that 40 years ago.

Rubber production in 2000 was 12 per cent less than six years ago in 1995. In 2001 rubber production decreased by a further 1.8 per cent to reach the lowest production ever of 86 million kilograms. This performance in Rubber production has indeed been very disappointing. It would be difficult to reverse the factors accounting for this decline even with a remunerative price. Many factors account for this. The declining prices for rubber, especially the shock of the Asian crisis in 1996 dealt a severe blow to an industry plagued with a number of problems.

The industry has hardly recovered from this set back. Meanwhile rubber lands are being converted to urban and industrial uses that are more lucrative. The area under rubber production has declined from about 200 thousand hectares in 1990 to 157 thousand hectares in 2000. The area under rubber cultivation was the same even in 2002. but the area under tapping had reduced from 132,000 hectares in 2001 to 125,000 hectares last year. This trend may gain momentum as the pace of urbanization and industrialization gathers momentum. If this trend of a reduction in extent under rubber continues there would be inadequate domestic rubber for local rubber goods manufacture.

This is especially unfortunate, as the trend has been for a greater use of domestic rubber for local rubber goods manufacture. It would indeed be a sad day if our rubber manufacturing industries were unable to source the raw material from within the country. Future; The replanting of rubber and inter-cropping of smallholdings rubber with other crops would require to be explored. The latter would ensure greater resilience in the face of fluctuating international prices that has characterised the rubber industry for a long time. There is a need to expand the area under higher yielding rubber clones to achieve much higher rubber yields than at present. In fact Sri Lanka's rubber yield is about the lowest.

In view of rubber-based industries in the country expanding production, a new perspective on the future of rubber is needed. There is every rationale for increasing rubber production owing to this ready market for over 60 per cent of current rubber production. An expansion in the area under cultivation and improved varieties of rubber being planted would be needed.