Challenging times ahead for rubber sector

The economy world-wide is passing through difficult times and the economic horizon is overcast with uncertainties adversely affecting investor sentiments and consumer confidence.

This would have its downbeat effect on all economic and industrial sectors. There could be volatility in natural rubber (NR) market due to weather conditions, currency movements, oil price variations, speculative factors.

However, the expectation that developing and emerging economies would recover and would be in a sustained growth path is a consoling factor.Rubber is used to make various products including car tyres, tubes, shoe soles, foam, hosepipe, gum, toys, among others.

Sweet Khan had two rubber plantations in Kulaura upazila in Moulvibazar. He had to sell one of the plantations around three years ago despite not getting the fair price. The remaining plantation is also facing crisis after the outbreak of coronavirus. He said, “There have been no buyers since last March because of Covid-19. So, I have stopped collecting latex from the tree.”

The mainstream rubber traders have lost interest in the business as the price of rubber was not up to the mark even in the normal circumstances, he said.  At times, they were unable to recover the production cost from the rubber plantations, added Sweet Khan. Tipu Chowdhury, the owner of Kalimulla Rubber Garden in Baramchal of the same upazila, echoed Sweet Khan. “

I started rubber plantation in the 1990s. In those days, I sold rubber at Tk280 per kilogram. But rubber price has been falling for the last 15 years. Now, rubber latex is sold at Tk25 per litre,” Tipu said.

He continued, “It takes four litres of latex to make a kilogram of rubber. So, I get Tk100 by selling a kilogram of rubber. But the production cost is around Tk70-80, and also I have to pay 15 percent VAT.”

The rubber plantation entrepreneurs in different parts of Sylhet division also provided similar information. Everyone said they did not get the price and so many of them are cutting down the trees because of prolonged losses. Even, some of them are also selling gardens.

But, in the past, the rubber industry was termed “white gold.” In the 1980’s, the government inspired rubber production. And a notable number of rubber plantations were established on public-private initiative.

Entrepreneurs are of the view that the price of rubber dropped in the country for increased import. Moreover, despite being an agricultural commodity, the entrepreneurs need to pay a 15 percent VAT for rubber as an industrial product.
So, the entrepreneurs of the plantations are in further trouble.

Even the state-owned rubber plantations are also facing losses.According to sources, there are 18 state-owned rubber plantations available in Bangladesh. Among them, nine plantations are in Chattogram zone, five in Tangail-Mymensingh zone and four in Sylhet zone.

Rubber is produced in a total of 8,442 acres of land in Bhatera, Satgaon, Shahji Bazar and Rupaichhara gardens of Sylhet region.Besides, there are more than a hundred private and privately owned rubber plantations in Sylhet region.
Altogether, rubber is produced in about 70,000 acres of land across the country. The country produces around 16-20 thousand tonnes of rubber annually.

And the demand of this product in the domestic market is 30,000 tonnes in a year. The latex collected from the different plantations in Sylhet are used to make rubber sheets. Then, those sheets are supplied to different factories in Dhaka and Chattogram.

Some private rubber plantation owners said that the price of rubber in 2010-12 was Tk280-320 per kilogram. But in 2013-2014, it stood at Tk120-130. And currently, rubber is being sold at Tk100-110 per kilogram.A plantation owner in Kulaura, Abdul Matlib has cut down the trees in his plantation three years ago.

“I kept the plantation operational with a subsidy for about five years. I was expecting that the price may get an increase. Instead, the price was decreasing gradually that increased the burden of debt for me. Thus, I have cut down all the trees and sold them,” he said. Meanwhile, most of the trees in the government plantations in Sylhet region have crossed their life cycle, while there are no initiatives to import or plant new trees.

Besides, the Forest Department is unwilling in giving new land for rubber plantations. The economic life cycle of 132,000 rubber trees in government plantations has already ended.A rubber cut pressure treatment plant has been set up at Srimangal to extract timber from the trees which have lost their life cycle.

According to the plant sources, it can process the timber and can convert the timber into sustainable wood for use.
The plant is capable of processing 160 cubic feet of timber a day, and accordingly it can process 48,000 cubic feet timber in a year.  Makbul Hossain, manager of Bhatera Rubber Garden, said all four government plantations in Sylhet zone are old.

“The production in these rubber plantations is good but they are facing losses due to low selling price,” he added.When asked about the current state of the rubber industry, Waliur Rahman, general manager of the Bangladesh Forest Industries Development Corporation (Rubber Division) at Sylhet region, declined to comment without permission of the higher authorities.

(AA)