The Rubber Research Institute (RRI) says Sri Lanka needs to look into exchange programmes and other arrangements with large natural rubber consuming countries, to contain falling rubber prices.
The national body is recommending government level arrangements with China, India and Middle Eastern countries, and programmes to promote domestic value addition, to boost demand for natural rubber.
“We need to look at bilateral arrangements, like exchange programmes, with large natural rubber consuming countries at this point, because natural rubber prices are still falling. This is a grave situation. So it is very important to take prompt action,” said the Chairman of the RRI, Dr Asoka Nugawela. China and India, alone, are seen as capable of absorbing total export output of Sri Lanka’s natural rubber. “China alone consumes around 26% of total global natural rubber output. India consumes about 9%. Together, these 2 countries consume about one third of total global output. Sri Lanka’s total output is only about 1.2% of total world production, and out of this, we consume about 60% domestically. So these 2 countries can easily absorb our export output. We can also look at Middle Eastern countries,” said Dr Nugawela.
At this point Sri Lanka has an over supply situation because of a drastic drop in demand for natural rubber. But the RRI says this is an opportunity to encourage domestic value addition in the rubber sector.
“This is an opportunity to encourage domestic value addition. For instance, we import tyres. But we can encourage domestic manufacture of tyres, and other goods that use natural rubber, because the supply of natural rubber is available. This will also help to boost demand and improve prices,” said Dr Nugawela.
Rubber prices continued to decline during the month of November. At the Colombo auctions in November, crepe rubber started at Rs.208 per kg and fell to Rs.130 per kg during the latter part of the month. Similarly, RSS 1 prices started at Rs.180 per kg and dropped to the level of Rs.150 per kg with little or no interest shown by the buyers, said the RRI.
The RRI says it has informed the Minister of Plantation Industries, D M Jayaratne, of the current situation and is awaiting a government response. |