Even though, Sri Lanka is the 1 st Asian country where the rubber plantation was established, due to limitations in land area available, the contribution from Sri Lanka to the NR requirement of the world market is very small and is about 1.8% at present.

The peak production of NR in Sri Lanka has been recorded in 1978, which was 165 000 MT, when there was 202,000 ha. of rubber plantation in the country. However, due to poor prices that prevailed in the world market for NR for over 30 years prior to the turn of the century, most of the rubber small holders have diversified their crop from rubber to tea because; the price paid for a kilogram of fresh green leaves in the village was more attractive than the price paid for NR. Further, the labour requirement for rubber is more, compared to tea.

Area under rubber in Sri Lanka has declined very fast, specially during the period after 1997 due to the worst set back experienced in NR prices in the world market caused by the South East Asian financial crisis. Actual extent of rubber available in 2003, according to a recent survey is 128,879 ha; of which 83,253 ha ( 64% ) is owned by the small holders.

As a result of this SEA financial crisis, the average world market price of NR that prevailed at US$ 1.05 /kg. in 1997 fell down to below US$ cts. 60 within 12 months. Hence, most of the rubber plantations owned by small holders and even by estates were abandoned without maintaining or tapping because the owners could not cover the cost of production from the income received from selling of rubber. Hence, since 1998, for the first time after World War II; the total annual rubber production of Sri Lanka fell down to below 100, 000 MT. The main reason why the rubber farmers could not survive during this period was because there was no price stabilization operation for rubber implemented during this period; like in Thailand where for every kilogram of rubber produced by the small holders, the Government paid Bhatts 20; irrespective of the world market price, which was substantial to cover the cost of production, keeping even a small profit.

Rubber Products Industry in the country, however, has developed during this period and at present nearly 65% of the total rubber produced is used locally to manufacture value added end products. In order to encourage foreign investment in the country a Free Trade Zone (FTZ) was established close to the Colombo airport in 1979. With the enormous success shown by this FTZ within a short period of time, and in order to extend the concessions offered to the investors in the FTZ to investments in the other parts of the country, especially in remote villages where the labour is easily available, the Board of Investment (BOI) was formed in 1992. Already there are over 100 rubber based industries operating under BOI in all over Sri Lanka.

Already, in solid tyre manufacture, Sri Lanka is the leading nation contributing to nearly 25% of the world need. Among the other products manufactured in Sri Lanka today:

•  Examination & Surgical gloves.

•  Automotive components.

•  Foot wear.

•  Flooring

•  Extruded hoses & rubber tubing

•  Balloons & toys.

•  Foam rubber mattresses and cushions,

are the main items.

The Board of Investment (BOI)

Today Sri Lanka is one of the most attractive investment destinations in Asia. The progressive liberalization of economy since 1978 has resulted in a business friendly environment. The Government has pursued a policy of Economic Liberalization with emphasis on private sector investments.

The private sector is recognized as the engine of economic growth with the role of the state being to provide an institutional framework supportive of private sector participation in development activities. .

The rubber products industry is one of the priority sectors identified for attractive promotion by the BOI and was accorded “Thrust Industry” status in 1977. Under this scheme, investment in the rubber products industry is offered a new package of attractive incentives and concessions.

Structure of the Rubber Products Industry:

The rubber products industry of Sri Lanka can be sub divided into 3 broad categories:

•  Export oriented BOI enterprises

•  Large scale traditional enterprises

•  Small and medium scale non-BOI and non-traditional enterprises.

These classifications have been made based on the type of market whether local or foreign, regulatory framework whether BOI or non-BOI and on the scale of the operation.

Table 1: NR Consumption by Product Type – BOI vs Non-BOI Sectors

Note: Figures in parenthesis indicate percentage distribution of NR consumption between BOI and Non-BOI projects by product type.

Source: Board of Investment of Sri Lanka

The total investment under the BOI today is nearly Rs,800 million where close to 20,000 people are employed. Nearly 425m of them flow into the category of latex dipped products providing employment to 35% of the work force working there. Significant number of employees are engaged in the category of footwear and solid tyres.

There are 20 countries that have invested in the rubber products industry in Sri Lanka. Nearly half of them are locally owned while the balance is joint ventures with the foreign investment. The participation of foreign investment has directly benefited the country in many ways such as:

•  Transfer of technology

•  Value addition

•  Access to international markets and

•  Establishing price

• 

thereby transferring Sri Lanka into a global player in the rubber industry.

Table – 2. No. of Projects, Investment & Employment by type of Ownership

Note: figures in parenthesis indicates the percentage value.

Rubber Products Manufacturing Projects in operation under Sec.17 & 16 of the BOI Law.

Source: Board of Investment of Sri Lanka

Australia is the largest foreign investor in rubber products industry followed by Italy, Korea, and Belgium. South Korean projects also account for the highest share of employment (30%) followed by Belgium (19%) and Australia (18 %.). The major attraction of Sri Lanka for the foreign investors, apart from the investments offered by the BOI are ;

a. Availability of high quality raw rubber and latex at a competitive price. The purest grade of raw rubber namely latex crepe, used for making rubber appliances used in food, pharmaceutical and infant products industry is available at reasonable prices.

b. Pool of technical and professional manpower from managerial level down to machine operator level, trained by the Sri lankan universities and the PRI

c. Competitive wage rate

d. Good infrastructure

Latex Protein Allergy

In order to increase the demand for NR based products globally, efforts are taken by the rubber producing countries to combat baseless allegations made against NR products such as the protein allergy. As Sri Lanka is already one of the major latex products producing country in the world, all modern test methods available in the world for the analysis of leachable protein levels in dipped products such as;

•  RRIM modified Lowry method (ASTM test D 5712-99)

•  BCA (Bicinchronic Acid ) method

•  Bradford dye method and

•  Chromatographic method

7are now available in RRISL laboratories. Several techniques have also been introduced to minimize the leachable protein levels of the dipped products manufactured.

Still, latex crepe and sole crepe manufacture in the country is also continued while enjoying the reputation as the sole producer of this high quality premium grade of NR made specially for food, pharmaceutical, medical and infant applications. Nearly 30% of the total production of NR in the country is utilized for this purpose.

Among the end products manufactured, mainly in the export promotion zones of Sri Lanka, latex based products such as examination and surgical gloves are in the forefront. Over 20% of the country's rubber production is converted into concentrated latex to cater to these industries.

Since, year 2000, in order to meet sudden short falls of certain grades of NR needed for the products industry, dry rubber and sometimes even latex is being imported to the country. Last year the total importation of raw NR to the country is over 7000 MT. This process is expected to continue until the raw rubber production in the country is increased substantially in the next couple of years.

Strategies to increase NR production in Sri Lanka:

Short Term Strategy - Use of Rain Guards in plantations.

Long Term Strategy - a) Increasing National Productivity from 950 kg/ha/yr to a minimum of 1500 kg/ha/yr

•  Extending Rubber Planting to non traditional areas

such as to Monaragala in the intermediate Zone and

to abandoned Tea lands (over 400M above sea level)

The only rapid way available for a substantial yield improvement in the rubber plantations is by fixing rain guards to prevent rain interruption on harvesting. By means of rainguards, Estates have been able to recover over 30% yield increase and thereby earning an additional income of over Rs 25000 per hectare. This yield increase is possible in rubber estates and in small holdings specially in Ratnapura and Kalutara districts, where the rain is more severe than in the other districts. Rain guards eliminate the need to do recovery tapping currently practiced in plantations in a big way thereby minimizing the danger of incidences of tapping panel dryness.

Now the Government of Sri Lanka is considering paying 50% or 25% of the cost of laying rainguards to the small holders in the form of a subsidy. Until then the Advisory services department of the RRI has made arrangements through state banks to give concession loans to the small holders for the purpose of laying rain guards in year 2004. Wide publicity will also be given through media to propagate rainguards in the rubber plantation this year.

Under the long term rubber production increasing plan, the Government of Sri Lanka has launched a scheme of planting rubber in non traditional drier areas such as in the intermediate zone as well as in elevations above 1000 ft.

Most popular foreign clone planted until 1995 viz. PB 86 could not withstand wind and climatic conditions prevailing in elevations over 300M above sea level. But the RRIC 100 series clones of Sri Lankan origin have shown a good response to the conditions in elevations up to 700M above sea level and hence nearly 29,000 ha of abandoned tea lands in these elevations will also be planted with these new clones in the future. Further, this project will help to protect the environment in a big way.

High Yielding Clones Recommended for Planting

For the smallholders

RRIC 100, 102 and 121

RRISL 203 & 205 up to 10% of the area for holding of extent more than 5 ha

For Regional Plantation Companies

Group I:- To be planted up to 10% of the extent

•  RRIC 100, 102, 121, 130 and Pb 217 *, 28/59 *

* Not recommended for areas having more than 3750 mm of annual rainfall

Group II :- To be planted up to 3% of the extent

(* Tapped at 67%)

•  Group III - Planted up to 2 ha in RRI/Estate collaborative clone trials

RRISL 200,201,204, 208, 217, 218, 219, 221, 222, 225, 226, 227 and RRISL 2000 to 2006 and RRIM 717, GPS 1, PB 255, PR 305, RRII 105

Only a high quality plant can give its potential yield and hence maintaining the quality of plants issued to the small holders for replanting is also of paramount importance to increase productivity of rubber lands.In future all the government rubber plant nurseries will be managed by the RRI.RRI hopes to cater to the entire need of the smallholders of the country while helping few of the plantation companies too with quality plants. In this process plant production by private nurseries will be discouraged, as the quality control of the plants produced by them is very difficult.

Project of planting rubber in Moneragala district in the intermediate zone of Sri Lanka was commenced this year. 200 ha. of land will be planted with rubber in the South West monsoon in year 2004 in this district while plants from the seed fall in the month of February in that area will be used for laying a new nursery in Moneragala at the beginning of 2004. These plants will be utilized to plant another nearly 2000 ha. in the district extending up to the eastern province of Sri Lanka, in the future

On a request made by the private sector rubber products manufacturing companies, the Government is strongly considering giving 2 ha. block of lands to small holders on out grower basis to be funded by these multinationals and local companies, who will ultimately buy their latex at a guaranteed price from the farmers.

This is the only way that Sri Lanka can meet the 120,000 MT of rubber requirement for the fast growing local rubber industry by year 2010 and nearly 150,000 MT need by year 2015. In order to encourage rubber plantation in the country, the subsidy payment of approximately Rs.50,000 per ha at present will soon be increased to Rs.100,000 per ha. A new export cess on raw rubber exports, rubber products imports and from rubber products exports on the rubber content will be levied to collect funds for building up a price stabilization scheme to help small holders, in case the world market price again drop drastically .

Scarcity of Rubber Tappers

There is a severe scarcity of labour in rubber plantations in Sri Lanka, particularly skilled tappers. The main reason for this is the social status of a “rubber tapper” at village levels.

All attempts taken by the government of Sri Lanka to change the dignity of the profession by giving them uniforms and also by issuing them certificates by the RRI after completion of a tapper training program; has so far been unsuccessful.

Further, over 75% of the cost of manufacture of raw rubber is the tapping cost which depends mainly on the daily intake of tappers, which in turn depends mainly on their skills.

Hence in order to solve this problem of tapper shortage to some extent thereby eliminating vacant blocks in estates, half spiral tapping once in 3 days (S 2 d 3 tapping system) with 25% ethral stimulation was introduced to plantations. The plantation companies are accepting this new technique widely. But; in order to get the maximum benefit from this new tapping system, rain guards is a must in plantations. Even without rain guards, because of this slight stimulation (25% of normal recommended dosage of stimulants) done, there will be an increase in the yield compared to un-stimulated area.

Growing more rubber in the country will fulfill the firewood requirement for domestic cooking and for industries such as the tea industry where 43% of the annual uprooted rubber wood is consumed for drying, and for the bread, tiles, and lime kilns thereby protecting trees in the limited forest reserves in the country. Treated rubber wood based industries which are closed down since the SEA currency crisis are to be revitalized to ensure payment of a realistic price for the old trees uprooted by the small holders for replanting.

Production of more rubber wood from expanded plantations will enable Sri Lanka to permit MDF Board industry to continue production at full capacity who are at present restricted to continue production at 50% capacity due to the shortage of rubber logs.

In order to support NR farmers to improve their income appropriate steps will be taken to show them other venues of income from their rubber farms such as income from carbon trading. If they gain additional income from such unconventional measures it is most unlikely that they will tend to move away from rubber planting even if the rubber prices drop again by a small percentage in the future.

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