PREFACE

This study on "The Economics of Rubber Plantation

Industry in Kerala" was started in 1974 when I joined the

School of Management, University of Cochin as a research
fellow. The study is an objective analysis of the import
ance of the economics of rubber plantation industry in
Kerala.

The study covers a period of 25 years ranging from

1950-51 to 1974-75. The data for the study were obtained
partly from published documents such as:
(1) The Plantation Inquiry Commission Report (for
1950s)

(2) The Tariff Commission Reports (for 1960s)

(3) Indian Rubber Statistics (for 1970s)

and partly from personal inquiries.

The thesis is divided into three parts consisting

of eight chapters. Part I deals with the importance, growth,
present position, and the scope of the industry. Part II
discusses in detail the various development schemes, their

- ii .

impact, the role of small holding sector in the development

of the rubber plantation industry and the problems faced by
small holdings. Part III analyses the problems connected
with marketing, cost, profitability and the development poten

tial of the industry.

Part I consists of two chapters:
1. The Importance of Rubber, and
2. Demand and supply.

The first chapter deals with the importance of the

rubber plantation industry in the Indian economy. Kerala
State accounts for 94 per cent of the area and 93 per cent
of the total rubber production in India. Thus Kerala enjoys
almost a monopoly in the rubber production in India. The
rubber plantation industry is composed of both well organi
sed estates and scattered small holdings and the growth of
small holding sector has made rubber almost a small holders
crop. The industry is classified according to size, owner
ship and climatic conditions.
The formation of the Rubber Board marks a turning

point in the development of the rubber plantation industry.

The Board initiated manifold development programmes. The
Co-operative movement was introduced in the rubber planta

tion industry on the basis of the recommendations of the

Plantation Inquiry Commission.

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The second chapter analyses the demand and supply

position of the natural rubber industry. The development of

the tyre sector and the increase of non tyre uses such as
cables, hoses, pharmaceutical and sanitary equipments paved
the way for increased rubber consumption in India. In India
the synthetic substitutes have not made any headway. There
fore unlike in foreign countries, in India natural rubber en
joys a vital role in satisfying the internal demand. Though
Kerala enjoys almost a monopoly in production, in the case
of demand it lags behind the States such as West Bengal,
Tamil Nadu etc.

Part II discusses in detail the role of the Rubber

Board in the development of the rubber plantation industry,
the co-operative sector in rubber plantation industry and the

credit structure of small holders. This part consists of two

chapters, viz.
(1) Role of the Rubber Bmard in the development of

rubber plantation industry, and

(2) Rubber Marketing Co-operative Societies of small
holders.
The Rubber Board was constituted under the Rubber

(Production and Marketing) Act, 1947 "to promote by such mea

sures as it thinks fit the development of the rubber industry"

in India. The Board initiated a number of programmes such as

financial aid schemes, effective performance of the co-opera

tive societies of small holders, opening of nurseries, demon

stration plots (to demonstrate to the growers the scientific,

cultural and production practices), tapping methods, advisory
services and research programmes. Steps are also being taken
by the Board to expand rubber cultivation to non-traditional
areas such as Andhra Pradesh, Goa, Assam, Tripura, Mizoram,
Arunachal Pradesh etc. The Rubber Board also established a

Research cum Development Station and a model plantation in the

Andaman and Nicobar Islands. The Board designed and started

Katchall Rubber Plantation Project in Katchall Island of

the Nicobar group, a phased programme of planting rubber in
800 hectares during the period of 1968-69 to 1979-80.

Chapter four analyses the role of the co-operative

societies and the credit situation of the rubber small hol
ders. The problem of credit is a major problem faced by the
small holders. The Rubber Board's financial assistance is

not sufficient. The high rate of interest prevailing in the

credit market is a major difficulty faced by the small hol
ders. Often the sources of credit are non-institutional and
do not come under the Governments or Reserve Bank's control.

In fact the co-operative credit is the most important source

of credit and it can solve many difficulties faced by the
holders provided the co-operative societies participate
actively and properly in their credit needs.

Qvx
Part III comprises the following chapters:
1) Processing and.Marketing

2) Cost of Production in estates and small

holdings

3) Profitability position of estates and small

holdimgs

4) Conclusions and Recommendations.

Next chapter discusses the processing and marketing

of raw rubber. The processing and the quality of the product

are directly related. The processing problems are of impor

tance since the structure of the rubber plantation industry
is characterised by the predoinance of holdings, Most of
the small holdings cannot afford to start advanced and.modern
means of processing. Further, 90 per cent of the holders do
not have rollers, dripping yards, and smoke houses. Conse
quently they are forced to carry out the sheet rubber process
ing in a crude manner. Hmnce the survival and proper develop
ment of the small holders sector call for the bettering of
the quality of their produce. Co-operative effort can be used
to overcome this. Collection of latex, transportation of pro
cessed rubber from production centres to consumption centres,
packing etc. are the important marketing functions as far as
the rubber plantation industry is concerned. The various
systems of marketing and the difficulties in marketing are also
dealt with in this chapter.

The cost of production of rubber changes from time

to time due to technical progress, scientific improvement and

research and price fluctuations. Cost data for 1950s have

been taken from the Report of the Plantation Inquiry Commi
ssion (1956) and Tariff Comission Report (1960); for 19603,
Tariff Commission Reports (1967 and 1969) are made use of;
for 1970s, the study relied on the Rubber Board's assessment.

The costs for estates and holdings are calculated with a

break-up into cost of production upto latex stage, packing
cost, processing cost, replantation cost, grade differential
cost and transporting cost. All these components are discu
ssed in detail. Along with this, yield accepted for cost ana
lysis is also counted. The cost is calculated for 100 Kgs. of
rubber. Replantation cost is counted as depreciation. And
these form the content of the sixth chapter.

Next chapter discusses the profitability position

of the rubber plantation industry. The calculation of the
profit share of the estate sector and the small holding sec
tor is made by using the break-even chart. The profitabi
lity position of one hectare of rubber is calculated. Changes
in variable costs, prices and production are the three major

factors influencing profit. In this chapter, the size of an

economic unit in rubber holdings is also analysed.
The findings and recommendations - to give a fillip

to the rubber plantation industry - are given in the final

chapter.

- vii
This study could not have been completed but for
the guidance and co-operation of a large number of well
wishers to whom I am indebted.

I express my deep sense of gratitude to Dr.K.C.San

karanarayanan, M.A., Ph.D., Reader in the School of Management
Studies, University of Cochin under whose supervision and gui
dance I completed this research project.

I am greatly indebted to Dr. M.V. Pylee, Vice

Chancellor, University of Cochin and Dr. N. Parameswaran Nair,
Director, School of Management Studies for their encouragement

and interest in my research. My thanks are also due to

Dr. Jose T. Payyappilly, School of Management Studies, Univer
sity of Cochin, and Prof. Mathew Joseph of the St. Thomas

College, Palai for patiently going through the draft and mak
ing valuable suggestions.
I have also benefited greatly from discussions with
Prof. K.M. Chandy, formerly Chairman of the Rubber Board,
Messrs. V.K. Bhaskaran Nair, Director, Rubber Research Insti-.

tute; V. Bhaskara Pillai, Secretary, Rubber Board; P.K.Naraya

nan, Public Relations Officer, Rubber Board; R.G. Unny, Sta
tistician, Rubber Board; T.M. Thomas, General Manager, Kerala
State Co-operative Rubber Marketing Federation.

- viii

My thanks are due to the Library staff of the

School of Management Studies and the Rubber Board and to my

friends who showed interest in my work. Mr. Surendranatha

Panicker deserves my special thanks for carefully typing the
manuscript.

Finally I thank the University of Cochin tor"

giving me a fellowship without which this study could not
have been completed.

Chinqpzz , JOSE THOMAS

2211979.