Prices of latex, rubber sheets keep falling, hitting growers

The prices of latex and rubber sheets have continued to fall in Bangladesh, depriving growers of a better return, although manufacturers and exporters are offering higher rates to suppliers.

Latex is a sticky, milky and white colloid drawn off by making incisions in the bark. It is then refined into rubber to make it ready for commercial processing.

In the last six months, the price of latex has fallen by Tk 7 per kilogramme to Tk 43 while that of rubber sheets has gone down by Tk 10 to Tk 130, figures from the Bangladesh Rubber Garden Owners' Association (BRGOA) showed.

Processors, however, say they buy grade 1 rubber sheets at Tk 194 per kg, grade 2 at Tk 175, and grade 3 at Tk 165, meaning middlemen who supply to processors make a significant profit at the expense of growers, garden owners allege.

A total of 67,939 tonnes of latex were produced in the country in 2022, up 58 percent from 43,000 tonnes in 2021 thanks to an increase in the area under cultivation, according to the Bangladesh Rubber Board (BRB).

Syed Moazzam Hossain, president of the BRGOA, said gardens don't supply latex and rubber sheets directly to processors. Rather, they sell the items through middlemen or suppliers since they don't have scopes to preserve the perishable items.

"Middlemen are taking advantage of the situation."

Mohammad Kamal Uddin, a former president of the BRGOA, said the price of rubber has increased in the global market in the past six months whereas it has declined in Bangladesh.

In Bangladesh, rubber is grown on 140,000 acres of land in 1,304 private gardens and 28 government-owned estates, mostly in the Chattogram region, according to the BRB.

The size of the domestic raw rubber market is about Tk 1,050 crore, Kamal said. Rubber gardens have collectively invested Tk 2,500 crore in the sector and have created around 150,000 jobs directly.

Tarun Kanti Chakma, vice-president of the Indigenous Rubber Garden Owners Association in Khagrachhari, said gardens have been selling raw rubber at Tk 35 per kg since the production season began in October.

"We don't get reasonable prices as we can't process latex."

He said gardens are not getting the expected prices although the production cost has increased due to a spike in labour costs in hilly areas amid a rising cost of living.

Chakma, however, admits that the business is viable despite the low price as gardens will continue to produce the raw material for a longer period.

Arfanul Hoque, head of retail at Bata Shoe Company (Bangladesh), says the multinational company uses at least 80 percent locally processed rubber in making sandals.

Meghna Innova Rubber Co Ltd, a concern of Meghna Group that exports bicycle tyres and tubes, uses 100 percent rubber produced in the country.

The company purchases rubber sheets of grade-1 at Tk 194 per kg, grade-2 at Tk 175, and grade-3 at Tk 165 from Bangladesh Forest Industries Development Corporation (BFIDC) although the prices averaged Tk 160 six months ago, said Luthful Bari, director for operations at Meghna Group.

"This has increased the production cost for manufacturers."

The BFIDC has raised the price of rubber sheets for the spike in the production cost, said Nesar Ahmed, director for production and commercial at the state-run corporation.

The export price of grade-1 rubber sheets is $1,765 per tonne, grade-2 is $1,581 per tonne, and grade-3 is $1,493 per tonne.

Rubber exports fetched $9.82 million in July to October of the current fiscal year, up around 10 percent year-on-year, data from the Export Promotion Bureau showed.