Rubber subsidy cut to worsen industry woes

30 October 2015 03:20 am - 0     - {{hitsCtrl.values.hits}}

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By Shabiya Ali Ahlam
Rubber industry heads yesterday expressed fresh concerns on the government’s move to scrap the guaranteed subsidy scheme for smallholders and warns its impact, though not immediate, will be felt in the medium term.

While the current scenario is rather grim due to the gloomy weather, high cost of extraction and low selling prices, industry representatives’ opined smallholders would be further discouraged with subsidies being snatched.

“It doesn’t look too good for them. We are selling at a very low price and they couldn’t sustain at that price. There will be an impact for sure. There will be a loss in production as it is likely they will move on to other agricultural areas,” said Forbes & Walkers Commodity Brokers Director-Rubber Damitha Perera to Mirror Business.

Noting the weather patterns have made it worse, he added it is essential to realise that the current market condition is depressing, thus imperative to look after smallholders, especially at a time of crisis, such as the one the industry is witnessing.

Furthermore, the government was urged to look at ways and means in helping to keep the plantations going.

He cautioned that industry as a whole should be cautious in its approach as when demand for rubber picks up in the medium term, there will not be any output if planters move on to other survival options. 

“We need to take effective measures to ensure the industry sustains without allowing the market conditions to wipe it out. The government should look at giving them (smallholders) re-plantation subsidies to keep the plantations running, at least to maintain the trees until the next round,” asserted Perera.

Meanwhile, Director and CEO of Kegalle, Namunukula, Maskeliya Plantations Sunil Poholiyadde noted that instead of providing subsidies to help uplift the industry, concession based on pricing could be extended.

Referring to the Rs. 15 CESS imposed on exports, which is acknowledged to suppress quality rubber production, he called for the flat rate to be removed.
“The current CESS imposed is a heavy charge and it is passed on to the producer. Instead of a flat rate it will help the industry if it is charged based on pricing. The industry is struggling and this does not help. However, just giving a subsidy won’t do.  It is a must to ensure certain quality standards are maintained,” Poholiyadde noted.

A well-placed source who wished to remain anonymous charged that the rubber industry is in a troubled position today largely due to relevant authorities having turned a blind eye to early warning signs.

The source asserted it is time the government intervened, just as it is for tea, and look to bring in realistic and effective measures to help the rubber industry achieve healthy growth rates. 
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