Condoms, pillows, mattresses… Why the planters supplying latex product makers aren’t expecting a happy ending

At about 200 trees per acre, this is not really a dense estate. But there was a time when God’s Own Country was synonymous with prosperous small and medium rubber farmers raking in the moolah. Just as deposits to the state poured in from expats in West Asia, people who stayed back in Kerala prospered with money from rubber estates. Marriages here were made not in heaven but on estates, and unofficial dowries were decided on the strength of rubber holdings.

But those days are in the past. Over several years now, rubber plantations in Kerala have been battling a series of headwinds: climate change, low productivity, labour shortages, human-animal conflict, unpredictable pricing, and changing customer demands.

“While the rubber plantation sector is facing many challenges, one of the biggest problems is low productivity. This is mainly because of changing climatic conditions and nobody really has worked on developing clones," says Venkitraman Anand, former chief executive officer of Harrisons Malayalam Ltd, India’s largest rubber plantation company, which is jointly owned by the RPG and RP-Sanjiv Goenka groups.

The average yield of rubber—the amount of rubber produced—has progressively declined over the past 15 years. According to data from the Rubber Board, an autonomous body under the ministry of commerce and industry, the average yield was trending at 1,879 kg per hectare (ha) in 2006-07. In 2023-24, it was at 1,485 kg/ha.

While demand for rubber has soared in 2024, many producers could fail to make the best of a good year because of the productivity bottleneck.

In a recently published report, rating agency Crisil stated that tyre makers are headed for a rough patch as the price of natural rubber has surged more than 33% on-year in just the first five months of 2024-25. Domestic prices of natural rubber closed in August at ₹238 per kg on average, way above the trend in the past decade.

“The last time the commodity breached the ₹200/kg mark was in 2011, propelled by demand recovery after the global financial crisis, aided by the accommodative stance of the US Federal Reserve and other central banks," the report stated. “Prices had logged a compound annual growth rate of 101% between 2008 and 2011. However, the three-year surge did not sustain and for a decade thereafter prices remained subdued below ₹150 per kg on average."

“Now, since the end of 2023, prices have shot up again amid a raft of challenges. Tight supply of natural rubber globally has cast a long shadow on the industry even as steady expansion of the automobile industry and other major consuming industries keeps demand healthy," the Crisil report added.

Tiny producer, big consumer

Rubber (species: hevea brasiliensis) is a tree of South American origin, and its cultivation was introduced in India in the 1900s. According to a Crisil report, the largest four producers of natural rubber in the world are Thailand, Indonesia, Vietnam and Malaysia, accounting for 82% of global production. India comes seventh with a 5% share after Côte d'Ivoire and China.

When it comes to consumption, as of 2022, India was the world’s second-largest consumer of natural rubber. The All India Rubber Industries Association (AIRIA), a group of rubber manufacturers, recently said that production of rubber in the country had inched up from 840,000 tonnes in 2022-23 to 860,000 tonnes in 2023-24. However, a sharp increase in consumption led to a shortage of 550,000 tonnes.

Tyre makers are among the biggest consumers of rubber in India and rely on imports to address supply gaps.

“The tyre industry in India has the potential to lead the march of Indian manufacturing globally," says Automotive Tyre Manufacturers Association (ATMA) chairman Arnab Banerjee, who is the MD and CEO of tyremaker Ceat. “Amid the new geo-political warfare, the world is keenly looking for alternatives to China for sourcing a host of products. Our tyre industry certainly ranks high on that list. Currently, India exports tyres to the tune of about ₹23,000 crore per annum to about 170 countries."

Within India, it is estimated that about 75% of the total area under rubber cultivation is in Kerala and the Kanyakumari district of Tamil Nadu. About 15% is in the northeastern states, with Tripura leading in the region with 9%. Other South Indian states make up for the rest. There are 1.3 million rubber growers in the country and Kerala accounts for a major chunk of the production, with 599,000 tonnes in 2022-23.

Says Mathew Jose, owner of Kollamkulam family estate, which has a rubber plantation of over 100 acres in Kanjirapally, Kerala, “While rubber plantations were traditionally concentrated in central Kerala, they are now spreading to south Karnataka and the northeast. I see a time coming in the next few years where the monopoly of Kerala in rubber production will come down."

Medium-sized family estates, with fragmented acreage, make cultivation unprofitable in many instances. But that’s not a deep problem when it comes to Harrisons Malayalam, one of the oldest plantations, with a history that goes back over 150 years. The company pioneered corporate farming and has, over this period, established and run plantations for tea, cocoa, coffee, and a wide variety of spices in addition to rubber. Today, it runs 11 rubber estates and six factories, producing about 9,000 tonnes of rubber a year.

Climate change impact

Rubber cultivation is a living example of how climate change and its after-effects can wreak havoc. Says Anil Kumar, vice-chairman of the Rubber Board, “In 2014-15, the Indian rubber plantation sector went through a crisis. Today, prices are high and that is a good sign. However, production has been down largely due to climate change and scarcity of labour."

Traditionally, the southwest and northeast monsoon were predictable. Plantation owners could take steps to limit any adverse impact on the productivity of rubber trees. Weather patterns are now changing—it rains for almost six to eight months in a year in Kerala—one monsoon leads to the other without a break. Consequently, there are fewer days to tap rubber, latex output is substantially lower, and the plastic rainguards wrapped around rubber trees to keep rainwater from diluting the latex deteriorate.

As they do in Njarakkadu estate, trained tappers start work at 4:00 am in other plantations across Kerala. They typically wind up by 9:00 am. However, the unpredictability of the rains makes fixed working hours difficult.

The result: output falls while costs rise. Diseases in rubber trees have been on the rise, and the use of pesticides to ward off pests results in higher input costs. At times, rains wash off the insecticides.

Some efforts are being made to address these challenges. The Kottayam-headquartered Rubber Board provides subsidies for new planting and replanting (of senile plantations) to growers. Further, through research, clones of existing rubber plants are being developed so that they are hardy, disease resistant and cultivable in areas beyond the southern states.

According to the Rubber Board, in ideal conditions, a rubber tree can live for a hundred years or even more. But its economic life in a plantation is around 32 years. To improve the profitability of rubber growers, former Harrisons Malayalam CEO Anand suggests promoting the sale of rubber wood when the old trees are uprooted for replanting. Rubber wood, he notes, is a relatively low-cost option for furniture makers.

Other challenges

Kerala remains a labour-strong state where wages are high. The wages differ from region to region, but Kumar of the Rubber Board says that in southern Kerala and Tamil Nadu, it would roughly be around ₹2 per tree, per day—workers are paid on a per tree, per day basis, and what they make depends on the number of trees they tap.

To counter this, some form of mechanization has been tried in different parts of the state. However, rubber planters have not been able to achieve this on a mass scale. As much as tapping is a skill, it is also an art. Not too much or too little of the bark should be shaved. Further, since local labour is expensive, plantations have started employing cheaper migrant labour, but much time is spent training these workers.

Another reason why production and productivity continue to be in the doldrums is growing man-animal conflicts. Many parts of large plantations—as opposed to smaller holdings—are in forest areas and elephants enter the estates. Any harm to the animals can invite trouble—the manager of the estate could be arrested immediately, planters say. CCTV cameras have to be installed in the plantation and all this adds up in the final cost of the produce.

Meanwhile, the growth of synthetic rubber (a petroleum byproduct and natural rubber substitute) manufacturers is another competitive factor, though not a strong one. Synthetic Rubber (SR) production decreased to 467,218 tonnes in 2022-23 from 485,165 tonnes in 2021-22, contracting 3.7%.

Planters also have to deal with changing customer demands. For instance, glovemakers, rubberband manufacturers and shoe-sole makers demand deproteinized or ammonia-free natural rubber as consumers may be allergic to protein-rich rubber. While such customisation is not very capital intensive, the process can be cumbersome and smaller rubber growers aren’t able to meet such demands.

Looking northeast

The central and state governments, planters and farmers are aware of the challenges before the sector and there has been a renewed effort this year to make it globally competitive. In February, the centre stated that it is “planning a slew of measures aimed at productivity enhancement of rubber produced".

Governments at the centre and the state have tried to boost the sector’s prospects in the past as well, with very modest success. In 2018, the centre had set up a task force to study the problems faced by rubber growers. A year later, based on the task force’s findings after consultations with the sector’s various stakeholders, the centre formulated a National Rubber Policy (NRP).

The primary goal of the NRP was to support natural rubber production and the entire rubber industry value chain. Among other things, it was aimed at promoting new planting and replanting of rubber, providing support to growers, addressing labour shortages and climate change concerns, boosting external trade, pursuing integrated strategies with states, and research.

Perhaps one of the most important initiatives in recent years has been the move to expand rubber production beyond Kerala and other southern states to the northeast, with Tripura taking the lead. The ministry of development of northeast region started a five-year scheme in 2021 to have new rubber plantations over 200,000 hectares in the region. To achieve this, the government has also brought tyre companies on board through ATMA to invest ₹1,000 crore on the initiative over five years.

“We have classified rubber growing into three categories: traditional, non-traditional and northeast. Our goal is to increase production and bring down imports," says Kumar of the Rubber Board.

While it has made progress on some fronts, much more has to be done for the NRP’s goals to be realized. The rubber sector in India—and globally—has undergone a lot of changes both on the production and manufacturing fronts, and the policy needs a relook to keep in step with these realities. A failure to do so will only keep the sector from growing to its full potential.