The current upward trend in prices will not be able to sustain itself, the premier planters body in South India pointed out. "Rubber growers are not optimistic about the sustainability of the prices at remunerative levels in the immediate future in view of the supply surplus that is still looming large over the horizon," the Upasi rubber committee said in a statement here.

According to the committee, despite the setback in production growth, the annual output in 1999-200 is expected to surpass the estimated demand.

The surplus at the end of the financial year in 1997-98 was placed at 52,000 tonnes. The surplus grew to 82,000 tonnes by the end of 1998-99. In the current year,the surplus is projected to be 69,000 tonnes. The committee pointed out that the month end stocks will be much higher than this level during November-February due to peak cropping.

"These surpluses have been arrived at nationally after providing for two months consumption requirement as stocks, which means about 100,000 tonnes. In fact, the stock balance at the end of January 2000 will be equivalent to as much as four months consumption," it said. This would only help in pushing down the prices which had exhibited some improvement after a long time.

The committee said stock norms should be revised to one month's consumption only as transport facilities from Kerala -- the major producing centre -- to the consuming centres in the country have vastly improved over the years.

It also called for the revision of the benchmark price as the existing price was outdated and it was based on cost of production and other factors for the fiscal 1996-97. But the costs have further gone up with the hike in inputs,especially in labour wages. The rubber price index has been lower than that of the wholesale price index of all commodities in the country. According to the committee, if the rubber price is to catch up with the WPI the price should be at the level of Rs 41,62 as against the existing Rs 34.25 per kg.

The committee pointed out that a million rubber growers of the country had been reeling under a crisis situation for nearly three years now, following the free fall in price and the slack demand. The price of graded rubber came down to the rock bottom level of Rs 25.69 in December 1997 from the average price of Rs 47.39 and Rs 47.63 per kg in 1996.

Though the government announced in September 1998 the bench-mark price at Rs 34.05 per kg, prices remained at lower levels till May 1999.