Rubber prices are down all over the world, to the extent that big producers such as Malaysia, Thailand, and Indonesia are worried. These countries are considering reducing production in a bid to increase rubber prices. As one of the top five producers of rubber in the world, with an output of around 900,000 metric tonnes, falling rubber prices should be of great concern to India. 80% of the country’s rubber production is concentrated in the state of Kerala. The recent slide in rubber prices has proved ruinous for many farmers who had bet big on the commodity. After years of relatively buoyant prices, many had devoted most or all of their land to growing rubber. 
At around Rs. 112 per kilo, Kerala rubber prices are the lowest they have been for more than five years. Farmers are staring at huge debts. For plantation owners and those with larger scale rubber operations, the low rubber price has forced the laying off of workers to reduce the scale of losses. Although some regions are more dependent on the commodity than others, its easy to see how the low price of rubber will have knock on effects throughout the state economy.
The state government has been running a procurement program for a number of months now, and recently increased the support price it pays for rubber to Rs. 176 per kilo. This is vital to reduce the pain of rubber farmers, but unfortunately the program seems to be having little effect on the market price. While it is a necessary measure in the short-term, such a policy cannot be sustained over a longer period. To prevent such widespread losses and contraction in the future, the state government should encourage farmers to diversify their crops, providing some insulation from volatile commodity prices.
A nudge in the right direction could be provided in the form of a tax-credit to farmers who plant a wider range of crops. Of course this is not possible for everyone, particularly those who own small plots of land. But then by reducing monoculture in areas where farmers are able to plant different crops, the state would have more funds to support small-scale farmers, who need it most.
