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2013

RUBBER TRADING IN KERALA: Its Impact on Society

SOCIAL DEVELOPMENT PROJECT


PROJECT GUIDE Prof. M K Nandakumar GROUP 28 PGP/15/082 Devina Bhaskar PGP/15/123 Vidisha Mohapatra devina PGP/15/125 Nikhil Warade PGP/15/227 Kavita Jangpangi 1/31/2013 PGP/15/251 Shrikant Bhimrao

DECLARATION

We hereby declare that all the work undertaken by us is authentic and consists of no plagiarism whatsoever to the best of our knowledge and belief. The group has taken care to index all key findings and resources and all references to any point are also mentioned at the end.

Place Date

Name (s)

Signature (s)

CERTIFICATE

This is to certify that the social development project entitled...... .... submitted by . to Indian Institute of Management Kozhikode is a bona fide record of the work carried out by them under my supervision and guidance.

Place Date

Faculty Name (s) Signature (s)

ACKNOWLEDGEMENT

We are extremely thankful to our project guide Professor M.K. Nandkumar and Social Development Project Coordinator Professor M.P. Sebastian, for having given us this wonderful opportunity of conducting a live research on situation of rubber trading in Kerala and alongside determine its impact on society as well as on all stakeholders involved. We hope that our findings and processes documented at the end of the project can throw sufficient light on the situation of ongoing rubber trading in Kerala, estimate its actual impact and also assess on how the situation can be bettered in upcoming future. This project couldnt have been successfully completed without the able guidance and extremely enlightened conversations with some of the eminent personalities in rubber trading and rubber estates. We owe the deepest thanks to them. We are open to all suggestions and critical comments on our project findings and look forward to a healthy discussion on the same I the upcoming presentation to enable us to carry forward the project in the near future. Lastly, we would consider ourselves successful in real terms if any of our recommendations, if implemented, could better the conditions of stakeholders involved in rubber trading in Kerala.

TABLE OF CONTENT
INTRODUCTION.5 EXECUTIVE SUMMARY.6 RUBBER INDUSTRY IN INDIA...7 RUBBER TRADING: AN INTRODUCTION.8 INDIAN RUBBER DEALER FEDERATION (IRTF).10 TRADING: THE MECHANISM..11 PROJECT MANAGEMENT METHODOLOGY..13 CRITERIA FOR DECIDING OBJECTIVES..13 PROJECT CHARTER.14 PROJECT SCOPE STATEMENT.15 PROACT+ FRAMEWORK.16 PROJECT MANAGEMENT TOOLS USED17 PROJECT PLANNING FRAMEWORK17 IMPACT OF RUBBER TRADING IN KERALA18 ENVIRONMENTAL IMPACT.18 CLIMATE IMPACT..19 SOCIAL IMPACT..23 RUBBER PLANTATION PROPERTY RIGHTS24 STRATEGY TO PROSPER FROM RUBBER TRADING IN KERALA25 REFERENCES.28 ANNEXURE.29

INTRODUCTION
Natural rubber is an elastomer derived from latex of plants. The source of natural rubber in Kerala is from the species Hevea brasiliensis. Actually rubber plant is not a native plant of Kerala. Dutch colonialists brought rubber plant to Kerala. But at present Rubber is an important source of Income for good number of Keralites. Kerala accounts for 90% out of the total area under rubber cultivation in India. In Kerala rubber is generally grown in the midlands and high lands including Kottayam, Pathanamthitta, Kollam and Idukki. In 2009 the production of Rubber in Kerala increased to 783,000 tonnes. Kottayam grows rubber in over 109,582 hectares and produces 120,946 tonnes of rubber per annum. Kottayam, the fourth largest rubber grower in India, produces almost nine percent of the world's rubber. Excellent price of rubber has really warmed the Rubber planters in Kerala. But acute labor shortage is affecting Rubber cultivation in Kerala. Kerala accounts for 78% of the area under rubber cultivation in India. In the current financial year ending 31 March, the state is expected to produce 917,000 tonnes of the commodity according to Monippally, up from 846,000 tonnes in the previous year. Rubber trading has assumed to be an important strategic sense not just in India but in many other parts of the world. In Kerala, production, extraction and maintenance of rubber plantations has assumed an extremely important dimension as compared to other Indian states. Due to Keralas good support with many international Gulf countries, Kerala has established a good relationship in commodity trading of several products especially rubber. However, rubber trading is an extremely complex process. The whole supply chain of rubber production and extraction is so behemoth that any change in one single entity affects other parts of the supply chains as well.

EXECUTIVE SUMMARY
India is the 4th largest producer of natural rubber (NR) in the world and has the 5th largest acreage under rubber cultivation. Over 84% of cultivation is in smallholdings. However, low productivity levels have kept rubber cultivation vulnerable to over exploitation, when prices are high, and abandonment, when Rubber is grown on smallholder lines in Thailand, 90% of the extent; and India, 89% of the extent and 91% of total production. The increasing dependence on the futures prices in the commodity segment of trading, rubber has been stretching out too far. Being the 4th largest producer in terms of metric tonnes and the first in productivity of rubber, India needs to be the haven of rubber trading. With Kerala accounting for most of the annual production, the major centers of rubber trade are in Kerala. The commodity rubber is obtained from hevea brasilienis and its journey to the rubber board is described here. The major indices of rubber trade are TOCOM (Tokyo) and NCDEX/MCX in India. Majorly used for automobiles, cables, footwear and latex, the major up thrust or loss to the trading is from the auto industry with the tyre segment constituting 60% of the total rubber production. The government of India has been wary of the practices in trading and hence has set up a rubber board (AIRA) and dealer federation (IRDF). There are 20 categories of rubber throughout the world out of which top 11 categories are traded on the board. They may be RSS= Ribbed Smoked Sheets or ISNR. The natural rubber is consumed either in the form of RSS, latex concentrate or solid block rubber. Futures trading in Rubber flagged off on 15 March 2003 for the very first time in India via National Multi Commodity Exchange of India Ltd. Ahmadabad, and the product soon became a role model as a truly efficient and liquid market. If futures are meant for the price discovery and price risk management for real hedgers, rubber futures should be considered as a great success. NMCE has provided an unbiased credible online platform to all the participants giving equal opportunities of the fair and transparent trade. Rubber futures have been used by the rubber industry whose offices are largely located in the south. It includes the traders, exporters, user industry, manufacturers, etc. The group carried primary and secondary research over a period of about 6 months regarding rubber trading in Kerala and has come up with a deep analysis of the current scenario and measures on how situation could be improved regarding the same to benefit the inhabitants of Kerala.

RUBBER INDUSTRY IN INDIA


The industry locally can be divided into two parts based on the amount of rubber usage for the products i.e. the tyre and non tyre based industry. On the basis of 2010 figures the annual rubber turnover has been 42,000 cr which has risen to 60,000cr in 2012 and is expected to touch 1 lakh crore in the coming years. The tyre portion of the turnover has been 25,000cr (2010), which constitutes 59.5% or approx. 60% of the total annual production. In terms of export, the total amount was 7000cr of which tyre industry constitutes 53.6% and the rest is other forms of rubber. The total amount of revenue that the government of India earns through production and trade of rubber is 6500 cr in excise duty and 3500 cr in import duty for each 10000cr it earns annually (figures correspond to 2010). The annual production of rubber is 1031678 metric tonnes (2010) constituting of all: natural, synthetic and reclaim forms of rubber. While accounting for the consumption, it would be 1370525 metric tonnes the same year. NATURAL 80% 67.8% SYNTHETIC 10.3% 25.3% RECLAIM 9.7% 7%

PRODUCTION CONSUMPTION

Thus the deficit of consumption and production which accounts to 33847 metric tonnes is fulfilled by the import of 420889 metric tonnes and the rest is exported all across. A few facts in the industry: Number of rubber producing units Number of tyre factories Large units Small and medium scale units Employment (number) 4327 51 501 3775 4,75,000

The total tyre production is 97 million units annually. The major producers of natural rubber in the world are: Thailand, Indonesia Malaysia and India (ranked descending in terms of metric production) and the major consumers across the world are China and India.

According to the area under rubber production, India ranks fifth in the world, while on the basis of productivity, India is first.

RUBBER TRADING: AN INTRODUCTION


In the case of rubber, we usually trade natural rubber in terms of commodity trading. The following exchanges are the ones on which rubber is traded in large quantities:

TOCOM OME SCE NCDEX MCE

Tokyo Osaka Singapore India India

In India, rubber is traded at Kottayam, Kochi, Kozhikode and Kannur mostly. An example: Kottayam Spot (Rs/kg) Variety RSS 4 RSS 5 Ungraded Monday 159.50 154 Not available

Some facts about trade exchanges in India: NMCE, the most popular exchange for rubber trading, estimates a turnover of Rs 30,131.99 crore in the current fiscal year, a 15-fold jump in three years. India is the fourth largest producer of natural rubber with an 8% share of the global market. Kerala accounts for 78% of the area under rubber cultivation in India. In the current financial year ending 31 March, the state is expected to produce 917,000 tonnes of the commodity according to Monippally, up from 846,000 tonnes in the previous year.- K.K. Abraham, president of Pala Marketing Cooperative Society, representing 8,500 farmers on the exchange.

The rubber as a commodity is traded in future exchanges. Approximately 5000 kgs of rubber is traded daily. In terms of the trading, there is an impact of the foreign markets (mainly Chinese) and trading exchanges on the prices of rubber:

Rubber prices in India has failed to climb the psychological Rs 200/kg mark even as rubber futures at Tokyo Commodity Exchange (TOCOM) witnessed a sharp rebound on Thursday on stimulus measures and price support mechanism being adopted by the rubber cartel representing largest producers, Thailand, Indonesia and Malaysia. On India's NMCE rubber futures for October delivery closed at Rs.19598 on Thursday. Trend in rubber trading:

INDIAN RUBBER DEALER FEDERATION (IRDF)


The board is basically constituted to provide for the honorable practices and standardization such that uniform policies are followed throughout. The various categories of rubber traded are (based on quality): RSS1 RSS2 RSS3 RSS4 RSS5

ISNR-10 ISNR-20

The highest quality is of RSS-IX. The various factors that influence rubber trading are:

Ratio of domestic rubber utilization and imported rubber utilization

International price movements of rubber

growth in automobile industry

Hoarding and storability

Production of rubber fluctuates on a monthly level

Government policies

TRADING: THE MECHANISM


The affect of trading exchange in the foreign market is felt in the Indian markets with a correlation of 83%. The prices as desired are depicted in the MCX/NCME exchanges very quickly. Most of the speculative and hedging techniques employed are well set from the major consumption areas of china and the growth of automobile industry.

PRIMITIVE VALUE CHAIN: EMERGING MARKETS

PROJECT MANAGEMENT METHODOLOGY


A. CRITERIA FOR DECIDING OBJECTIVES
1. Specific
What are our project objectives? To carry out analysis of the current value chain of rubber trading industry in India especially in Kerala To carry out primary research on rubber estates and rubber traders offices and collect data firsthand To record the impact of rubber trading on Kerala society and economy as well as environment To give recommendations and suggest a strategy on how to make rubber trading sustainable in Kerala

2. Measurable
What impact does rubber trading has on Kerala? Environmentally Climatic How many gases with disastrous impacts are emitted Market Intervention How much the rubber prices have fluctuated CDM Potential What activities have CDM potential in natural rubber sector Policy Interventions What laws has the government formulated Property rights exercised by individuals in rubber trading

3. Attainable
All the goals were formed keeping in mind whether the sources of carrying out primary and secondary research would be feasible or not and whether the different phases of the project planned would be able to be completed within specified time or not. With the exception of minor deviations, all the goals have been successfully accomplished.

4. Relevant
Rubber tradings heart and soul lies at its inception of obtained rubber at the estates and exchange of valid information between all stakeholders concerned. All relevant information has been collected by secondary or primary research.

5. Time bound
We had planned via the Gantt chart in Microsoft Project professional 2007, the timeline, wherein all activities would be completed according to the planned schedule. Each activity had a beginning and end phase at the end of which a milestone was attained.

B. PROJECT CHARTER
PROJECT TITLE
A study of rubber trading scenario in Kerala, assess its impact and suggest measures and frameworks to improve the same.

PROJECT START DATE


Jul-12

PROJECT END DATE


Jan-13

PROJECT PARTICIPANTS
PGP/15/082 PGP/15/123 PGP/15/125 PGP/15/227 PGP/15/251 Devina Bhaskar Vidisha Mohapatra Nikhil Warade Kavita Jangpangi Shrikant Bhimrao Gajbhiye

PROJECT OBJECTIVE
To carry out analysis of current value chain of rubber trading industry in India especially in Kerala To carry out primary research on rubber estates and rubber traders offices and collect data first hand To record the impact of rubber trading on Kerala society and economy as well as environment To give recommendations and suggest a strategy on how to make rubber trading sustainable in Kerala

PROJECT APPROACH
Setting SMART objectives Following PROACT+ methodology Devising a project plan

C. PROJECT SCOPE STATEMENT


1. PROJECT OBJECTIVE
To carry out an analysis of the current value chain of rubber trading industry in India especially in Kerala To carry out primary research on rubber estates and rubber traders offices and collect data firsthand To record the impact of rubber trading on Kerala society and economy as well as environment To give recommendations and suggest a strategy on how to make rubber trading sustainable in Kerala

2. DELIVERABLE
A detailed project report assessing the rubber trading scenario in Kerala and identifying the key stakeholders and elements of value chain. It would also enlist the various impacts of rubber trading and measures suggested improving the same in Kerala.

3. MILESTONES

ELEMENTS
PROJECT INCEPTION PROPOSAL SUBMISSION SECONDARY RESEARCH TELEPHONIC INTERVIEWS WITH R1 LOCAL RUBBER ESTATE VISIT IN KERALA ANALYSIS AND RECOMMENDATIONS REVIEW WITH GUIDE FINAL PROJECT SUBMISSION

TIMELINE
July 2012 August 2012 October 2012 November 2012 December 2012 January 2013 January 2013 January 30th 2013 January 31st 2013

4. REQUIREMENTS
Access to EBSCO articles and online library journals on rubber trading Introduction to rubber traders and local rubber estate contacts Project management tools Permission and convenient timing to visit rubber estates to collect primary data

5. PROJECT REVIEW
We always strived to have periodic reviews with our guide Professor Nandkumar sir as well as the final review on time. The success of the project would be decided after the final seminar by PGP I February 2013.

D. PROACT+ FRAMEWORK ELEMENTS


PROBLEM DEFINITION OBJECTIVES

DESCRIPTION
How is the rubber trading industry progressing in Kerala? How can it be improved further to benefit the society and economy in Kerala? To carry out an analysis of the current value chain of rubber trading industry in India especially in Kerala To carry out primary research on rubber estates and rubber traders offices and collect data firsthand To record the impact of rubber trading on Kerala society and economy as well as environment To give recommendations and suggest a strategy on how to make rubber trading sustainable in Kerala

ALTERNATIVES

Primary Research Secondary research Telephonic interviews Estate visits Group Brainstorming Measures on how to improve the current rubber trading scenario in Kerala and benefit its inhabitants. Time to complete project had to be adhered to. Could not visit as many estates as planned in order to justify the project scope. Ho w the rubber trading has impacted Kerala and has helped in determining many effects? How can this information now act as input to decide the improvement measures?

CONSEQUENCES TRADE OFFS

LINKED DECISIONS

E. PROJECT MANAGEMENT TOOL USED


Whodo.es online project management tool

F. PROJECT PLANNING FRAMEWORK

PROJECT PROCESSES AND FINDINGS


Methods of data collection
1.Primary: Visits to rubber estates near Wayanad Telephonic and skype conversations with managers in renowned rubber trading firms like R1 International. 2.Secondary The group did the literature review on a large number of e-journals and white papers,the sources of which are mentioned in references.

DETAILS OF PRIMARY VISITS AND CONVERSATIONS 1.Mr.Vinay Raj,VP Trading,R1 International


Headquartered in Singapore, R1 is a global company, not only in the reach of its business, but also in the make-up of her shareholders, comprising of partners from Malaysia, Thailand, Singapore and the USA.R1 is a global rubber trading company specializing in rubber commodity. They supply all kinds of rubber and rubber-based products to all parts of the world. Via telephonic conversations with Mr.Vinayraj,we have come to know the various nuances of rubber trading in India especially Kerala and worldwide,all details of which,have been documented in the beginnining as the introduction part of rubber trading. We also gathered data about various products in which the trading was carried on.

(Source:R1 International :Products) Products


They deal in different grades and types of rubber including, technical specified rubber, latex, smoked sheets, compound rubber, synthetic rubber and rubber-related products such as tires, rubber woods, etc.

NATURAL RUBBER Natural rubber, in its milky sap, is tapped from the Hevea Brasiliensis tree. Most of the latex is either

processed into sheets or solid crumb rubber. It can also be kept in its liquid form through use of chemicals to prevent the latex from coagulation. In the solid form, the rubber sheets or crumbs are used in the manufacture of solid rubber based products, eg. tyres etc, while the liquid form is used for dipping products such as gloves, balloons and condoms. Technically Specified Rubber (TSR) Rubber grading under TSR was established in the early 1970s. The rubber is graded by its dirt, ash, nitrogen content, volatile matter content and plasticity retention index.They have good processing characteristics and physical properties. Usually, such grades of rubber are high in green strength, tack, easy to mix and has low viscosity.Common sources of TSR include Malaysia, Indonesia, Thailand, India, Vietnam etc. Depending on the countries the rubber is from, the rubber labeled accordingly. SMR, Standard Malaysia Rubber, is from Malaysia. SIR, Standard Indonesia Rubber, is from Indonesia.These are used in high performance passenger tyres, motorcycle and bicycle tyres, heavy load truck tyres, conveyor belt, inner tubes and hose. A Typical Technical Specification of Standard Malaysian Rubber (SMR): SMR10 Dirt % wt max Ash % wt max Nitrogen % wt max Volatile matter % wt. max Acetone extract % wt max Copper content max Manganese content max Po Min (Plasticity) PRI % min Mooney Viscosity 0.08 0.75 0.60 0.80 5.00 8 PPM 10 PPM 30.00 50.00 70.00 - 90.00 SMR20 0.16 1.00 0.60 0.80 5.00 8 PPM 10 PPM 30.00 40.00 70.00 - 90.00

Ribbed Smoked Sheets (RSS) Ribbed Smoked Sheets, or air dried sheets are commonly known as RSS. It can be graded into RSS1 to RSS5, with RSS1 as top grade. It is usually packed in large bales of 111.11kg/bale or 19 metric tons per 20 foot FCL.

The different grades are determined by the percentage of particles in the rubber sheet. Grade RSS1 Unacceptable Conditions Acceptable Conditions

Oxidized spots, weak heated, Slight traces of dry mould on the packaging are under-cured, over-smoked, opaque acceptable but mould should not penetrate inside the and burnt sheet are not acceptable. bale. Small scattered pinhead bubbles are permissible. Oxidized spots, weak heated, Slight traces of rust and dry mould on the packaging and under-cured, over-smoked, opaque interior sheets are acceptable but it should not be >5% and burnt sheet are not acceptable of the bales sampled. Small bubbles and slight specks of bark are permissible. Oxidized spots, weak heated, Slight traces of rust and dry mould on the packaging and under-cured, over-smoked, opaque interior sheets are acceptable but it should not be >10% and burnt sheet are not acceptable of the bales sampled. Small bubbles, slight specks of bark, slight blemishes in colour are permissible. Oxidized spots, weak heated, under-cured, over-smoked (exceeding the degree shown in samples), opaque and burnt sheet are not acceptable Oxidized spots, weak heated and burnt sheet are not acceptable Slight traces of rust and dry mould on the packaging and interior sheets are acceptable but it should not be >20% of the bales sampled. Medium sized black particles, bubbles, translucent stains, slightly sticky or oversmoked rubber are permissible. Slight traces of rust and dry mould on the packaging and interior sheets are acceptable but it should not be >30% of the bales sampled. Large particles, bubbles or barks, small stains or blisters, slightly sticky, slightly undercured or over-smoked rubber, blemishes are permissible.

RSS2

RSS3

RSS4

RSS5

Pale Crepe Pale Crepe consists of carefully collected fresh liquid latex, deliberately coagulated and sometimes, bleached, milled, to produce crepe of a thickness corresponding approximately to standardized thickness. There are a number of grades available with the purest form being 1X Thick Pale Crepe (1XTPC) while the most popular is t Thick Pale Crepe (1TPC). 2 Thick Pale Crepe is also available. Pale crepe is usually sold in 25kg bales with 32 bales packed onto a crated pallet of 800kgs, suitable for ocean container. Pale crepe is used in FDA applications, medical supplies, footwear, cements and adhesives.

A Typical Technical Specification (TCVN 3769:2004 #ISO 2000:2003E) Parameter

of STANDARD

VIETNAMESE

RUBBER

(SVR):

Limits for rubber grades From whole field latex From cuplums New

Test Method

SVR SVR SVR SVR SVR SVR SVR SVR SVR L 3L CV60 CV50 5 10CV 10 20CV 20 Dirt retained on 44mircon apeture (max, %wt)

Old (suggestion)

0.02 0.03 0.02 0.02 0.05 0.08 0.08 0.16 0.16 TCVN6089:2004 TCVN6089:1995 ISO249:1995 ISO249:1987(E)

Volatile matter 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.8 (max, %wt) Ash content, (max, %wt) Nitrogen (max, %wt) 0.40 0.50 0.40 0.40 0.60 0.60 0.60 0.8

0.80 TCVN6088:2004 TCVN6088:1995 ISO248:1991 ISO248:1978(E) 0.80 TCVN6087:2004 TCVN6087:1995 ISO247:1990 ISO247:1990(E) 0.60 TCVN6091:2004 TCVN6091:1995 ISO1656:1996 ISO1656:1988(E) 30 TCVN60922:2004 ISO2007:1991 TCVN60921:2004 ISO2930:1995 TCVN6092:1995 ISO2007:81

0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.6

Initial plasticity 35 (Po), (min)

35

30

30

Plasticity 60 retention index (PRI), (min) Lovibond colour, Individual value (max) 4 Range (max) Mooney viscosity ML (1'+4') 100C -

60

60

60

60

50

50

40

40

TCVN6092:1995 ISO2007:81

TCVN6093:2004 TCVN6093:1995 ISO4660:1999 ISO4660:1991 6 2 605 505 60+ 7/-5 65+ 7/-5 TCVN6090:2004 TCVN6090:1995 ISO289-1:1994 ISO289-1:1994

Curc*

TCVN6094:2004 ISO6502:1999 ISO3417:1991

Three sub-grades of SVR5 are SVR5WF (processed from whole field latex), SVR5RSS (prepared by direct baling of Ribbed smoked sheet-RSS) and SVR5ADS (prepared by direct baling of air dried sheet ADS) Producer limits do not exceed 0.5% Producer limits are for Mooney viscosity stabilised rubbers * Rheograph and cure test data are provided when customers require.

LATEX Latex is the thin stretchy material obtained by processing the sap of rubber plants. It can also be made synthetically by polymerizing a monomer that has been emulsified with surfactants. Requirements of ISO 2004 for centrifuged and creamed natural rubber latex concentrates Centrifuged HA Total solids content, %, minimum Dry rubber content, %, minimum Non-rubber solids, %, maximum Ammonia, % on latex 61.5 60.0 2.0 0.6 minimum Mechanical stablity, s, minimum Coagulum content, %, maximum 650 0.05 LA 61.5 60.0 2.0 0.29 maximum 650 0.05

Copper, ppm, maximum* Manganese, ppm, maximum* Sludge content, %, maximum Volatile fany acid (VFA) number

8 8 0.10

8 8 0.10

As agreed between the interested parties but not to exceed 0.2 As agreed between the interested parties but not to exceed 1.0 No pronounced blue or grey No pronounced odour of putrefraction

KOH number

Colour Odour

Optional requirement. Difference between total solids and dry rubber content. Higher minimum values of mechanical stability may be agreed between the interested parties if desired. *Based on total solids. After neutralization of ammonia with boric acid.

IMPACTS OF RUBBER TRADING IN KERALA


ENVIRONMENTAL EFFECT
A large size of forests in Kerala has been cleared to promote the fostering of rubber plantations in Kerala. This has even included methods like setting fire to forests in Kerala. This promotion of monoculture has also given rise to pest attacks which has reduced soil productivity. The reduction in landscape diversity has also led to loss of green manure fodder and firewood resources. A large number of green gardens have been converted to cash crop plantations like that of rubber and coconut.

Soil Erosion

The decreasing forest cover and rainfall in the area has led to soil erosion. This has drastically reduced the quality of soil and ultimately led to poor productivity. The infiltration rate i.e. the rate at which the water used to percolate has decreased tremendously causing longer run-off from catchment areas. The sediment production rate has increased and also it has caused many flash floods in recent past (Kerala Forest Research Institute, 2005). Higher crop diversity in turn results into more of litter heterogeneity and hence they decay fast. One parameter related to quantity and variability of plant litter inputs is soil organic matter (SOM) (Swift M J, 2004). Diverse land-use systems in terms of species richness generally maintain better SOM than species poor ones (Russell, 2002). Water infiltration and retention processes are also regulated by organic matter flows.

CLIMATIC IMPACT
Land conversion is a major source of GHG emissions. The figure given below shows various activities in rubber plantations and the corresponding GHG emissions from the same.

Figure 4: Schematic Overview of the Production of Fresh Latex & Primary Rubber Products and Associated Emissions of GHG Source: (Jawit, 2010)

GHG Emissions from Rubber Plantation

CDM POTENTIAL IN NATURAL RUBBER SECTOR


There is extremely high carbon sequestration activity in natural rubber plantations. For primary processing of latex and rubber products manufacturing there are several activities apart from carbon sinks that qualify as CDM activities.

Source: (Jacob)

Internally generated cash flows from these CDM projects may be used to finance natural rubber cultivation.

INTERVENTION FROM MARKET ACTIVITIES


The major use of rubber is in manufacturing tyres. Hence, any economic downturn that impacts the automobile industry also does the same for the rubber trading and plantations. This often affects the demand of rubber and also leads to large fluctuations in rubber prices. This has caused most of the marginal farmers in Kerala to move away from rubber manufacturing to that of other crops. Surprisingly, the externalities in rubber production are not taken into account while manufacturing rubber Rubber Plantations in Kerala

Sustainable management of rubber plantations Preservation of biodiversity Effluent problems of rubber processing Use of non-renewable fossil fuel resources High energy consumption Disposal of tyres

Global producers of rubber like Malaysia, Thailand, Indonesia and India should incorporate these externalities for the rubber prices to start reflecting their true economic and social costs .This would also enable them to leverage their substantial market power to influences prices in rubber market all over the world.

POLICY INTERVENTIONS BY GOVERNMENT


The major policy interventions by the government in the rubber industry are: Government of India passed the Rubber (Production and Marketing) Act in 1947 which formed the basic set of rules governing the industry Post liberalization (1991), import tariff on tyres has been reduced to 10%. This has led to widespread import of tyres from other countries despite India producing large quantity of good quality rubber. To counter this negative influence on Indias rubber industry, the rubber board has been pushing for an increase in import tariff from 10% to 20% for tyres. Post liberalization, government has removed subsidies given to establish processing units to marginal farmers. This move has reduced incentives for marginal farmers to enter the rubber industry. Government introduced GM crops in Kerala in 2011 in spite of Kerala being a GM free state. Though it might lead to higher production yields, it will degrade the environmental conditions.

SOCIAL IMPACT
There are several notable differences existing in the operations of large and marginal farmers. Following are some of the disparities that exist.

RUBBER PLANTATIONS PROPERTY RIGHTS

With the surge in rubber prices, in Kerala vast tracts of forest land have been converted into plantation areas leading to the reduction in forest area. As per the Land Reforms Act of 1963 "Private forest" means a forest which is not owned by the Government, but does not include areas which are planted with tea, coffee, cocoa, rubber, cardamom or cinnamon. Land reforms played a huge role in empowering the poor; however the tribal people still suffer from frequent encroachments. This has led to many uprisings against the hostile living conditions in rubber plantations and encroachment of tribal land like Chengara struggle in Harrison Malayalam Rubber Plantations where 5000 families took part in the protest by pitching tents inside the plantation (Venugopal, 2009). Majority of the protestors were dalits and tribal people who toiled in these plantations, but never possessed any cultivable land. The protest led to a settlement with over 1400families getting land and financial assistance to build houses, as part of the settlement.

RUBBER FARMERS SETTING PRECEDENT IN FUTURES TRADING IN KERALA


Ten of the 36 farmer cooperatives in Kerala are now trading on mainly two exchanges, National MultiCommodity Exchange of India Ltd (NMCE) and Multi Commodity Exchange of India Ltd (MCX), to hedge and to speculate, and more farmers are poised to join the group. Farmers are collectively also leveraging new communication systems to trade effectively on the futures market. In Muvattupuzha village in Ernakulam district of the state, for instance, a giant ticker provides real time rubber prices to the public. Also, the high level of education and awareness among farmers in Kerala along with growth in Information technology has enabled the farmers to participate majorly in this derivative trading due to which they are no more dependent on fluctuating rubber prices.

STRATEGY TO PROSPER FROM RUBBER TRADING IN KERALA


Reinvestment in rubber processing units in Kerala should be encouraged. An entrepreneurial cultural related to rubber plantation, processing and trading should rise that can tackle both the static policy measures as well as providing jobs to hordes of the youth coming back empty handed middle east to Kerala. Its time to do away with the flash strikes and non transparent policy measures adopted by Kerala government and to adopt more professionalism in cultivation and exchange of more important crops like rubber. A well developed balance should exist between the growing of cash crops like rubber and food crops like rice so that food security is not threatened by rubber trading and there is no growing rift between marginal and rich farmers. Growers must now exercise abundant caution in their living, spending and savings habits. The new generation of rubber growers and traders must also aim at developing the talent for local rubber tappers and searching for more avenues for cheap labor, the absence of which can spell trouble for most of the rubber growers. There should be transparency related to rubber stock holdings and futures trading to secure the interests of the farmers and to hedge against agricultural risk. This would prevent speculation in rubber prices and also monopoly between the farmer and the brokers. Developing a fall back strategy: The value and importance of rubber are set to grow as industrialization gathers momentum. Rubber should not be allowed to meet the sad fate of other cash crops like cocoa, vanilla and coconut. The Government and the Rubber Board have a bounden duty to address the issues facing the rubber sector in Kerala and to protect the interests of farmers so that rubber continues to contribute substantially to the global economic growth. They should formulate a scheme to encourage savings among the farmers as a bulwark against future crash in prices and to channelize those savings into productive sectors.

AN IT ENABLED FRAMEWORK TO HELP KERALA FARMERS


Vision: To organize the unorganized agricultural trade sector for rubber trading in Kerala. To overcome the weakness in conventional market systems Create more employment and awareness by value addition industries Aim for the 5 Rights Right Information at Right place in right time to Right person in Right Context

REFERENCES
http://www.livemint.com/Companies/76TM6YBCplyO5XHXB1olLN/Rubber-farmers-in-Kerala-setprecedent-in-futures-trade.html http://news.bbc.co.uk/2/hi/south_asia/8546952.stm (http://www.commodityonline.com/news/india-natural-rubber-prices-rides-positive-trend-in-spot-andfutures-50703-3-50704.html) http://www.livemint.com/Companies/76TM6YBCplyO5XHXB1olLN/Rubber-farmers-in-Kerala-setprecedent-in-futures-trade.html http://www.business-standard.com/india/news/rubber-exportsrise-280-in-april-august/449032/
http://www.commodityonline.com/news/india-natural-rubber-prices-rides-positive-trend-in-spot-and-futures-50703-350704.html http://allindiarubber.net/about-airia/Stat_Table.pdf

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