Liquid rubber (latex) fetches good price for Kerala rubber growers

Rubber has emerged as the most rewarding crop in Kerala. Rubber is either sold in solid form as sheets made after coagulating the field latex or as Crump Rubber or in liquid form as field latex by adding anticoagulants like Ammonia. Kerala rubber growers are getting the best price for latex because latex procuring companies taking the responsibility of procurement, transport, processing, sale and export. They operate a big fleet of transport vehicles for supply of empty barrels fed with anticoagulant to the farmers and collection of field latex filled barrels from the plantations. Due to the severe shortage of farm labour farmers are increasingly opting to sale rubber in latex form.

The farmers are paid price for their product based on the Dry Rubber Content (DRC) of latex. Most of the latex procuring companies have their own state-of-the-art laboratory cum R&D center for the qualitative analysis of field latex and Cenex.

The prevailing market situation is favourable for latex exports especially with the international latex price ruling above domestic prices. It would be adventurous for rubber growers to convert latex into sheet considering the price differential.

Considering the current bearish trend continued the Kerala rubber market, the liquid rubber (latex) fetches at least Rs. 25 profit margin for Kerala rubber growers compared with RSS4 rubber sheet considering the amount of hard work, time and money are gone into processing. I think that rubber growers are always conventional when it comes to processing their produced latex, whether to sell it as latex form or process it to rubber sheet. Majority of the medium level rubber growers are tend to believe that it is the hard rubber (rubber sheet) that fetches them good price than the latex. The more important forms in which plantation rubber is usually sold are as sheets and crepe.

The two most important forms of plantation rubber are sheet and crepe. Sheet is generally dark brown in colour because it is dried in smoke while crepe is of straw colour and is dried in air. Sheet is obtained from latex coagulated in shallow tanks divided into compartments of suitable dimensions, each piece of coagulum being pressed by light machinery to the required thickness.

In the preparation of crepe the coagulum is machined much more drastically, heavy rollers being necessary. During this process the coagulum is torn and pressed until it is sufficiently thin to dry in air without artificial heat. The rubber is dried by hanging on racks in well ventilated sheds for about a week. Sheet is thicker than crepe and requires artificial heat to dry it in a reasonable time. It is therefore exposed to the smoke of a wood fire for about 14 days.

Mr. Augustine Joseph, who has been a rubber grower over 35 years said that since last 15 years he has been selling latex and it is more profitable than processing the latex into rubber sheet and selling it. The hard work involves in rubber sheet processing is hilarious, it is so much time consuming and expensive. For medium level rubber growers it is slightly difficult to stock both rubber sheet and latex over one year, therefore, it is very difficult to have future trading. Therefore, the rubber growers will be forced to sell their products to the market, which is perishable. The rubber sheet will get fungus and it is always difficult to preserve as RSS4 sheet because it needs regular attention and the same way the latex can’t be preserved more than 1 year from coagulation and deterioration.

Latex is being increasingly used for the production of surgical gloves, condoms, balloons, rubber bands, and now progressively for rubberised roads here in Kerala. Therefore, there is always a high demand for latex in the market. In Kerala, the maximum Dry Rubber Content (DRC) for latex is 42% and the lowest is 20% and 35 is the average DRC for latex.

The latex pricing is being calculated using the following formula, current latex price x 10 ÷ 6 – 35. As on Thursday, Kerala Rubber Board offered  Rs. 118.40 for latex (60% DRC) therefore, it is calculated as 118.40 x 10 ÷ 6 - 35 = Rs. 162.33. The minus Rs. 35 in the latex pricing formula, is the latex collecting agency charges from rubber growers on account of barrel charges, prices of 5kg ammonium used in each barrel to preserve latex from coagulation and deterioration, loading and unloading of the barrels, weighing the barrels, DRC calculation  and transportation charges.

An average barrel of latex weighs 200kg and if the DRC is more the weight of the barrel will be less and if DRC is less weight of barrel will be more because water weighs more than latex.

If latex pricing is being calculated using the average (35) DRC of the latex, 200kg x 35 ÷ 100 = 70kg. Therefore, 70kg x 162.333 = Rs.11,363.33 is the amount that the grower will get for per barrel. If 200kg of latex is being processed into rubber sheet the DRC of rubber sheet will be the same 70kg and 70kg x the current RSS4 prices, As on Thursday Kerala Rubber Board offers Rs. 147, make it to Rs. 10290. So the marginal difference is Rs. 1073. Rs. 1073 divided by 70kg of DRC makes it to Rs. 15.32 profitability for per 1 kg of latex (DRC).

Now the processing charges for both latex collection and rubber sheet shall be taken into consideration. Tapping cum processing charges for per rubber plant is Rs. 2.25 (it varies place to place) and which is 50ps higher than rubber tapping and latex collection. Rubber sheet processing also includes expenses such as; water, formic acid, tear and wear charges of rubber roller, drying, wood for drying in smoke to finally process it into RSS4 rubber sheet, loading, unloading and transportation charges to take the product to the market to sell it off.

If all the processing procedure would cost at least Rs. 10/kg rubber sheet. Therefore the current RSS4 rubber price given by Rubber Board, 147 - 10 = 137 will be the profit that the rubber grower getting for every 1kg rubber sheet. Hence, 70 x 137 = 9590. So the grand total differential is 11,363 – 9590 = 1773. 1773 ÷ 70 DRC = Rs. 25. There is a marginal Rs. 25/kg difference between 1kg RSS4 prices and DRC latex prices.

According to Mr. Jose Parathattel, Rubber trader cum rubber grower, Rubber sheet is more profitable than latex because rubber sheet can be easily stored and could be sold closely watching the rubber price fluctuations in the market. Though the processing charges are more for rubber sheet it gives more profit. However, sometimes latex is more profitable than the rubber sheet. The price of the latex is determined by the DRC. There is no fixed prices for latex but it is solely dependent on the DRC.

Selling latex form is very easy compared to the processing of rubber sheet. Latex is just needed to be filled in the barrels after tapping with ammonium whereas rubber sheet processing takes lots of time, hard work and money are involved in it.

At the end of the day, the rubber growers ability to predict the price fluctuations in the market and sheer luck fetch good price for the commodity. However, taking into consideration the processing of rubber sheet and amount of hard work involved and money spent, it is liquid (latex) that fetches best price for rubber growers than RSS4 rubber sheet.

The Indian latex is well accepted in international market with regular exports to various countries. There is enough capacity in India for doubling the current latex production which augurs well for the future exports.

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