Sri Lanka's rubber production in 1997 is expected to be slightly higher than last year but lower than this year's target due to declining international prices and poor weather, a government official said on Wednesday.
"The decline in international rubber prices and bad weather conditions in Sri Lanka will not permit us to reach an earlier forecast of 118 million kg. Instead, we should produce about 115 million kg," says Piyadasa Liyanarachchi, director general of the Rubber Development Department.
"With the continuous price decline in the world market this year and with the cost of production increasing, producers are finding their profit margins getting lower," Liyanarachchi said.
A drought earlier in the year and recurring rains in the past weeks were also likely to hit production, he said.
Sri Lanka produced about 112.5 million kg of rubber last year, of which 72.1 million kg were exported bringing in 5.744 billion rupees in foreign exchange, Liyanarachchi said.
The Central Bank said recently that rubber production in the first seven months of 1997 was up 4.7 per cent to 69 million kg over the same period last year.
Liyanarachchi said rubber production in the first six months of this year was 59.815 million kg, up 3.8 per cent over the same period in 1996 when it was 57.6 million kg.
But rubber exports in the first six months of 1997 fell two per cent to 38.467 million kg over the same period last year.
"The decline in exports was because local consumption increased by 12 per cent during the period January to June."
"The demand for raw latex rubber is increasing as more factories are producing value added products," he said.
Sri Lanka is the sole producer of latex crepe used for making surgical and pharmaceutical rubber products, infant toys and rubber goods used in contact with food.
Liyanarachchi said the government wanted to increase production, and was offering a subsidy of 49,722 rupees per hectare of replanted or newly planted rubber trees this year, up from 38,065 rupees last year.
The World Bank was involved in the subsidy programme until June this year, and paid 16,000 rupees of the subsidy, he said.
"Last year, we paid around 130 million rupees in subsidies and expect to pay a slightly higher figure this year." (Reuter)
He said the government was also distributing higher quality rubber plants to planters.
"The improved quality plants which have been distributed since 1995 is noticeable in some estates as the plant density is better," he said.
Per hectare yield in Sri Lanka is 920 kg compared to 1,440 kg in major rubber producing countries like Malaysia and Indonesia.
Sri Lanka has slipped from being the world's fourth biggest rubber producer to the eighth spot in 25 years, but the World Bank said in August that the Indian Ocean island was poised to expand its share of the world rubber market following privatisation of state-owned plantation firms.
"We have to replant three per cent or over 3,000 hectares of rubber plantation ever year to keep production at a balance," Liyanarachchi said.
Small holders, whose estates are less than 50 acres, account for 64.5 per cent of Sri Lanka's 162,000 hectares under rubber cultivation.
