Kerala's ailing rubber sector: New study proposes revival of societies, overhaul of incentives
A new study has recommended a set of measures to revive Kerala's struggling natural rubber sector, including the revival of rubber producers' societies (RPS), a restructuring of the rubber production incentive scheme (RPIS), and a dedicated scheme to tap abandoned plantations. The report, prepared by the Public Policy Research Institute (PPRI), a think tank under the Kerala Finance department, has been submitted to the Kerala State Planning Board.
The study, titled 'Price fall of natural rubber and its impact on Kerala economy - Study of a natural rubber-dominant grama panchayat,' examined the effects of falling rubber prices on Chirakkadavu, a grama panchayat in Kottayam district that relies heavily on rubber cultivation. The research team comprised PPRI Director S. Mohanakumar, Vipin Kumar R., and Prem Kumar, and was based on a sample survey of 565 rubber-dependent respondents.
The study found that the sharp decline in rubber prices had pushed many rubber producers' societies into inactivity. Reviving these societies is essential to attract farmers back to the sector, the study argued. “It will help farmers to process rubber and manufacture value-added products,” it said. The researchers urged the State government to evolve and implement a special scheme for this purpose. They also recommended drawing up a plan to tap abandoned plantations or plantations where owners are absent.
The study highlighted a structural issue in the rubber market: a “buyer oligopsony,” where numerous small and marginal farmers with limited bargaining power face eight major automotive tyre companies that control over 70% of India's rubber consumption. This concentration of buyers, according to Prof. Mohanakumar, has made the existing RPIS ineffective. The scheme, currently oriented towards farmers, should be restructured to also cover labour, he said.
The natural rubber sector in Kerala is passing through a crisis marked by “unprecedented” volatility and price decline, the study noted. This price fall has affected productivity and production, even though the gross area under cultivation has remained unchanged. In Chirakkadavu, the persistent price drop has led to a significant contraction in the local rubber economy: the number of licensed rubber dealers fell from 22 to 5 between 2020 and 2025, input suppliers from 6 to 3, and processing units from 5 to 4. The study also observed that farmers are increasingly leasing out rubber land for alternative crops such as pineapple and rambutan.
Among the remedial measures, the study called for regulating rubber imports to protect domestic growers. It also recommended expanding the World Bank-aided Kerala Climate Resilient Agri-Value Chain Modernisation (KERA) project to cover all districts and all rubber plantations. Currently, the project includes rubber but is limited to six districts in the State.
The study further suggested promoting rubber exports and rubber-based micro, small, and medium enterprises (MSMEs). It also proposed specialised training for women in rubber-based, non-tyre industries, which could open new livelihood opportunities. Together, these measures aim to stabilise the sector and improve the resilience of farming communities dependent on natural rubber.