Subsidies no remedy for low rubber prices – Onkar Kanwar

Falling natural rubber prices have driven output in India down, and many anticipate that tapping of natural rubber will soon reach its lowest point in almost two decades. Last month the state of Kerala announced an Rs 150 (£1.51) per kilogramme subsidy to help small-scale producers, however Onkar Kanwar believes that subsidy programme such as this can only be of limited help.

“The reason why prices continue to be low is not because of imports or any other reason other than the fact that demand for all commodities has continued to stagnate,” stated Kanwar during his speech to Apollo Tyres’ 42nd Annual General Meeting. “This is a reflection of the demand situation in the consuming industries, of which the tyre industry is the largest. The global slowdown has meant that world over the demand for natural rubber has continued to be below expectations, and prices around the world have come down.”

The Apollo chairman believes “artificial means of propping up prices cannot work in the long run in a globally connected economy like ours.” He opined that only “a strong and buoyant economy” can elevate and maintain natural rubber prices.

Natural rubber production amounted to 655,000 tonnes in the financial year that ended on 31 March 2015, and national tyre industry association ATMA estimates that production could drop to 557,000 tonnes in the current year.