Top sources in the Rubber Board said the four-member finance ministry team had visited over 400 rubber producing units and held discussions with the representatives of growers and rubber consuming industry three months back in its bid to calculate the cost of production of natural rubber. The averagecost of cultivation and maintenance up to the yielding stage was considered as the reference cost for fixing fair price for the agricultural commodities.

According to the technical team's findings the average cultivation cost for natural rubber worked out to be Rs 87,700 per hectare in 1998 prices, Rs 15,700 higher than the cost of production in 1996. The 1996 average cost was estimated by the Rubber Board.

According to the Rubber Board study, the average cost of cultivation and maintenance up to the yielding stage for natural worked out to be Rs 72,000 per hectare in 1996 prices. The Rubber Board study found that the average cost in the holding sector - holdings below 20 hectares - worked out to be Rs 34.05 per kg. Similarly, the cost of production in the estate sector - holdings above 20 hectares - worked out to be Rs 40 per kg. Since more than 86 per cent of the total natural rubber production coming from the holding sector the Board had estimated the fair price by taking the weighted average of thetwo and at Rs 34.82 per kg.

Sources said based on the estimates of the finance ministry study, the fair price for natural rubber would work out to be Rs 42.48 per kg.

This means that the growers are losing well over Rs 10 for each kilo gram of natural rubber produced in their holdings. The rubber prices are ruling at Rs 31 per kg for the past couple of weeks.