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C H.AB T E B?

_, II

DEMAND?? AND% ?SUPPLI

20

nmmnn AND SUPPLY POSIII,0li

1. The importance of rubber can be studied also from


the perspective of its commercial aspect. The demand for
rubber, internally and externally, has been rising steadily
and rapidly since its first commercial production in the early
years of the century. The flourishing development of the
rubber consuming industries gave great stimulus to increased
commercial production of rubber. The development of the
Tyre Sector as well as the increase of non-tyre uses such
as cables, hoses, shoes, pharmaceutical and sanitary equip
ments paved the way for increased rubber consumption in India.
The world rubber consumption rose from an annual average of

1.8 million tonnes during the early part of 1950s to an annual


average of 7 million tonnes during the early years of 1970s.1
It shows an increase of 260 per cent or an average annual
increase at the rate of 10.4 per cent. Though there has been
a progressive increase in world consumption of rubber, synthe
tic rubber accounts for the lion's share in the expanding
market when compared to that of natural rubber. Among the
consuming nations, the United States of America stands as the
1. Department of Statistics, Rubber Board, Kottayam.

21.

largest single user though consumption has been growing


faster in other developed countries such as Southern Europe,

Japan, Italy etc.


In India, rubber consumption has increased rapidly
over the last twentyfive years. The rubber consumption shot
up from 19,854 metric tonnes in 1950-51 to 175,076 metric
tonnes in 1974-75 i.e. a 10 fold rise within a period of two
and a half decades. Natural rubber comes to about 132,604
metric tonnes out of the total consumption (Indian) of rubber
2

in 1974-75

The table 2.1 reveals the details of the consumption


of rubber in India.
TABLE, 2.1'

Year Total
CONSUMPTION

(Metric Tonnes)

Natural Synthetic
Rubber
Rubber Reclaimed
Rubber

33
11..1-_1.12

24_

15 as

1950-51

19,354

N.A.

19,354

1951-52

23,202

N.A.

23,202

1952-53

20,344

13

2,023

22,335

1953-54

24,142

15

26,493

1954-55

26,332

21

2,336
2,261

1955-56

23,445

461

2,647

31,553

1956-57

29,993

2,366

3,543

36,407

23,620

222

1955-58

33,014

3,131

4,131

40,333

1958-59

35,131

3,411

4,102

43,343

1959-60

40,491

4,934

4,939

50,424

1960-61

43,143

1,391

5,453

30,993

1961-62

43,410

10,133

3,043

34,342

1962-63

53,553

10,123

3,350

11,123

1963-64

31,155

11,959

1,932

31,093

1964-65

31,051

15,235

9,339

35,111

1965-66

33,135

21,553

9,114

95,092

1966-67

33,335

23,592

10,913

1967-68

14,513

23,324

11,332

109,104

1968-69

33,315

21,233

14,139

123,022

1969-70

33,213

30,333

14,255

131,104

1970-71

31,231

33,130

14,343

134,145

1971-72

93,454

31,209

15,112

149,435

1972-73

104,023

33,913

14,333

152,301

1973-74

130,302

23,921

11,134

112,001

1974-75

132,304

24,313

13,093

115,013

Source:

103,190

Indian Rubber Statistics, Volumes 13 (p. 51) and


15 (p.45), Rubber Board, Kottayam.

It can be seen from table 2.1 that the consump


tion of natural rubber increased by 112,750 tonnes between
1950-51 and 1974-75. Natural rubber has not been able to meet

2010

I23

the total consumption requirements. The volume of consumption

of synthetic and reclaimed rubber is also on the increase


except for the years 1967-68, 1972-73 and 1973-74 in the case
of synthetic rubber and for 1958-59 and 1972-73 in the case
of reclaimed rubber. But the total volume of annual consump
tion has always been increasing except for the year 1952-53.

2.2. The statewise consumption of all kinds of rubber


can be seen from the table N0.2.2.
TABLE Z -,2 _

SIATEWISECONSUMPTIONOF.ALLKlRD_OF RUBBER

(Metric Tonnes)
Year

_, _19 9 - ~

Natural

Rubber
2

Synthetic
Reclaimed Total
Rubber Rubber

73771415

WETBENGAL

1965-66

27,091

10,234

6,290

43,616

1966-67

23,477

11,277

6,901

46,666

1967-68

31,633

10,633

7,122

49,393

1968-69

36,033

11,720

3,042

64,360

1969-70

31,636

12,193

7,607

61,391

1970-71

30,933

11,634

7,016

49,637

1971-72

29,326

11,206

7,139

43,170

1972-73

30,090

10,167

7,442

47,639

1973-74

31,636

,s,063

6,926

42,613

12345

224

MAHARASHTRA

1965-66

16,016

5,666

1,609

26,116

1966-61

16,292

6,511

1,666

24,669

1961-66

15,105

5,665

1,641

22,261

1966-69

20,161

1,415

6,069

60,665

1969-10

20,626

9,212

6,064

66,159

1910-11

19,696

9,691

6,261

62,624

1911-12

24,651

12,646

6,660

40,659

1912-16

26,661

11,496

6,426

41,600

1916-14

29,602

6,641

6,691

69,564

1974-75

61,662

6,610

4,649

44,551

1965-66

9,669

2,166

1,166

16,645

1966-67

10,626

6,256

1,544

15,125

1967-68

12,246

6,105

1,606

11,154

1968-69

14,119

6,556

1,660

19,591

1969-70

15,154

6,922

2,265

21,911

1970-71

11,546

5,966

2,626

26,142

1971-72

19,646

5,541

2,665

2,1112

1972-73

16,912

5,215

2,029

26,216

1973-74

60,096

5,126

5,262

41,066

1974-75

25,665

4,166

6,561

66,566

T-MIL N491;

12345

253

PUNJAB

1965-66
1966-67

1,491

212

81

1,190

1967-68

1,554

109

75

1,888

1968-69

1,145

100

120

1,955

1969-70

2,225

160

238

2,524

1970-71

2,211

206

269

2,152

1971-72

2,258

244

182

2,584

1972-73

8,485

195

189

8,859

1973-74

4,880
4,881

301

206

5,881

236

139

5,255

1965-66

4,555

1,901

95

5,551

1966-67

4,245

1,245

81

5,528

1967-68

4,588

2,459

108

1,110

1968-69

5,518

2,909

152

8,549

1969-70

5,558

8,125

181

8,981

1970-71

4,415

2,489

198

1,101

1971-72

5,422

8,488

591

10,501

1972-73

9,911

8,552

551

14,095

1973-74

11,949

2,952

1,085

15,941

1974-75

18,588

1,411

110

15,115

1974-75
HARYANA

1234

Zfi

KERALA

1965-66

3,353

511

293

4,163

1966-67

4,194

601

381

5,962

1967-68

5,443

1,146

434

1,025

1968-69

5,314

913

428

6,115

1969-70

1,034

491

6,441

1970-71

4,922
6,139

1,196

380

6,911

1971-72

1,666

2,115

560

10,543

1972-73

1,913

1,541

526

9,966

1973-74

9,035

1,423

610

11,066

1974-75

9,690

1,360

977

12,041

1965-66

1,016

66

25

1,161

1966-61

1,202

66

10

1,216

1961-66

1,513

93

1,615

1966-69

2,165

67

16

2,246

1969-10

2,043

125

31

2,199

1910-11

1,956

199

96

2,251

1911-12

1,611

420

130

2,361

1912-13

2,554

337

98

2,969

1913-14

3,631

390

92

4,319

1974-75

3,255

437

128

3,620

QELEL

12345
GUJARAT

1965-66

552

70

957

1966-67

749

62

11

522

1967-68

797

100

25

922

1968-69

794

77

20

591

1969-70

1,117

119

30

1,255

1970-71

1,192

161

45

1,595

1971-72

1,515

282

65

1,552

1972-73

1,552

232

57

1,571

1973-74

2,155

198

94

2,477

1974-75

2,215

240

170

2,525

UTTAR PRADESH

1965-66

444

32

17

495

1966-67

522

73

27

522

1967-68

575

96

34

505

1968-69

595

50

27

570

1969-70

917

83

51

1,051

1970-71

1,150

153

59

1,572

1971-72

1,401

189

43

1,555

1972-73

1,745

250

50

2,045

1973-74

2,100

372

82

2,554

1974-75

5,950

644

227

4,551

13345
KARNATAKA

1965-66

242

12

52

335

1966-67

343

15

55

413

1967-68

504

213

413

1,235

1968-69

532

332

378

1,242

1969-70

543

543

391

1,432

1970-71

531

509

358

1,593

1971-72

935

935

377

2,241

1972-73

434

131

220

1,441

1973-74

1,311

323

317

2,322

1974-75

1,510

975

443

2,933

1965-66

215

222

1966-67

241

243

1967-68

310

13

323

1968-69

335

37

27

450

1969-70

509

54

30

593

1970-71

515

98

74

141

1971-72

122

141

134

991

1972-73

341

198

62

1,101

1973-74

3,104

320

269

4,293

1974-75

4,134

509

132

4,115

OTHERS

12345

ZED

TOTAL

1965-66 63,765 21,553 9,774 95,092


1966-67 66,665 23,592 10,913 103,190
1967-66 74,516 23,324 11,662 109,704
1966-69 66,615 27,236 14,169 126,022
1969-70 66,213 30,636 14,255 131,104
1970-71 67,237 33,160 14,346 134,745
1971-72 96,454 37,209 15,772 149,435
1972-73 104,026 33,913 14,666 152,607
1973-74 130,302 23,921 17,764 172,007
1974-75 132,604 24,376 16,096 175,076
Source: 166166 Rubber Statistics, Volumes 13 (p.54, 55, 56) &

' " 15 (p.46, 49 & 50), Rubber Board, Kottayam.


/

The relative share of natural and synthetic rubber


in the total consumption is generally believed to depend upon
the following factors:
(a) Domestic supply

(b) Competitive position of the product


(c) Economy situation in production and consumption

(d) Suitability or fitness of the product for the


uses, and
(e) Quality considerations.

2.3. In India, natural rubber enjoys a vital role in


satisfying the internal consumption demand since the threat

30

posed by the synthetic substitute is not serious due to its


restricted availability or supply. In India, the direct
competition between the natural and synthetic rubber for a

greater share in the market is absent. Further, in India,


natural rubber enjoys better position both in quality and in
cost. But the case with the foreign markets is different
since synthetic rubber has drastically changed the demand and
supply condition there, and it may be partly due to its abun
dant supply.

3. Natural rubber has reached high consumption levels


in India in spite of the many inhibiting factors present in
the Indian economy. Indian economy had to face recurring

crises such as poor harvests, industrial recession, investment


slowdown resulting from plan holidays and the chronic inflation
which had depressing effects on all sectors of the economy.
Even in the midst of these difficulties rubber consumption
advanced steadily thanks to the spectacular progress of the
tyre as well as non-tyre sectors. The growth of 'tyre-tube
sector registers an annual growth rate of 14 per cent. For
consumption purposes the demand for rubber, tends to be

inelastic over a short period. The demand for rubber is tech


nically related to the production programmes of the automobile
industry. Thus the level of demand for raw rubber is free
from affecting temporary market disturbances.

31

4. But the consumption uses of raw rubber in the


non-tyre sector such as belts, hoses etc. are sensitive to
the short-term changes. There are certain factors which
govern demand elasticity. In the production corners where
rubber is to be consumed, rubber constitutes a large proper

tion of the total costs and to that extent, the retail prices
of the final products are influenced. Hence large variations
in consumption create price deviations in the raw rubber.

4.1. In the total consumption, overall aggregate elasti


city is of relative importance to the tyre as well as the non
tyre sectors. But there is every possibility of over play of
demand elasticity when the nonautomobile tyre sector is the

major rubber absorbing sector. If the other uses of rubber


develop, demand will become more elastic. The tyre sector

was the dominant partner in the early fifties, but gradually


the situation is changing in India. Table 2.3 shows the
details.

5. The expansion of demand for rubber has been at a


rapid rate. The fast growing tyre sector is the largest con
sumer of rawrubber in India. The increased number and capa

city of non tyre sector also absorbs a significant volume of


the rubber produced in India.
The actual production and consumption of natural
rubber from 1950-51 to 1974-75 is given in table No.2.4.and pro
duction, import, export and consumption of all kinds of rubber in
table No.2.5.

132

TABKLE_ _ _2* 3

(Metric Tonnes)
Year
1965-66

& Tubes & Tubes rs

Grand

N.-A. NQAQ N.AQ NQAQ

95092

Automobile Cycle tyres Total othe

Total

1966-67

44238

12509

56747

46443

103190

1967-68

44448

14602

59650

50654

109704

1968-69

55739

16636

72375

55647

128022

1969-70

59169

16168

75337

55767

131104

1970-71

61574

17014

78588

56157

134745

1971-72

70934

18723

89657

59778

149435

1972-73

73175

18808

91983

60624

152607

1973-74

81419

22578

103997

68010

172007

1974-75

85696

22925

108621

66455

175076

Source:

Department of Statistics, Rubber Board, Kottaymm.

I33

TABLE 2.4

-iiill

Year Production Consumption Difference(+&-) 2


1950-51
1951-52
1952-53
1953-54
1954-55
1955-56
1956-57
1957-58
1958-59
1959-60
1960-61
1961-62
1962-63
1963-64
1964-65
1965-66
1966-67
19 67- 68

1968-69
1969-70
1970-71
1971-72
1972-73
1973-74
1974-75

Source:

15,880
18,087
20,498
21,588
21,774
28,780
24,080
24,584
24,189
24,178
25,897
27,448
82,289
87,487
45,818
50,580
54,818
84,488
71,054
81,958
92,171
101,210
112,884
125,158
180,148

19,854
28,202
20,844
24,142
28,882
28,445
29,998
88,074
85,787
40,491
48,148
48,410
58,558
81,155
81,057
88,785
88,885
74,518
88,815
88,218
87,287
98,454
104,028
180,802
182,804

+ 4,024
+ 5,135

- 152
+ 2,554
+'4,558
+ 4,715
+ 5,938
+ 8,540
+11,598
+16,318
+22,451
420,984
+21,314
+23,668
+15,441
+13,235
+13,867
+10,Q50
+15,561

+ 4,260

- 4,934
- 4,756
- 8,336
+ 5,149
+ 2,461

Compiled from Indian Rubber Statistics, Volumes 12,


13, 14 and 15, Rubber Board, Kottayam.
(2) +denotes greater consumption and
-stands for lower consumption.

6.

Before analysing the demand and supply position

of natural rubber in Kerala, it is important to study the


roles of both estate sector and small holding sector in the
production of raw rubber in India.
TABLE 2.6
PRODUCTION OE EOLDINGS AND ESTATE

Year

Holdings

Estates

(Metric Tonnes
Total

1950-51

3387

12,443

16,330

195$-56

5316

16,414

23,730

1966-61

6528

19,169

26,697

1965-66

20424

31,006

61,430

1970-71

51538

40,633

92,171

1974-75

79260

60,363

130,143

Source:

Department of Statistics, Rubber Board, Kottaymm

7.

Quantitatively Kerala's place in the total Indian


production is significant. It can be seen from table 2,7
that Kerala has 93.40 per cent of India's production in the

year

7.1.
But the demand position of natural rubber in Kerala
is more significant since the state of Kerala plays a very
vital role in the supply (90%) of natural rubber in India.
The importance of Kerala from (the perspective of) its supply
position reveals the scope of the development of the rubber

TABLE?-7
KERALA'S PLACE IN THE TQTAL INDIAN PRODUCTION

(Metric Tonnes)

Y
Indianercen
P age
t
ear Kera1a's
Production Production
1950-51
1951-52
1952-53
1953-54
1954-55
1955-56
1956-57
1957-58
1958-59
1959-60
1960-61
1961-62
1962-63
1963-64
1964-65
1965-66"

1966-67
1967-68
1968-69
1969-70
1970-71
1971-72
1972-73
1973-74
1974-75

14,750
16,663
16,766
19,759
19,669
21,660
21,653
22,196
22,062
21,690
23,175
24,954
29,057
33,792
41,391
46,953
50,495
59,976
66,473
76,697
66,773
95,499
105,934
117,221
121,556

15,630
16,067
20,496
21,566
21,774
23,730
24,060
24,534
24,169
24,173
25,697
27,446
32,239
37,467
45,616
50,530
54,616
64,466
71,054
61,953
92,171
101,210
112,364
125,153
130,143

93.18
92.34
91.56
91.53
91.34
91.36
90.83
90.47
91.28
90.56
90,19
90.92
90313

90,14
90.74
92.92
92.11
93.04
93.55
93.83
94.14
94.36
94.28
93.66
93.40

Source: Compiled from Indian Rubber Statistics, Volumes 12,


13, 14 and 15; Rubber Board, K0ttYam

37

plantation industry in Kerala. Kerala alone provides 91.66


per cent of the total consumption of the natural rubber in
India in the manufacturing sector. In Kerala alone 121,558
metric tonnes of natural rubber are being produced.

7.2. As far as the economy of Kerala is concerned the


supply side of raw rubber is more important than the demand
side since Kerala enjoys in effect almost a monopoly in pro

duction, when compared to the other states in India. But in


the case of demand aspect Kerala lags much behind the states
such as West Bengal, Tamil Nadu etc. It seems a paradox.
Kerala can go much further in the consumption or rubber provided
conditions are created for the same.

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