Even before the dust settled over the shooting down of the controversial proposal to set up a tea hub, Sri Lanka’s coalition government is now proposing to establish ‘a rubber hub’ in Sri Lanka, which will enable importation of rubber for re-exporting after value addition, as a response to the multi-year low production and record low global natural rubber prices.
According to Plantation Industries Minister Navin Dissanayake, the importation of rubber is the timely solution for the ills facing the industry but acknowledged such a proposal could lead to controversy.“Rubber should be allowed to be imported for re-export activities without any hindrances whatsoever, like what is happening in Singapore and Dubai.
I know that this will be somewhat a controversial proposal to you but I feel that, given the current situation of the rubber industry, this is suitable,” Dissanayake said at the 97th Annual General Meeting of the Colombo Rubber Traders’ Association (CRTA) – one of the oldest trade associations in the country.
The industry is now in doldrums due to lower production volumes and falling global market prices for rubber. While the adverse weather conditions have caused the production to fall sharply, the global commodity market slump, particularly the record low oil prices, has caused the natural rubber prices to decline as the cheaper synthetic rubber made out of crude oil is a close substitute for natural rubber. The rubber production in 2015 fell to around 90 million kilograms after hitting a record high production of 130 million kilograms a decade ago.
Besides the adverse weather, the dwindling land resource for rubber cultivation has also threatened the future of rubber in Sri Lanka. “At the rate which we are losing lands on account of development activities, we will lose many hectares of lands and very soon have to start importing,” he said. Rubber is Sri Lanka’s fifth largest export commodity earning US $ 26.1 million in 2015, down 42.3 percent a year ago. Seventy percent of rubber is exported in value-added form.Meanwhile, the newly appointed CRTA Chairman Sunil Poholiyadde speaking to Mirror Business welcomed the proposal by the minister to allow importation of rubber, provided the local producer is safeguarded and the prices are maintained. Malaysia, Indonesia,
Thailand and Vietnam account for 70 percent of global rubber production.The CRTA is the apex industry body representing rubber producers, buyers, brokers and exporters. Poholiyadde further called for the restoration of the fertilizer subsidy enjoyed by the rubber producers because it has adversely affected the producers.
“As far as the rubber cultivation is concerned, one major issue we face is the banning of weedicide. And also I would like to mention that the lifting of the subsidy for fertilizer also has affected the grower,” he said.Rubber generally has a longer gestation period of between five to six years. Meanwhile, the industry as well as the government called for increased value addition as they see it as the way forward for the industry.