Kerala's small and marginal natural rubber farmers are jubilant over the state budget's announcement increasing the support price for the raw material to ₹250 per kg from ₹200 per kg, according to an article by V Sajeev Kumar in The Hindu BusinessLine. The hike was widely expected, as the ruling United Democratic Front (UDF) had promised a higher support price in its election manifesto.
Support Price Under Rubber Production Incentive Scheme
The existing support price was introduced under the Rubber Production Incentive Scheme to help farmers cope with falling prices, said Chief Minister VD Satheesan during his budget speech. PC Cyriac, former chairman of the Rubber Board, told the publication that the decision would provide significant relief to small growers, who account for nearly 70 per cent of the state's rubber farming community. Cyriac noted that the higher support price would encourage more farmers to resume tapping operations and improve productivity. However, he pointed out that the immediate impact may be limited because domestic rubber prices are currently trading above ₹250 per kg.
| Feature | Before Budget | After Budget |
|---|---|---|
| Support price (₹/kg) | 200 | 250 |
| Governing scheme | Rubber Production Incentive Scheme | Same |
| Core beneficiary | Small & marginal growers | Same |
"The relevance of the enhanced support price will be felt when international and domestic rubber prices declined. In such a situation, the guaranteed price would provide confidence to farmers to maintain and improve production without fear of a sharp fall in market returns." — PC Cyriac, former chairman, Rubber Board
Supply-Side Implications: Untapped Plantations and Tapping Activity
George Valy, President of the Indian Rubber Dealers Federation, said the announcement was in line with the UDF's poll promise and would encourage growers to bring untapped plantations back into production while motivating them to replant ageing rubber trees. He estimated that around 20-25 per cent of rubber plantations remain untapped, of which 10-15 per cent consist of senile trees that require replanting. Valy urged the government to conduct a survey of untapped plantations across panchayats and introduce incentives for rubber tappers to boost production. He expressed confidence that the state would not incur a significant financial burden from the revised support price, as domestic rubber prices are unlikely to fall below ₹250 per kg in the coming months amid firm international market trends.
Demand-Side and Industry Response
TR Radhakrishnan, chairman of the Association of Planters of Kerala, appreciated the budget announcement but urged that the facility should be extended to all growers in Kerala without any restrictions. Industry representatives believe the higher support price will serve as an important safety net for farmers, encourage increased tapping activity, and support long-term investments in replanting and productivity enhancement across Kerala's natural rubber sector.
Outlook for Natural Rubber Prices and Production
While the immediate market impact is muted due to prevailing domestic prices above the new floor of ₹250/kg, the guarantee becomes crucial if international or domestic prices decline. The safety net is expected to stabilise farmer incomes and incentivise maintenance of rubber plantations, which could improve India's natural rubber output. Traders and procurement teams should monitor global rubber markets — firm international trends, as cited by George Valy, suggest that the support price may not trigger government offtake in the near term, but it provides a clear floor for farmer sentiment and tapping decisions.
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