In the midst of India's economic crash, it is said that agriculture will lead India's economic revival. India's food grain production in 2019-20 was 3.7 per cent higher than in 2018-19. The procurement of rabi wheat in 2020-21 was 12.6 per cent higher indicating resilience in the sector. Food inflation in Q1, 2020-21 at 9.2 per cent was higher suggesting robust demand. And most importantly, kharif sowing in 2020-21 was 14 per cent higher than in 2019-20. All these suggest that agriculture is doing well. Is it so simple? Regional and crop specific analysis may be useful in this context.

Among the Southern states, Kerala has the lowest area under crops. Net cropped area in Kerala in 2017-18 was 20,16,000  hectares and gross cropped area 25,84,000 hectares. Kerala agriculture has some unique features. It is a dominant producer of natural rubber, coconut, cardamom, other plantation crops and spices in India. These are tree crops (cardamom is a bush) with long life and not easily reversible as once planted the area cannot go back to field crops. As may be seen from Table 1, area under tree crops, such as coffee, rubber and coconut is large in Kerala. In total, the five crops listed in Table 1 account for close to 15 lakh hectares and their share in the gross cropped area of the state is 57 per cent.

Table 1. Land under Plantation Tree Crops in Kerala

 Sources: www.indiacoffee.org; www.ecostat.kerala.gov.in

This note seeks to discuss the price and production trends of two of the major crops grown in Kerala, namely rubber and coconut.

Kerala is a dominant producer of natural rubber in India accounting for over 80 percent of the Indian production. As shown in Figure 1, price of rubber had hit its highest levels in 2011 crossing Rs 200 a kg. for RSS 4 grade.  Since then it had shown a steady fall, the year 2012 witnessing a fall in prices of 15 per cent. The next year saw it fall by 8 per cent and 2014 recorded the highest reduction of 19 per cent.  The fall continued into 2015 with the prices coming down by 11 per cent. Thus, over a period of four years the prices had eroded by close to 50 per cent and in 2015 the prices were almost half of that in 2011. But the last five years have seen stable prices only to get a hit with COVID 19 and the resultant lockdown.

Fig1. Natural Rubber Prices in the Kottayam Market, 2010 to 2019 (Rs per 100 Kg.)

    Source: rubberboard.org.in/indianprices

The bulk of Indian production (70 per cent) of natural rubber is in the form of sheets (RSS 3,4, 5,…). But recent years have seen a transition into solid block rubber (15 per cent) and latex concentrates (10 per cent). Production of rubber has been showing an increasing trend. In January 2020, production was 10 per cent higher compared to the corresponding month of the previous year (Table 2). It was 6 per cent higher in February and in March the production was same in the two years. But in April production dropped by 53 per cent largely on account of the lockdown due to COVID 19.

Table 2 . Monthly Production of Rubber (Tonnes)

Source: Rubber Statistical News (Various issues) available at rubberboard.org.in

Monthly average prices of rubber in 2019 have been showing an increasing trend (Table 3). There was a 20 per cent increase in the price of RSS 4 grade from January to June 2019. Though there has been a slight fall in the latter half of 2019, prices continued to remain high till March 2020. But the lockdown and the resultant collapse in economic activity put a halt to this increasing trend. The month of April did not see any trade in the market. When the trade resumed in May the prices were lower by about 10per cent. As economic activity started picking up,  the prices started rising but in August have not reached the level of January. The prices of latex show a different pattern. While the price increase in 2019 was steeper till October, the fall was steady since then. The lockdown accentuated the fall.

Table 3. Monthly Average Prices of Rubber (Rs per 100 Kg)