Upload
anonymous-dtm5t8qxby
View
238
Download
2
Embed Size (px)
Citation preview
CHAPTER V
TRENDS IN INPUT AND OUTPUT PRICES
Economic literature makes a distinction between two
types of price changes, one cost-determined and the otherdemand-determined. Generally speaking, changes in the pricesof raw materials inclusive of primary foodstuffs are believedto be demand-determined and changes in the prices of finishedgoods to be cost-determined (Kalecki, 1971). In recent yearspolicies designed to promote economic development have been
seriously considered by most developing countries and arecharacterised by the development of major sources of foreignexchange earning. A more stable price will reduce the riskand uncertainty costs and make the marketing system more efficient.
The pricing of raw materials have, however, to be seenexplicitly within the specific features of their market structure and in the light of the condition on the demand andsupply side. In India supply conditions are identified asessential reasons for the difference in price changes (PanditSom Nath, 1982). The structure and behaviour of prices denote
the nature, composition and magnitude of prices. Price mechanismis the medium through which the desires of consumers are
127
transmitted to producers. If the commodity in question isdurable there is an added dimension in the pricing of it, viz.,the role played by inventories in explaining price movements.‘This factor has to be incorporated while defining or ratherspelling out the conditions on the demand and supply side.
The level of agricultural prices in an eaconomyinfluences a number of aspects of the economy. The relativeprices among individual commodities influence a shift from one
commodity to another. The relative price level between theagricultural and non-agricultural sectors determines the termsof trade between these sectors and hence influences the move
ment of resources from one sector to the other. While analysing agricultural price it is also possible to analyse the changesin price levels at different levels of the market with a viewto understand the changes in market structure and marketingmargins Agricultural prices are quickly responsive to demandand supply conditions. Since agricultural output constituteshalf of the national product the general price level is mostlydetermined by the behaviour of agricultural prices. Due tomarket imperfections in underdeveloped countries the effect of
price signals gets considerably weakened, resulting in eithertime lags in response or differential magnitudes of responses.Price policy inevitably is a part of the overall economic policy.Price policy in conjunction with policies on other aspects such
128
as input supply, marketing of output, research and extension
influence the modernisation process, especially through theadoption of improved technology. The objective of agriculturalprice policy is to achieve price stability without destabilising the total fievenue of the farmer and provide a price supportwhich would be economic to the farmers as well as to agrobased industries and at the same time safeguard the interestsof the consumers. While the influence of agricultural priceson allocation of resources between agricultural and nonagricultural sectors in an area like Kerala, characterisedby a large proportion of perennial crops, may not be large,its impact on the allocation of resources within the agricultural sector and on the modernisation process cannot be underemphasized. The short term goal of price policy is stabilityin crop prices to create certainty. The medium term goal ofgrice policy is stability in terms of trade for agricultureand the focus of the long term goal is an agricultural adjustment of all prices towards their equilibrium level. Thus therole of agricultural price policy is to moderate short runprice fluctuations and to allow prices to perform their longrun allocative function. In short it may be emphasised thatthe aim of the price policy should be to effect a properstructure of production and distribution (Pandit Som Nath,1982}.
129
Economists often find it useful to think of the marketdemand as consisting of demand for current use or consumption
plus possible demand for addition to inventory; and the marketsupply , similarly, as consisting of supply from current production plus possible supply from inventory. Inventories mayhave either a stabilising or destabilising effect on the commodity's price depending on the conditions that permit or requirethe holding of inventories. However, traditionally, economistshave assumed that the effect of inventories is to stabilise
price, though the extent to which it will do so, of course,varies from one market to another. Agricultural price analysisis one of the most important and well developed parts of priceanalysis. The agricultural price analysis is not a mere exercise of academic curiosity but results of it are immediatelyput to work as bases for huge economic programmes. In thissection we will examine the behaviour of natural rubber and
synthetic rubber prices which are used as raw materials in therubber-based industry. Attempts were made to analyse both“e inter and intra year variations in natural rubber prices
after the 1970's and the role played by rubber stocks inexplaining it.
5.1 Price Movement of Natural Rubber
Market price of indigenous natural rubber had increased
130
cosiderably over the last two decades. Interestingly wideintra year fluctuations are also noticed in the market priceof rubbery 'This.may be due to fluctuations in production andstock of natural rubber in different months. In 1969-70,price of natural rubber was as high as B.584.1O per quintalin April (Table 5.1). Upto September the market price ofnatural rubber was above the average price level of m.501 perquintal. During 1970-71 price or natural rubber per quintalwas lower than that in the previous year. In 1970-71 theprice is worked out to be $.464 per quintal. Price was lowerin the month of November. During 1971-72 also the averageprice of lot rubber showed a declining trend and stood at%.420.78 per quintal. During the year price of lot rubber waslower in the month of December and higher in the month ofMarch. In the next year 1972-73, price of natural rubberincreased marginally and it stood at b.459 per quintal. Thepercentage increase when compared to the preceding year isfound to be 9.03. During the next two years also averagemarket price of lot rubber showed an increasing trend. In1974-75 the average market price of lot rubber per quintal isworked out to be B.849 per quintal. This is 64.85 per centincrease when compared to the previous year. However, duringthe period 1975-76 and 1976-77 the average market price of
rubber showed a declining trend, mainly due to the fact that
1.31
mm.Hmmfioo.monH#m.mvc_mo.vmmHmo.nom~co.mom~mm.mmv~mo.oomdom.HmmH_H.mmmHov.o~mHon.wooo.mo~Hpmuommfi
o>.omwH¢m.mH>HNm.~>wH¢[email protected]~mH~m.-aHou.»>oam~.mo»fl>m.~mm~om.emo_mm.omo~ov.omn~mmummmfl
m~.>mm~mH.-m_m~.oom_mp.pmvH~m.nom_m>.nmvH~v.mmmdoo.mnm_ov.omwa>o.m~>flo¢.aonHmm.~mwHv».mmmH
mmuqmma
nm.no»fi>>.mvo.¢m.m~o~om.>opfipo.mv»Hov.~o~Hmn.mnwHom.>~>flmv.~om~om.H~>~mo.nmn_mn.wo»fiwm.omm_
qmunmmfl
nm.movHn~.mmm~mm.vov_mm.mom_oo.m-Hon.~>~flmm.mH-.oumHoo.vvmHHm.wwm~m~.u~mHoo.e~mHmo.oomH
nm-~mmH
.mmwmmm
mo.onvH~v.>HmHm~.»oe.vo.nuv#Hm.eHwHoo.mmnHn».-nHmo.omnHom.n~v_mm.ommfimm.nwvHmo.n>v~mm.mmv_
Nmuammfi
o~.~H~Hno.mmmHmv.ommHm:.nom_mm.ovo~.an~Hov.mo~Hn».wm~HHm.mv~Hmm.mmHHoo.mvo_mv.o~o“nn.m~oH
Hmnommd
.mmmH
fim.oHoHmu.mooH
Hh.>>m
om.ooo_
mo.>omoo.~vmmm.mom-.mvo
o~.~mo.mm.mmoHo«.H»oH~v.mvfi.p~.vwo~
omumnmfi
.Em>muuox
mv.nmmmm.m>mov.~vmem.ommoo.¢>m~m.ummo~.mnm
oo.~m.~
oo.o>m
mm.mmoH
om.oom-.mmmoH.oopm>-m>m_
.Uumom
HA.~mw.m.nmmom.>nmon.>noma.oHuoo.n~oom.mvwmn.mmmoo.emuoH.omwon.~,mom.-oom.moomnuwpmfl
RUDD 5K
um.mmmn>.mmmnm.mHoon.mooom.-nofi.mmmom.wnmom.mmmH>.mmmam.m~wmH.mmmnn.Hmmo~.vmo
>>-m»md wn:m>ma mblvhma
.mH .Ho>~m.mv~o~.omwhw.m>mfin.ammoo.m~nmn.aN>mn.Ho>~o.nm>mp.vu~»n.mm>~H.>omo~.nm>~p.Hnm
0 nun .§v
Em>n»uDs ua uwfifizm
go;».m
mo muunum uwx.mI umark k
can:
.nu«unaumum uunnsm :mqU:H
e~.m¢mow.o~m»n.v»mov.voomn.mH»mm.mfi~on.>>>om.>ma
om.nooA
>o.ummov.mmmov.wmmov.mmw
mazucoz
mn.m~mmn.omw~m.>vmmn.aonHv.mmv_>.vm.am.oovov.mm«no.mmvmm.~mvm~.m>voe.n>vH~.mov
H~.mmvwm.mn.oH.o>voq.N»vvn.~vvon.mnvnm.on¢m~.m~von.mnvom.vmeno.muvm~.mm¢¢o.~mv
uuuuzom
m».o~vom.>mvmo.m~vn~.m~vmv.>nnom.vmmve.oovnv.Vmnmm.nHvmo.mmvvm.mmvw~.vvv~o.mmv
om.mwwmo.~m¢>m.>ovmm.a.qmm.mnvnm.Hwqoo.o>vom.oo¢o».mmvm».nmvH~.vmvom.wwwoo.Hn¢v»-n»m~ nn-~nmd ~»-dhmH.fi>-ohmH
uDmum><Laud:>um:hnwm>um::mwuwa._.=uum.n_uuAEo>oz
umnouuouvnaaummmuw:U:<>H:hwash>mZ~Hua«
mnucot
131
nm.Hmm~oo.mo>H«m.mvc~mm.vmmHmo.nom~oo.mon_mm.mmv~mo.oom~om.HmmHHH.mwmHov.o~o_on.mopHoo.mo»Hwmuwmmfi
o>.omwHvm.m_>H~n.~poHeo.moo~nm.mHoHmm.v~m~~m.H»mfiom.>>wHm~.mo>H>m..mmHom.vmo~om.omm.ov.omm~mmunmmfl
m~.>mmflmH.a~m_m~.oom~mp.»mvH~m.mom~mn.nmvH~v.mmm~oo.m>m~ov.omofi>o.m~>fioe.mon.mm.~noHq».mmm_
nmnqmafl
nm.»o»H»n.mvo.«m.m~mHom.ho»_»o.mvn~ov.~omn.mnwHom.»~p~ov.~omflom.fi~»~mo.nwn~mn.mu»Hom.ommfl
¢m-nmm~
nm.moqfln~.mmmfimm.vovHnn.mon~oo.m~nHon.~p~Hmm.mH~H-.oonHoo.vvmg~m.vmm~mfl.w~mHoo.e~mHmo.omm~
nm-~mmH
mm.on¢HHv.>.mHm~.>o<H.o.nue_am.=Hv_oo.mmnHnn.-n~mo.mmnHom.m~vHmm.omnHmm.mwvHmo.n>vHoa.mnvfl
~m-~mmH
o~.~flmHno.mmmfimv.mnnHmm.nom_mn.ov~Ho~.m>H~ov.mw~Hnn.om~fiAm.me~Hmo.mmH~oo.mvo~mv.m~o.mn.m~oH
Nmuoomfi
.mmmH .Em>muw0x .Uumom
~m.oHo~mw.nooH
H>.hhm
om.ooo_
mo.»omoo.~vmmm.mom-.mvm
o~.~moHmm.mmoflov._~oH~v.mvHfip~.vpo~
omumhmfi
mv.nmm HH.~nomm.mpm vm.nmoo¢.~vm om.>mmem.amm on.>nmoo.vnm mm.o~o~m.omm om.»~wo~.mmm om.mvmoo.~m.fl m~.mmuoo.o»m oo.omunn.mmoH oa.ommom.oom on.~fio>~.mmm oa.-ooH.oow om.moo
mpumnmfi mnnnpmfl
HUDDDK
om.mmmnn.mmmnm.m~oon.mooom.-mo~.mmmon.ummom.mmmH».mmmam.m~om~.mmmn>.Hmmon.vmo
pp-o»mfi m>:m>mH mnxvpmd
.mH .~0>~m.mvno~.omw>m.m»w~n.ommoo.mH»mn.am>mn.Ho>~o.nmnm».vo>>».mm»~a.>owon.mm>~».Hnm
Nmmmammm mm; .a.
.mu«»n«umum uvnnsm :M«U:H
v~.mvmoq.u~m>n.v»mov.vomnn.aHpmm.mn>on.>~nom.>mm
om.nooa
>o.mmmov.mmmov.wmmov.mmo
Emmnuuox um uwfizzm
_.m I uanzn
ya; we muuaum uwx_m: umm,u.~
s.:u:o:
mn.m~mmn.omm~m.~vmmn.momHe.mm.a>.vmvom.omvov.mmvno.movum.~mvm~.m>voo.nhvH~.mwv
«plasma
H~.mmvmm.mpvoa.on.oq.~p.vn.~wvon.mnvnm.onvm..m~vom.mmvom.vmqno.mu.m~.mm¢¢o.~mv
npuwpm.
uuuunom
m».o~vom.nmvmo.m~¢na.n~vm..~»nom.vmmvo.oovpv..mnmm.nflvmo.mnvvm.mnvw».vvv~o.nm.
3:33.
ow.mwv unmuw><no.mm« LUHMI»m.»o¢ »um:unummo.u\v >uu::owmn.n~¢ uunemumn
nm.Hmq uuflEU>O2oo.o>v HUDOUUOom.o3 u~n:_3mmm_
o>.mmv umshsmm».»m. >A:hH~.vm+ Ucflhom.omv >mzoe.H>v nAum<
_p:onm~ ncucox
132
M m mm. D
mflr.»
I‘. nu--.
31$... . ... ,_
.1 \...::l. ........... .. 4%m.u «I I
H."
. -- ........ .. J L :15...
m.......I.- ..
IL ._n. .. ..
.5! F ......... .. 1... .........r...l.iIl- .. ....... i . .f\f.... ..
... ... ._
. ...
.. . n .............. .. .1 .- ...J !..._r...i:... I’ -
E
.l:|._|.'l..1.l. . L. .. .
_
if .. ..r . A
...".
! I ......... .. i
nu .
- ..,..; -1- ..
-v.u:.fl
.iIl.J...L ............. .....!....._.._.I:.... .I. .. .. . . In ...... (.... ....... ...IJ. u ..... .. I . .. ......... ‘L .r:.|rI.Ir| .. 1| .
._
m «W31 ........... .. I ......... .. I In... 1.... ..- xi 1. H.mm.
' .111. Lullln l.l.!.$.«. . l vl . ll. ..
m_...._...........$..._A.._.WW._. E. .. Fri...
H4w..'emmmmfl
“hi
5-$5
\f_ 1' - gs mm but 11:: ,_g;_;
ECJE=Li
.#...
.-.!
133
during these years the internal production was sufficientto meet the demand in the country. In 1976-77 average priceof lot rubber is worked out to bel.596 per quintal.This was29.80 per cent lower than that in 1974-75.
From 1976-77 to 1981-82 average market price of lot
rubber showed a remarkable increasing trend. In 1981-82 theaverage market price of natural rubber stood at %.1431 perquintal. During this year the price of lot rubber was higherin March and lower in July. It is to be noted that production of natural rubber was lower during the month of March.
The percentage increase in prices during the period 1976-77 to1981-82 is estimated to be 140.10. Although there was somevariations in the price level, it showed an increasing trendafter the period 1981-82 also. In 1986-87 price of naturalrubber stood at 1591.83. The compound annual growth rate inprices during the period 1970-71 to 1986-87 is worked out tobe 9.98 per cent (Appendix 1). when we take three yearly moving averages we can see that market price of natural rubber was462 in 1970-71-(Table 5.1). This has increased to 729.27 in1975-76. Except for the years 1976-77 and 1977-78 movingaverage showed an increasingtrend. These are the two yearswhere the import of natural rubber did not take place. It isalso to be noted that production of natural rubber tends to
Table 5.2
Average Market Price of La Rubber at Kottayam
(B. per Quintal)
134
PriceAverage Market Three Yearly
moving average
1969-701970-711971-721972-731973-741974-751975-761976-771977-781978-791;/9-801980-811*" 1-821982-831983-841984-851985-861986-87
500.86463.60420.78458.71515.39849.24743.62595.96632.11953.43
1016.511212.201430.651408.831707.531587.291660.701591.83
461.75447.70464.96607.78702.75729.61657.23727.17867.35
1060.711219.791350.561515.671567.881651.841613.27
SOLIICCE Z1988.
Computed from Indian Rubber Statistics, Vol.18,Rubber Boar5f’Kottayam,
135
be higher during the period September to January. Interestinglymore than 50 per cent of the total production takes place duringthis period. Production of natural rubber is comparatively lowduring the months of February and March. Prices of naturalrubber tend to be high during this lean period.
Now let us examine the factors which are influencingthe price of natural rubber. we have developed two models forinter and intra year variations in prices. Our basic assumption regarding the determination of inter year price variationsis that it is governed by several factors viz.. production,consumption and total stock of natural rubber. In order toexamine whether international prices have any bearing on theIndian natural rubber prices we have taken price of naturalrubber in London as a proxy variable. As natural rubber is aprimary commodity with a derived demand concentrated in the
industrial countries. it is posited that the spot pricingprocess is dominated by stocks held in the consuming regions,the size of these stock holdings (nearly half of total stockholdings) and the operation of the spot market by consumer reinforce this argument. Thus it is the London spot price thatexerts ultimate influence over natural rubber price formationin the producing areas in each period (Tan Suan. 1984). Inthe case of intra year price variations it is assumed that it
136
is influenced by the manufacturer's monthly purchase decisionsin relation to net availability. The manufacture's purchasedecisions are governed by purchase for current use or consumption and for addition to inventory or stocks. Monthly production of natural rubber also exerts some influence on intrayear price variations. The estimated equations are givenbelow:
P = - 1l4.15904 + 0.27524 PLD +(15o.34482) (o.356o0)
*** ***0.01547 CNt- 0.01255 QNt
(0.00860) (0.00670)
+ 5;oo5s3 sNt(0.06628) R2 = 0.9.395
R-2 = 0.8986, F 36.448
*~k*
MP 798.517; - 0.00497 MQt(131.9520) (0.oo271)
SSTCMTS+ 0.07845 Mct — 1628.946?
(0.00695) (227.4779)
SGDMTS
(323.9641) K
i— 914.1303
2 0.7090-2R = F
*: Significant at one per cent level.***: Significant at twenty per cent level
where
MPt
MP
MQ
MCtMTS
SSTC
SGD
SNt
PLD
QN
137
i— 645.8532 + 0.00055 MQt
(135.8387) (0.0o3o6)
*+ 0.08712 MC + 15o2.7219 _§§t HTS(0.00623) (228.6328)
R2 = 0.6882
R‘2 = 0.678. F = 67.6870
monthly price of natural rubber
monthly production of natural rubber
monthly consumption of natural rubber
monthly stock of natural rubber
stock of natural rubber with the State
Trading Corporation of India
stock of natural rubber with the growersand dealers
total stock of natural rubber in the year t
Price of natural rubber in London in the year
production of natural rubber in the year tconsumption of natural rubber in the year t
5.2
138
'0 II price of natural rubber in the year tMS monthly stock of natural rubber with the
manufacturers.
The regression estimates show that consumption of
natural rubber is influencing positive movements of prices.Production variable as expected showed a negative relationship. Although coefficient of stock variable and coefficientof PLD showed the right signs they are found to be statistically not significant. In the case of intra year variationsconsumption and the ratio of the manufacturers stocks to total
stocks are found to be positive and statistically highly significant. Coefficient of the monthly production of naturalrubber turned out to be significant only in the first model.Coefficient of the ratio of the growers and state trading corporation's stocks to total stocks are found to be negativeand significant. The high value of the coefficient of theratio of the manufacturer's stocks and state trading corporation's stocks to total stocks reveals the significance of bufferstocks for indirectly controlling prices rather than directprice control measures.
Movements of Prices of Svnthetic Rubber
During the last decade prices of synthetic rubber has
139
increased considerably. Price of styrene butadiene 1502 hasincreased from B. 4.4 per kilogram in 1970-71 to B. 25.17 perkilogram in 1986-87 (Table 5.3). The percentage increase isworked out to be 472.05. In 1970-71 price of styrene butadiene1712 was k.3.90 per kilogram. This has increased to 5.8.58per kilogram in 1978-79. In 1986-87 the price has increasedto %.22.85 per kilogram. The percentage increase when compared to 1970-71 is worked out to be 485.90. Similarly anincreasing trend was observed in the case of styrene butadiene1958 also. Its price stood at just B.6.8 per kilogram in1970-71. This increased to 5.29.15 per kilogram in 1986-87.The percentage increase is estimated to be 328.68.
Price of latex SC - 2000 also showed an increasing
trend during the last nine years. From just 3.6 per kilogramin 1976-77 price increased to %.14.78 per kilogram in 1986-87.A similar pattern in increase was seen in the case of other3ynthetic rubbers also. From $.18.70 per kilogram in 1976-77price of nitrile 3309 increased to B. 20.70 per kilogram in1978-79. After 1982 its price has increased alarmingly. Duripd the period 1982-85 it has almost doubled. In 1986-87 itsprice stood at $.36 per kilogram. Same is the case withnitrile 3809/11 rubbers also. From m.20.70 per kilogram in1976-77 its price increased to B.39.50 per kilogram in 1986-87.The percentage increase is worked out to be 90.82.
140
Table - 5.3
Grade-wise Prices of Styrene Butadiene and Nitrile Rubber
(Ex~Barei11y — m/Kg.)
Year 1500/1502/ 1712/ 1958/ Latex ———§iE£i¥9——————1552x 1752 194lx sc - 3309/11 3809/112000
1970-71 4.40 3.90 6.80 -- -- -1971-72 4.40 3.90 6.80 -- -- -1972-73 4.40 3.90 6.80 -- -- -1973-74 4.27 3.77 6.14 -- -- -1974-75 9.02 7.32 12.26 -- -- -1975-76 7.79 7.20 13.70 -- -- -1976-77 8.13 7.63 13.78 6.00 18.70 20.701977-78 8.55 8.05 14.20 6.50 19.70 21.701978.79 9.09 8.58 14.40 7.80 20.70 21.701979-80 12.22 11.34 17.32 11.38 20.70 22.701980-81 15.07 13.17 20.19 11.75 20.70 22.701981.82 17.29 15.42 21.30 11.75 20.70 22.701982-83 18.33 16.34 22.10 11.75 24.00 24.351983-84 18.53 16.51 22.26 12.75 28.00 31.001984.85 20.86 18.08 23.82 13.15 31.50 38.001985-86 23.50 21.10 27.36 13.83 37.50 41.501986.87 25.17 22.85 29.15 14.78 36.00 39.50
Source: 1) Handbook of Rubber Statistics, AIRIA, Bombay, 1987.2) Ifidian Rubber Statistics, Vol. 18, Rubber Board,
Kottayam, 1988.
141
J1E’._!E;E"E 3333"’?
'1
=aE‘”E“H"'"”.T!sLT:
a ram - 5.2
yr" ::mC
MIG. F-"'FZ”.fE%f.'1iE~Z
i'=53.‘
2F.‘-. IJ«':J'. mu:‘L , ,....."I-'._1 ._ 175:’.La“. -- :5-Flu[Q --h - :‘ .-~' "II'- L _I .., iiI i1.. 1; Iii: 1- -_I 5ll“ ‘IR '.1 ,-=‘.'u-_ '~. -
will"~'.'r. ...r
r-.-.
+L.
F17»
__ ,9,Thus
},'l!!!!=
@
F5 5‘.-:3E "-"
"*7: W H uni‘ W "'“' »:9_':‘; 1:=..g.4: rm. °"“" ""‘ "" W [“L ,-:-L ,—‘"-.. 1-=7.2'." "J‘ ‘HF.’ '._:‘
142
Average Price of Polybutadiene Rubber (Ex—Baroda
Price B./Kg.)
__ Polybutadiene:25; """"""""" 7325“1978-79 8.53 8.531979-80 9.76 9.761980-81 12.24 12.241981-82 14.14 14.141982-83 14.77 14.771983-84 14.77 14.771984-85 16.98 16.751985-86 19.28 19.071986-87 20.72 20.72
Source: 1) M/S. synthetics & Chemicals Ltd. and Indian petrochemical Corporation Ltd.
2) Indian Rubber Statistics, Vol.18, Rubber Board,Kottayam, I988.
143
Prices of polybutadiene rubber has also increasedconsiderably over the yea"s. From %.853 per kilogram in1978-79 price of polybutadiene 1203 has increased to M.20.72
per kilogram (Table 5.4). The percentage increase is estimated to be 142.91. Polybutadiene 1220 price has increasedfrom 3.8.53 per kilogram in 1978-79 to B.20.72 per kilogramin 1986-87. The percentage increase is worked out to be1é2.9l.
Thus the analysis reveals that prices of styrene butadiene, nitrile rubber and polybutadiene have increased considerably during the last decade.
Analysis of wholesale Prices
As already mentioned rubber manufacturing industry
can be divided into tyre sector and the non—tyre sector.Besides natural rubber a large number of other raw materialsare also used in the manufacture of various tyre and nontyre goods. The other major raw materials used in the manufacture of rubber goods are synthetic rubber, carbon blackand rubber chemicals. It is also to be noted that most of
the above raw materials are manufactured by a small numberof large firms while natural rubber is §i}ng.produced by a
144
large number of small holders. Another factor which needs
to be mentioned is that majority of the non-tyre rubber goodsare manufactured by small scale units. Thus we can see thatan escalation in the prices of raw materials is going to affectthe unorganised non-tyre sector much more than that of theorganised tyre sector.
Now let us compare the growth rate in wholesale priceindex of natural rubber, synthetic rubber and rubber-chemicalsvis—a-vis the prices of rubber products. An analysis of wholesale prices of natural rubber shows that from 1970-71 to1973-74 prices of natural rubber did not show any risingtendency (Table 5.5). But in 1974-75 wholesale price indexof natural rubber shot upto 166.3. Again upto 1977-78 pricesshowed a declining trend. In the subsequent years wholesaleprice index of natural rubber showed an upward trend. From199.4 in 1978-79 the wholesale price index climbed to 301.2in 1981-82. This is clearly a remarkable increase indeed.Wholesale price index of natural rubber reached an all timehigh of 359.4 in 1983-84. Thereafter it showed a fluctuatingtendency. In 1986-87 it stood at 336.5. The compound annualgrowth rate in prices during the period 1970 to1987 is worked
out to be 9.62. The coefficient of variaghpn of naturalrubber prices during the period is estima€%di£o‘be 44.44.
4‘:
1445
.mmmH
.muuHua uammuaonz no XMUCH Umn«>mu J H.ao>
\m>n~vmH
.mHU:H
.wu«unfiumun wuaum wammmaonz
..4.:.xnncm;u
.Em>muuox .uumom uunnsm .mH .Ho> 4mufiumHumum uwnnzm cmqUcH an
aHuUUHDOW.mumU wnu Eoum wmusmeou mum mumu zuzouo U::oaEoU Ucm :oaum«um> mo ucwaoauwmoo "uuo:
mH.v
¢~.o~
o>.Ho~o~.¢mHoa.coHow.muHom.dmaov.mmao¢.mmHoo.>¢Ho~.mnao~.m~aov.>mfloo.mwHo~.mmHon.Ho«o>.OOHow.ooHoo.ooH
mmonm
Ufiunmama manna:
oH.oHmo.mv
om.nmmon.~>mon.¢¢moN.m~nom.manHo.am~oa.~m~om.mHwOm.HmHo».mmHOH.mmHoH.mmHom.onHoo.noaoN.moHom.HOH00.00“mmnzu
J mwuxe
mm.»
no.mm
om.momom.em~oe.¢m~om.da~o«.vm~om.mm~on.om~oH.mH~om.oaao».vnHo>.omHoo.mm«o».mmHom.~aHom.>o~om.noHoo.ooH1002AWEQU..v lillllilllllllllllI1ll.Ill|.Il|ll....\.llillllllllllllllllllllIl|r.1.lI..
em.m nm.~a H>.m
~d.m~ ~m.~m q~.mv
ov.mm~ om.~om on.mm¢oc.~m~ om.~om oH.omno¢.~m~ o>-n>v oo.nwmov.~m~ ow.flme om.nmno¢.mm~ o~.o~v ow.Honon.am~ om.omn om.~o~om.o~m om.vmn o~.mm~oH.-~ o~.oom om.mm~om.omH oo.ne~ om.mo~oN.Hn~ ov.~o~ oq.~mHo~.o- om.>mH o~.emHoo.>H~ ov.>mH oo.vm~om.omH om.m>~ oe.moHo~.nnH o~.vHH oo.-H
ov.maH oo.ooH on.wo_oH.nHH on.uoH om.¢oHoo.ooH oo.ooH oo.oofl
uonnsm
uocoam mumo: mcauamm
Aooa n awuowoav
mm.m
mv.v¢
ow.Hmmom.omnom.mmnom.mHnoH.wonoH.em~om.mv~om.vH~om.HmHoa.mmHo~.>mHom.omHoo.oqflon.moHon.noHo>.~ofioo.ooH
Hh.Namm.~m
om.Hmoo~.wmmoo.mmvon.omvom.~wvon.mHeom.omnoo.mHmo>.m>~Oh.Hm~on.m¢~o>.nv~oH.nH~Om.>HHom.n«Hoa.moHoo.oo~
mm.wHmm.¢m
oe.w~mo¢.wmmom.mmmoo.m>oon.mmcoo.vwoo>.~nmoe.>vmo~.mo~oo.mv~om.wv~om.ovmom.~vm
oo.mmom.mmom.mm
O0.00a
muuavoumuunnsg
WAflUHEU£U
umnnsm
fiwwuatoeiou tnwumaww uo mmuaua wamnmaozl mo ucnfisz KMUCH
m.m
I wanna
xoaanZ3AHflU
mumu
cusouwmw.m mm.m fiEDOflEOUcoauumHum>mo ucmflu
mH.om vv.ov uquumooom.m>~ om.mnm wmuommfiom.~m~ o~.mvn mmnmmmflofl.vm~ om.mmn mmuvmmfiom.flo~ o¢.mmn emunmmdom.mmH ow.wm~ mm:~mmH
oa.omH o~.~om Nmufimmaoq.¢nH oo.mm~ Hmuommdoo.m>~ om.¢H~ omumnmfloo.>o~ o¢.mmH mnumpmaoo.¢m% om.mnfi mnupwmfloo.mmH om.m~H wnuwpmfloo.»~H om.nmH onumpmaoo.mo~ on.wmH mpavpmaoo.ma o».coH chlmbmaoo.ooH Vopéofl PAR;oo.oofi o>.¢oH mpuanmaoo.ooH oo.oofl H»-o>mH
umnnsm UUDDZC H00»
oauuzucxm Amusumz
146
mam}
Wm wmmfi Hm swag mm mmmfl an Qmmfi
=¢%/k L _ 5' ||_. _|L| L _ _l L _ _|' l, D
m cqmgm... §»4=;;.. 4mmmm:m.»m .a.-.1,;-;;. . .. K», H
m Lamcm QN
¥m¢4m.M 1,,»x M ;gmLw§;;L m H
m4:Im M xxx? 4, »Hmmm
Q £amLm.;;. .aa .a
.Wmmmmmgfi
xmmzfl magma wgam mA©4J
hmm-mmmH Q. HN-©mmH,
£3.52 3% H5 32 Am; 5% MEI:
2....._§...m
147
mag»
Wm mama #m-©mm# @m-mmmH Hm-mmmH
m LgmLm -- H
xamgzm
m :mmLm .... ..
mm:Hmamm}H
M LmmLm=::;
mmaIm.mw.;
D LmmLmn:\
m:HH4mm.m v_ _ m £QmLm-;:. .. mmma: W Lamgm 4/ ,. n 3 xmgz_ mafia; macm W491;
&mmmm£wm¢m..{- mxm-mmmH DH HN-gNmHU
mkwjmgmg mmmmzz
D_:mH:Hg gm x_QzH mgflm; w4¢m MJU:
HB§§§§§
__m ..._W- Ems,.?:. .“..L
148
During the period 1970-73 the wholesale price indexof synthetic rubber remained stagnant. In 1973-74 it declined ‘marginally to 99. Interestingly wholesale price index ofsynthetic rubber almost doubled in the year 1974-75 when com
pared to the previous year. During the period 1975-80 pricesshowed wide variations. After 1980-81 wholesale price indexof synthetic rubber showed a steady increase in trend. In1985-87 wholesale price index of synthetic rubber remained
at 275.5. The compound annual growth rate in prices duringthe period is found to be 5.89 and the coefficient of variation is worked out to be 30.19.
The wholesale price index of carbon black and rubberchemicals increased much more than that of natural rubber and
synthetic rubber. From 99.6 in 1971-72 the wholesale priceindex of carbon black increased to 826.4 in 1986-87. This is an
alarming increase by all means. Wholesale price index of rubberchemicals increased from 105.9 in 1971-72 to 651.5 in 1986-87.
The compound annual growth rate in the wholesale.price indexis found to be 16.31 and 12.71 respectively in the case ofcarbon black and rubber chemicals. Wholesale price index of
carbon black showed wide variability when compared to rubberchemicals. This can be understood from the coefficient ofvariation- Coefficient of variation of wholesale price indexof carbon black is 16.39, whereas that of rubber chemicals isonly 12.71.
149
Now let us analyse the changes in the wholesale priceindex of finished rubber products. wholesale price index oftyres and tubes was found to be 101.3 in 1971-72. This hasincreased to 155.1 in 1975-76. Although wholesale price indexof tyres and tubes marginally declined in 1977-78 it showed asteady increase in trend after 1977-78. In 1986-87 it stoodat 389.2. The compound annual growth rate is estimated to be10.16 and coefficient of variation in prices is found to be46.05. wholesale price index of camel back also increasedsubstantially over the years. From 100 in 1970-71, wholesaleprice index has gone upto 188 in 1975-76. During the period1976-79 wholesale price index of carbon black showed a fluctuating tendency. However from 1978-79 onwards wholesale priceindex of camel back showed an increasing trend. In 1986-87wholesale price index of camel back stood at 308.9. The compound
annual growth rate during the period 1970-87 is worked out tobe 7.95 and the coefficient of variation is found to be 35.03.Among the finished rubber products rubber and plastic shoesshowed the least increase in prices. From 100 in 1970-71,wholesale price index of rubber and plastic shoes rose to 201.7in 1986-87. The compound annual growth rate and coefficient ofvariation is estimated to be 4.13 and 20.24 respectively. Thecomparatively smaller growth rate in prices is mainly due tothe lower increase in prices of plastics. The wholesale price
150
index of other rubber products has also increased considerablyover the years. In 1986-87 wholesale price index of other
rubber products stood at 381.6. The coefficient of variationin prices is estimated to be 44.49 and the compound annual
growth is found to be 9.83 during the period under study. Asin the case of rubber and plastic shoes wholesale price indexoF sponge rubber also showed a comparatively smaller growth rate.The compound annual growth rate in wholesale prices of spongerubber is 6.54 and its coefficient of variation is worked outto be 29.32. Wholesale price index of rubber belting and hosesalso showed considerable increase during the last decade. Thecompound annual growth rate is estimated to be 9.71 and 12.53respectively in the case of rubber belting and hoses. Pricesof hoses sh wed wider variations than that of rubber belting.Coefficient of variation of rubber belting and hoses are workedout to be 43.24 and 52.52 respectively during the period.
Thus the foregoing discussion shows that wholesaleprice index of raw materials and finished products has increasedconsiderably in the rubber manufacturing industry. From theanalysis emerges that among the raw materials carbon blackshowed the highest variability followed by rubber chemicalsand natural rubber. Synthetic rubber prices showed the leastvariability among the raw material prices. Among the finished
151
rubber productslhoses has shown the highest variability andrubber and plastic shoes showed the least. Tyres and tubesshowed a higher variability in prices than natural rubberprices. The study reveals that synthetic rubber has shownthe lowest growth rate followed by natural rubber among theraw materials. In the case of finished rubber products hoseshas shown the highest growth rate followed by tyres and tubesand other rubber products sector. The lowest growth rate inprices was shown by rubber and plastic shoes. Thus it emergesthat growth rate in prices of raw materials is almost similarto theguowthrate in prices of finished rubber goods. Therefore we can infer that increase in prices of inputs are mainlyresponsible for the increase in prices of finished rubberproducts.