Rubber price crash hits land deals in KeralaOctober 29th, 2008 - 1:46 pm ICT by IANS
Kozhikode, Oct 29 (IANS) Rubber plantations, once the most sought after farmland in Kerala, now find no takers because of the plummeting price of natural rubber in the last two months.The price touched an all-time high of Rs.142 per kg on Aug 28 but lost around Rs.60 a kg in 45 days to touch Rs.81.50 on Oct 13. The price now hovers around Rs.90 per kg.
The natural rubber price has trailed the crude oil price as synthetic rubber is a crude oil derivative.
“The price for an acre of plantation here was around Rs.12 lakh (Rs 1.2 million) two months ago. Now, there are sellers ready to dispose of the land at Rs.10 lakh (Rs.1 million). But buyers seem to be wary, expecting a further fall in prices,” said S. Mohan, a real estate broker at Thaliparamba in Kannur district. He said his business had plummeted around 40 percent after the slump in rubber prices.
Real estate brokers say many people who entered into agreements to purchase plantations are now backing out, fearing a further fall in rubber prices.
“Three months ago I had brokered a deal for 80 acres of plantation in Karnataka for four US-based Keralites at Rs 600,000 per acre. They paid half the amount and have been taking the yield under an agreement to pay the remainder in six months’ time. Now, they say they want to cancel the deal as prices of rubber have fallen.”
Real estate dealers say they feel the prices of plantations will fall further. “I think the market will dull further in the next few months. Prospective buyers here are not ready now to commit a price. My business is down almost by half,” said K.K. Abdul Nasar, a real estate broker in Kozhikode.
He said the plantations which had attracted a price of Rs.500,000-Rs.700,00 per acre three years ago had found buyers who paid Rs.24 lakhs (Rs.2.4 million) as natural rubber prices were on the upswing.
“There is a 90 percent decline in buying and selling of plantations. Almost no business has taken place in the last two to three weeks,” K.S. Eapen, who draws up land registration papers in Kottayam and is president of the All-Kerala Document Writers’ and Scribes’ Association, told IANS.
“It is the real estate brokers who jacked up the prices and many unwittingly bought land at exorbitant rates. It is not a sound financial proposition to buy a plantation at such rates,” Eapen added.
Farmers point out that it makes no sense to invest Rs.2-3 million on an acre of rubber garden as even fixed deposits provide give better returns.
“The rubber price now stands at Rs 80-90 (per kg). This is a good price and is enough to give a decent return to farmers. But if one had purchased the plantation at Rs.15-20 lakhs (Rs.1.5-2 million) per acre, one can’t expect a profit from the investment,” Alex Kurian, a farmer in Thrissur district, said.
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