Rubber Planters For Reduction In Stock Norm

With the stock holding and price level showing little correlation in natural rubber, the United Planters Association of South India (Upasi) has urged the Rubber Board, a wing of the Commodities Board under the Union commerce ministry, to reduce the current stock norm for natural rubber from two months consumption by the industry to the six weeks consumption level.

Upasi secretary-general, D Ravindran, in a letter to Rubber Board chairman, K J Mathew, said if the stock norm was reduced to the six-week level by industry, it would not have any adverse effect on the price level.

Putting forward Upasis view to demand reduction of natural rubber stock norm, he said the transportation time of rubber from Kerala, the major producer in the country, had been reduced due to better transportation facilities. There was also a compulsion on the consuming industries to lower their stock holdings in view of a credit squeeze and high cost of credit, he added. He said the stock norm had already been reduced to two months from three months in 1991, while initially, it had been reduced to three months from four months in 1976.

 

Ravindran said that during the previous periods when the stock holdings were actually lower than the stock norms, neither natural rubber trade nor its consumption level had been affected. Moreover, the consuming industries had the facility to import rubber under advance licence against export of rubber goods and therefore, if they required to improve their stocks, they could go in for import of natural rubber, he said.

The plea of Upasi assumes significance in the wake of reduction in consumption of natural rubber in view of the financial crunch and a slump in the automobile sector.

In view of the reduction in consumption, the carry-over stock of natural rubber at the end of the current financial year is expected to be nearly one lakh tonnes.

This has convinced the union commerce ministry to decide against import of natural rubber under the OGL in the next financial year. In view of the reduction in natural rubber consumption, the import of natural rubber under advance and special licence is expected to be only 15,000 tonnes against the estimated 20,000 tonnes. In 1995-96, over 36,000tonnes of natural rubber were imported under OGL.