Vietnam set to beat India to emerge as the commodity trading hub of South-East Asia

When Singapore Mercantile Exchange, the first pan-Asian commodity exchange, opened for business in February, it chose Ho Chi Minh City as the delivery benchmark for its pepper contract, constituting a fresh setback for India in its losing battle against Vietnam for supremacy as South-East Asia’s commodity hub.

Prices set on the Mumbai-based National Commodity and Derivatives Exchange Ltd (NCDEX) have traditionally moved the global pepper market, but now this edge is in danger of being lost.

“The new exchange is still in a nascent stage. But Vietnamese traders are aggressive. The warehouses as delivery points for the exchange are getting full,” said S Kannan, executive director at the Jakarta-based International Pepper Community, an inter-governmental association of pepper-producing nations.

The annual global pepper market is worth around $2 billion. Singapore Mercantile Exchange’s preference for Vietnam as the new market mover is an indication that the global market no longer considers India as an influential player due to its declining volumes.

This is the latest in a series of setbacks that India has suffered on the commodities front as a combination of stagnant yields, rising labour costs, tiny farms, low mechanisation and faulty government policies erode the country’s competitiveness in comparison with its South-East Asian rival.

Though it is no match for India in size and resources, Vietnam’s graph as a commodity hub has been steadily climbing. In the past five years, the country with a population of 90 million has, one by one, overtaken India in production and export of cashew, seafood, coffee and pepper. Very soon, it is expected to surpass India in rubber production as well.

Vietnam’s aggressive growth in agriculture and commodity trade has begun attracting global investors.

The International Finance Corporation (IFC), a division of the World Bank, recently announced two investments totalling $40 million to aid Vietnam’s growing demand for trade and commodity financing.

Vietnam gets its edge from policies which link the entire value chain from production to the final consumer overseas and are designed to improve efficiency at each level, said PK Joshi, director (South Asia), International Food Policy Research Institute, a Washington-based think tank that helped the South-East Asian nation boost its rice production a decade ago.

“Vietnam has a policy for production that ensures timely delivery of inputs and high-quality services, a policy to create market linkages, and a very effective trade policy with clear strategies on how to target each market.

Together, this becomes a great recipe for success in the global commodity market,” Joshi added.

A decade ago, India was the world’s largest pepper producer, with an annual crop of 80,000 tonnes.

But while its annual production has declined to 48,000 tonnes, Vietnam’s has increased to 1.20 lakh tonnes, and it now exports almost five times more pepper than India.

“Vietnam has successfully introduced high-yielding pepper vines from Madagascar,” said CP Krishnan, director, Geojit Comtrade, a commodity brokerage.

A similar story was repeated in cashew nuts. India used to buy raw cashew nuts from Vietnam for processing and re-export, but soon Vietnam set up its own processing centres. Today, it exports around 1.70 lakh tonnes of cashew kernels versus 1.10 lakh tonnes by India

Higher productivity has taken Vietnam past India in the global seafood market as well. “Vietnam has gone in for intensive cultivation. While we have touched $3.5 billion in seafood export, they have crossed $5 billion,” said Anwar Hashim, managing director, Abad Fisheries.

The shrimp, Vannamei, currently a top money-spinner in the world market, is a good example of how India has lost the race. “Vietnam’s production of Vannamei is around 75,000 tonnes while we are at 30,000-40,000 tonnes. In Basa, which is widely consumed as fillets, Vietnam has a productivity of 250 tonnes per hectare, while we are at 20 tonnes,” added Hashim.

In rubber, too, India’s position as the fourth-biggest producer is under threat from Vietnam’s faster growth. Last year, its production grew 8% to 8.12 lakh tonnes and it is slated to rise by 6% this year to 8.6 lakh tonnes.

In comparison, India’s rubber production rose by 4.9% to 8.93 lakh tonnes in 2011. It is expected to slow down to a mere 4% and reach 9.27 lakh tonnes this year.

Vietnam may overtake India by 2015, given its current rate of growth, said Jom Jacob, senior economist at the Kuala Lumpur-based Association of Natural Rubber Producing Nations.

“They are going for high-yielding clones to enhance production. Nearly half the plantations are state-owned and are run efficiently,” he added.

To stay in the reckoning, India needs to get its policy act together. “India is only targeting production. It is not thinking of marketing and it has nothing for trade.
We need to stop this piecemeal approach if we wish to stay competitive,” said Joshi.


India’s second rubber park comes up in Tripura

India’s second industrial rubber park has come up in Bodhungnagar in western Tripura to boost the country’s elastic polymer industry.

The park, a joint venture between the Tripura Industrial Development Corporation (TIDC) and the Rubber Board, is the second of its kind in the country after the rubber park in Irapuram, Kerala.

Tripura Chief Minister Manik Sarkar Friday inaugurated the park, created at a cost of Rs.23 crore at the Bodhungnagar industrial growth centre, 15 km north of Agartala.

Tripura is the second largest natural rubber producer in the country after Kerala.

At least 20 rubber-based industrial projects would be set up in the park in the next few years. “The rubber park was built on an area of about 58 acres of land in the Bodhungnagar industrial growth centre in western Tripura and over Rs.75 crore are expected to be invested in the park over a period of three years,” said TIDC Chairman Pabitra Kar.

“A big rubber product development and display centre and a rubber museum have been set up in the park, which would lead to significant direct employment generation for 1,000 to 1,500 people,” he said.

Tripura is the second largest rubber producer in the country after Kerala with 65,000 hectares of land so far brought under cultivation producing 30,000 tonnes of natural rubber annually.

“The state has a potential to increase the production of rubber to 60,000 tonnes per year after five years,” Kar added.

The products proposed to be manufactured in the rubber park include cycle and two-wheeler tyres and tubes, retreading of old tyres, auto components, flaps, chappals, sports goods, latex foam, coated fabrics, hot water bag, hose, mattresses and pillows, automotive rubber components and rubber threads.

Products from the park, funded by the union commerce ministry under the ASIDE (Assistance to States for Development of Export Infrastructure and Allied Activities) scheme, are expected to meet the needs of northeastern states and neighbouring countries.

“There are over 50,000 rubber and latex-based downstream products that have a huge domestic and international market potential and the park would provide the platform and impetus for the growth of the downstream rubber industry in the country,” said R.C.M. Reddy, chief executive officer of ILFS, an infrastructure and lease finance company.

Industry and Commerce minister Jitendra Chowdhury said Tripura earned Rs.550-Rs.600 crore per annum from the raw rubber and with value addition the income would easily cross Rs.1,500 crore in the next three years.

“Products valued at Rs.400 crore likely to be exported from the rubber park,” he said, adding that the park would be a “land to lab to market” catalyst.

A persistent push to develop large-scale rubber plantations as a livelihood alternative to slash-and-burn cultivation by tribals has resulted in a major economic upswing in the state. And the government’s Rubber Mission seeks to bring 85,074 more hectares under rubber cultivation for ensuring socio-economic and industrial growth.

“The non-traditional rubber plantation zone of northeast is the area where lies the potential for expansion of rubber plantation to avail higher level of production of natural rubber, which had been used as industrial raw materials for almost 50,000 goods,” said a rubber board official.

The Kottayam-based Rubber Research Institute of India (RRII) has also identified 450,000 hectares for rubber cultivation in the northeast region.

Of the total 4.5 lakh hectares identified suitable for rubber plantation in different northeastern states, Assam alone has about 2 lakh hectares which could be gainfully put under cultivation followed by Tripura (one lakh hectares).

“Future expansion and growth of natural rubber in India lies in the northeast, which is agro-climatically most suitable for rubber cultivation,” said another rubber board official.

India has 600,000 hectares of rubber plantations producing about 750,000 tonnes of natural rubber annually. (IANS)

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North-East soon to become rubber hub of India

The North-East is becoming the rubber hub of India since the experts are of the opinion that the large-scale cultivation of the crop can help meet the shortfall in supply amid the surging demand.

The rubber is grown in the southern states of Kerala and Tamil Nadu, but the surge in demand for the crop has lead to the search for other regions where cultivation can be pursued. Rubber planting has not expanded to the target in Karnataka, Andhra Pradesh, Goa, Maharashtra and Orissa, where the climatic conditions support their growth.

Mr KG Mohanan, Additional Rubber Production Commissioner of the Rubber Board, said, “We believe that now we have to look to the North-East to produce more natural rubber. Though the agro-climatic conditions prevailing in some parts of the region are moderately suitable for planting rubber, it has been proven through experimental plantation that under appropriate agro-management practices, the commodity can be grown as an economically viable crop.”

A search has been unveiled and it culminated in attempts by the board to grow rubber in Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland and Arunachal Pradesh. According to reports, the Soil Conservation Department of Assam has planted rubber in the state in 1950s and the first commercial planting has been done by Tripura’s Forest Department in 1963.

The Tripura government had established Tripura Forest Development Plantation Corporation Ltd (TFDPC) in 1970. In the past, govt has sanctioned a scheme for speeding up rubber development in North-East.

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India’s rubber industry demands urgent measures for securing future rubber availability

NEW DELHI: The Indian rubber industry has demanded for initiating urgent initiative for securing future availability of rubber as it had expressed fears that the surging shortage of natural rubber may affect the growth of the rubber industry.

While speaking at the annual general meeting of All-India Rubber Industries Association (AIRIA) attended by Rubber Board chairperson Sheela Thomas, the representatives of the rubber industry, growers fraternity, rubber dealers and government officials, Mr Vinod Simon, President, AIRIA, has said that the availability of natural rubber has been the main concern that the industry needs to encounter with in the next decade.

Mr Vinod Simon, said, “In India the production and consumption of rubber have been matched but starting from 2010-11, the consumption of rubber has exceeded the production of rubber, while this year, the gap is further widening.”

Moreover, the production has slipped behind consumption by over 85,000 tonnes during 2010-11 (according to Rubber Board data) and in the present financial year, the gap between production and consumption of natural rubber is expected to vary in the range of 100,000 tonnes.

It is expected that the deficit will rise further in the upcoming years as the consumption of rubber by the industry will cross the production by the rubber plantation sector.

As per the Rubber Board data in 2010-11, the production of natural rubber was at 861,950 tonnes and the the consumption was at 947,715 tonnes, a deficit of over 85,000 tonnes. In the first five months of current financial year, the manufacturing has stood at 311,200 tonnes and the consumption has reached 400,995 tonnes.

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Ex-militants to cultivate rubber in Assam

Surrendered militants in Assam will soon be engaged in productive activities like cultivation of rubber.

“If the ultras can be engaged in fighting poaching in wildlife sanctuaries and policing, they can be involved in agricultural activity as well,” Assam’s Irrigation Minister Ardhendu Dey said.

Assam is not the first state in the country to experiment with the plan to engage former militants in fruitful activity.

Its tiny neighbour Tripura has already shown the way by becoming the largest producer of rubber in the country after Kerala by successfully implementing a plan to involve former militants in rubber cultivation.

“We want to take a leaf out of Tripura’s book,” Dey said.

With the current annual production of rubber being a mere 1,080 kg per hectare, as many as 50,000 acres would be brought under fresh cultivation over the next five years, the minister said.

The irrigation department for the purpose has identified land mostly in Lower Assam where the climate is more suitable for rubber production.

“Demand for rubber is growing day by day and it is expected that in the next 20 to 25 years there will be international and domestic shortage of rubber,” Dey noted.

The department has also urged the Centre to enhance subsidy in the 12th plan so that more funds could be generated.

The minister said September 22 would be observed as ‘Rubber Day’ in the state and to mark the occasion more than one lakh rubber saplings would be planted covering an area of 200 hectares.

“This can very well draw the attention of Guinness Book of World Records,” Dey said.

The districts to be covered under the scheme are Kamrup (rural and metro), Goalpara, Dhubri, Morigaon, Nagaon and Golaghat.

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Rubber Board gears up to boost rubber plantation in Assam

GUWAHATI, Sept 6: With a scarcity of rubber predicted worldwide in the coming years, the demand for rubber will increase. The State Soil Conservation Department has therefore decided to focus on increasing Assam’s rubber production. The Department, in association with the Rubber Board of India, will observe September 22 as Rubber Day.

Addressing a press conference, State Soil Conservation minister Dr Ardhendu Dey said, “Assam has tremendous potential for rubber cultivation. There is need to tap this potential. The Soil Conservation Department and the Rubber Board of India have identified 2 lakh hectares of land in the State with potential for rubber cultivation.”

Rubber Board of India joint rubber production commissioner KV Rathore said, “Kerela and Tripura have been very successful in rubber cultivation. The Rubber Board will now concentrate on Assam. The Board has identified Kamrup, Kamrup (metro), Goalpara, Dhubri, Morigaon, Nagaon and Golaghat districts and Hojai, Kalibor, Rangia, Bilasipara, South Salmara and Bokaghat subdivisions as areas favourable for rubber plantation.”

Rubber Board of India development officer PC Goswami said, “At present rubber cultivation is done on 28,000 hectares of land in the State. The Board is also ready to give subsidy to marginal and medium farmers. A rubber plant attains maturity after seven years of plantation. After seven years it starts producing rubber. For the next 30 years rubber can be collected from the plant. Even after the plant stops producing rubber, the rubberwood proves handy and is even for valubale than teak.”

Dr Ardhendu Dey further said, “As per the government’s scheme, for the next five years rubber plantation will be carried out on 10,000 hectares of land every year. At the end of five years rubber plantation will be carried out on 78,000 hectares of land (including the existing 28, 000 hectares). Assam will then be in a position to give competition to Kerela and Tripura so far as rubber plantation is concerned.”

Commissioner and Secretary to the Government of Assam, Soil Conservation Department, Dr Prem Saran was also present at the meeting.

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Rubber Board seeks NE funds pattern change

The Rubber Board has decided to approach the Planning Commission for cent per cent funding of rubber plantation in the northeastern states.

Generally, a state provides 50 per cent of the funds, while Rubber Board bears 40 per cent of the expenditure. The remaining 10 per cent is borne by the beneficiaries.

The Board’s decision to seek 100 per cent funding from Planning Commission stemmed from the fact that many of the states often failed to provide its share of fund, preventing implementation of block plantation of rubber in the region.

As part of block rubber plantation, which is the flagship scheme of the Rubber Board, 100 farmers are chosen for rubber cultivation. Each farmer has to go for rubber plantation in two hector plot according to the scheme.

A senior Rubber Board official said block plantation was the only way to promote rubber production in the region. So far, only Tripura and Meghalaya have block rubber plantation.

Tripura is the second largest producer of natural rubber in the country after Kerala. About 55,415 hectare area is is under rubber plantation in Tripura. Out of Assam’s 200,000 hectare potential areas for rubber plantation, only 28,102 hectare have been covered by rubber plantation. In Meghalaya, 9,196 hectare has been used for rubber plantation out of the 500,000 hector potential area. Nagaland has 15,000 hectare potential area, of which 4,141 hectare has been utilized. In Arunachal Pradesh, 1,200 hectare is under rubber plantation out of its 25,000 hector potential area. Mizoram has 908 hectare under rubber plantation out of 50,000 hectare potential area and Manipur has 2,723 hectare rubber plantation out of 10,000 potential area.

“Unless the northeastern states go for block plantation, we cannot tap the production in the region. Triupura could script the rubber production success story only because of block plantation,” the official said.

He added that one of the major reasons for block plantation for rubber not being successful in many of the northeastern states is that the states’ shares of fund do not come on time.

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Assam Rubber Board to bring 12,500 hectares under plantation

The Rubber Board has indentified Assam as a” potential state” to “replicate the Tripura success story” and plans to bring 2 lakh hectares area under rubber plantation in the state in near future. It has a set a target to bring at least 12,500 hectares area under rubber plantation in Assam and 35,000 hectares in North East in the 12th five year plan.

Sustained effort from the state government and the Rubber Board had made Tripura, a left ruled state in North East, the second largest producer of natural rubber in India within a short span. The rubber success story helped the state bring down militancy drastically over the years.

If Rubber Board officials are to be believed, Assam can overtake Tripura within next 10 years or so, if a sustained effort is being made.

“We have seen that the agro-climatic conditions of Assam and North East are suitable for rubber plantation. What has happened in Tripura can also happen in Assam and North East. We are going to be focussed on North East in the next 4-5 years,” said Sheela Thomas, Chairperson of Rubber Board.

Tripura has shown that rubber can be very remunerative employment for the people, “if there is a whole hearted effort from the government”, Thomas said.

She added that “productivity wise” too Assam “huge scope” for rubber plantation.

Citing Kerala’s example, Thomas, however, cautioned that agricultural land should not be converted into rubber plantations as that would then lead to food scarcity in the state.

AK Krishna Kumar, Executive Director of Infrastructure Leasing and Financial Services (IL&FS), who has been very instrumental in helping Tripura script the rubber success story, suggested the Assam government to launch a Rubber Mission, similar to one launched in the neighbouring state, for promoting rubber plantation in a focussed way. Researches are presently underway by the Rubber Board to develop a rubber clone exclusively for the North Eastern states.

As per figures provided by the Rubber Board, Assam has 28,102 hectares of land under rubber plantation currently, against its potential of 2 lakh hectares.

Tripura on the other hand, has 55,415 hectares of land under plantation as against its potential of 1 lakh hectares.

The land under rubber plantation in Kerala, which is the largest rubber producing state in India, is 5,25,408 hectares.With demand for natural rubber growing fast, the deficit between availability and supply too is widening, prompting the Rubber Board to look for suitable areas for plantation.Presently, India’s rubber industry turnover is around Rs. 4,500 crore and the demand is expected to touch 1.78 lakh MT by 2025.

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Indian natural rubber production rises by 7.2% to 62,000 tonnes in July

NEW DELHI: The Indian natural rubber production surged by 7.2% to 62,000 tonnes in July 2011 as compared to the corresponding period last year. Reports suggest that the consumption has risen by 7.61% to 82,000 tonnes.

Reports suggests that the natural rubber production in India was at 58,500 tonnes during June 2010 while the consumption of the natural rubber stood at 76,200 tonnes.

Moreover, the natural rubber imports rose to 20,127 tonnes in July 2011 as compared to 17,975 tonnes in the same month last year. Even, exports also surged to 779 tonnes in July this year as compared to 24 tonnes in the same period last year.

The rubber imports in India has risen 11.97% to 20,127 tonnes in July this year as the tyre manufacturers have bagged profits from low customs duties.