Vol. 5, Issue 5 (2019)
Impact of change in market prices on expansion of new planting area of natural rubber: a study on rubber plantations in Tripura
Author(s): Haripada Datta, Dr. Haradhan Debnath, Dr. Parag Shil
Abstract: Tripura is the second-largest contributor to the total production of natural rubber in India. The natural rubber is the second-largest agricultural crop in Tripura after rice and area under natural rubber has registered a phenomenal increase during last one decade. The income from rubber plantation is basically a function of price and yield. The yield from natural rubber trees is available only after six years from the year of commencement of cultivation. Hence the impact of a price change on the growth of new plantation area and re-plantation of natural rubber can be practised only after six or more years. The sharp decline in market price of natural rubber in recent times has some negative effect over the profitability of small rubber growers. But a sudden response from the rubber growers for a change in the price of rubber can be noticed in the care given to rubber trees rather than on new planting area. The study examines the impact of change in market prices on new planting area of rubber plantations. Log-Linear Regression Model has been used for this purpose to estimate the elasticity of change in market price on new planting area. The result shows that for 1% increase in market prices of natural rubber, the new plantation area of rubber increased by 0.39% i.e. it is inelastic in nature. Natural rubber is a perennial crop and investment in rubber plantation is a matter of long term decision making. Therefore, price induced effect does not immediately reflect in the expansion of area under rubber plantation.