Out-grower schemes for rubber in non-traditional planting areas are being developed as one way to bridge an expected shortfall in top quality grades for the local rubber products industry.
Spearheaded by the Southe Development Ministry, a smallholder project is being developed in Moneragala to produce rubber that will then be processed into high quality grades for the local products industry.
Currently, 35 percent of Sri Lankas 87,000 MT production is graded rubber of which only 15 percent are high quality RSS 1 to 3 grades.
This is largely because the local pricing system for rubber does not encourage processing of the higher grades, as prices are not fixed accordingly, but on sales sold in bulk.
As a result, manufacture of the higher quality grades of sheet rubber has been declining, standing currently at 15 percent of local production, says Rubber Research Institute Director, Dr. L K Thillakaratne.
All of this is sold locally at prices reaching a maximum of Rs. 75 a kilo.
This could also go shooting up in December this year, because Thailand has reportedly forward sold RSS grades of rubber at Rs. 80 per kilo, Thillakaratne added.
But due to a shortage in supply, most requirements of these RSS grades are currently imported at per kilo prices that go up to as much as Rs. 100.
An initial 10,000 hectares of land, to be extended to 20,000 hectares is being developed under the Moneragala project, to get off ground next month.
The land will be divided into plots, with the workers from the surrounding area being given ownership of the land.
” We need to convert more rubber into these grades for local product manufacturers, minimising imports. This is what we are trying to address through this scheme” , Rubber Research Institute Director L K Thillakaratne told Lanka Business Online.
Statistics indicate that rubber needs for local consumption alone is projected to increase to about 120, 000 MT by 2010.
We have been importing 5000 tons of RSS grades and latex a month over the past two months. Unless we go in for extensive replanting there will be a shortage” , he added.
The Moneragala project is tied up with the Thurusaviya scheme set up in 2000 to assist smallholders in obtaining a better price for their latex and to obtain credit.
The Thurusaviya centres set up in the area will buy the rubber from the smallholders and this is then processed into higher grades of sheet rubber.
It is expected that the project will be integrated with local product manufacturers, many of who have already expressed an interest in the project, Rubber cluster sources said.
High raw material prices have prompted companies like Dipped Products and Ansell Lanka to take their expansion plans overseas, to countries like Thailand and Vietnam where steady supply and lower prices is ensured.
The rubber products sector employs 38,000 people bringing in a tuover of Rs. 22 bn.
The area has been earmarked because it receives less rain, which interrupts tapping in other areas at times of the year as well as for its fertile soil and the ready labour available in the area.
High yielding clones are being used, producing an initial 2000 tons of rubber a year, to reach 10,000 tons in five years, Tillakaratne said.
Funding for the project is tipped to come at a total cost of US$ 80 mn, cluster sources said.
This will come through a combination of state funds through the Rubber Development Department of the Plantation Ministry as well as through donor funds from the Asian Development Bank (ADB) and the World Bank.
In Sri Lanka, smallholders contribute to about 60 percent of production (63 percent in 2001) as against the 85 to 95 percent in leading rubber producers like Thailand and Malaysia.
The estate system for rubber cultivation is no longer considered economical with poor management techniques, coupled with huge overhead costs making it increasingly unviable, sources said.
Out-grower systems of this kind are being encouraged in Sri Lanka as the way ahead, with plans to extend rubber cultivation to marginal tea lands in the country.