Row Over Rubber Boards Move To Revise Bmp

A move by the Rubber Board to reportedly get the benchmark price (BMP) for natural rubber revised has sparked off a controversy with a majority of the rubber-consuming industry protesting against the move.

"The Rubber Board has written to the commerce ministry for revision of the BMP which had been discontinued since 1993," industry sources said.

Until 1993, the centre fixed the BMP which provided the base price for procurement of rubber by the consumers. But with liberalisation gathering momentum, the commerce ministry decided to discontinue it in order to help rubber growers get prices on par with global rates.

The current move by the Rubber Board is being seen as one that could help growers who have been badly hit by low prices.

Rubber prices are ruling at a four-year low currently in view of the worldwide recession, and negative growth posted by the transport sector. "Actually, ever since rubber prices fell from the record high of Rs 6200 a quintal, various measures have been undertaken by the centre, Kerala government and various state-owned agencies which are not rationale," the sources said.

Natural rubber prices in the domestic market have also fallen in view of a fall in global prices. Till January, global prices had ruled lower than domestic prices.

"Domestic prices were higher than world prices since 1994 in view of the production shortage here," the sources said. "Let the government fix the BMP but we will buy rubber only at the market prices," they added.

The move to revise BMP comes after various measures taken by the centre and state governments have failed to yield results. First, the State Trading Corporation (STC) was asked to procure rubber as part of market intervention.

Next, the Kerala government waived of purchase tax for rubber procurement, and it also asked its agencies like the State Warehousing Corporation to buy more and hold stocks. Moves to export the commodity also failed.

"Even if the BMP is revised, India will have to allow free import of natural rubber in another two year's time. What will happen then?" the sources asked.

At present, rubber imports are not allowed though the consuming industry brings in a small quantity under advance licence against exports of rubber products.

On the other hand, a section of the industry has preferred to wait and watch the situation. "We would prefer to watch the situation as we do not want to be seen against the growers," they said.