Bulletin of the Rubber Research Institute of Sri Lanka. (1997) 36, 38-50 \ / THE ECONOMICS OF REPLANTING IN RUBBER PLANTATIONS PART II : COST OF MATURE UPKEEP I N Samarappuli and C S Wickramaratne INTRODUCTION Replanting of rubber is considered as a long term investment. The cost of production (COP) is a key factor which determines the economic viability of this particular farm activity. For convenience, cost of production can be broadly split into two categories viz: cost of immature upkeep (including the initial investment) and cost of mature upkeep. The part 1 of this paper examined the cost of immature upkeep with special reference to the estate sector. This paper analyses the cost of mature upkeep (including the cost of processing) in the estate sector. A productive phase of 27 years commencing from the 7Ul year of planting is assumed in the analysis. Input data on labour and material were gathered from a sample of 140 mature fields planted with RRIC 100 series clones. The sample was randomly selected from 15 rubber estates located in Kegalle. Kalutara and Ratnapura on the basis of 5 estates per district. In this study, the 27-year mature period is sub divided into six age groups »7*. 7-12. 13-18. 19-24. 25-28. 29-30 and 31-33 to calculate the total cost of mature upkeep. The first 4 groupings are based on the stage of the tapping panel (i.e.. A. B, C and D) where tapping would be in progress. A significant variation is observed within the above age groups with respect to average yield, stand per hectare and nature of the agronomic practices such as frequency of weeding and the quantity of fertilizer used. The 5th age group i.e., period of last two years of tapping on D Panel (29th - 30th year), is taken separately due to the fact that fertilization is not being done after the 28"' year of planting. The last age category viz. 30-33 year refers to the period where slaughter tapping is in progress. The major activities of mature upkeep The major types of activities that take place during the mature period can be broadly sub divided into three categories viz. field maintenance, exploitation and processing of latex. The activities that fall into the category of field maintenance include weeding, desilting of drains, terracing, census and numbering of trees, marking of tapping panels and application of fertilizer and pesticides. 38 Cost of mature upkeep by different age groups The estimated average rates of labour and material used for different operations in the mature phase are given in Annex 01.' The input prices used for this study are given in Annex 02. The cost of mature upkeep was compiled using the guidelines given in Annex 01 and Annex 02. The details of the computed costs of mature upkeep for six different age groups are presented in Table 1 to Table 6. The average cost of mature upkeep (per hectare per year) has varied according to age group from Rs 21.470/ = (Table 6) to Rs.35.500/= (Table 2). Similarly, the total number of man days required per hectare per year has varied from 200 (Table 6) to 306 (Table 1) whereas the material cost has fluctuated from Rs. 1.220/= (Table 6) to Rs 3.740/= (Table 1). The average cost of mature upkeep (Rs/ha/year) by labour and material according to different age groups is illustrated in Figure 1. The labour has accounted for over 87% of the total cost throughout the mature phase. The share of labour cost has gradually increased from 87% to 93% during the mature period whereas the material cost has declined from 13% to 7% accordingly. Year 30 25 20 15 10 5 0 5 10 15 20 25 30 Labour Cost Material Cost Fig. I. Average cost of mature upkeep by labour and material according to different age groups (excluding manufacturing cost) Rs'000) 39 Tahle I. Cost of mature upkeep: year 7-12 (while tapped on A-panel) (Rx/ha/yr at 1995 prices) ACTIVITY | LABOUR USAGE MATERIAL USAGE LABOUR + MATERIAL COST' ACTIVITY No 4* Cm Rs mmmm M**t (talis LABOUR + MATERIAL COST' ACTIVITY No 4* Cm Rs mmmm M**t (talis Its 1 eriili/ci 1112:14 1-1 4 .'32 5 711 3MI 2,0Si 54 XII 7 15 l :triili/ei Kie.wiile III IK) 45 410 12 III 4S0 1 .'5 I'esi Aj | )isc;isc Cnnirnl 13 35 S» 1 5 Census H: Nuinheriiu! of Trees i IA6 1) h5 75.(1(1 (1.5 '$ 1 III •204 l> HI Mnrkiiu: ill" Tupping I'juiels J 2*9 (1 'IN (l 75 Tupping X2 4 h2 77 SCI I50.IKI 1 I W 4 III. II 45 Anli C'n;ii:ul;iiii f N;i. S( 1,) *>.•: .'him 1 5 ?4 1 44 S* II II. M;inuraLiuiini: 12 54 IK'sillm^ **t Drains I I 3.5>> 2 74 I'eiKiciinj 4 1 .11 II >W Weed iiii: 3(1 '1 X 2.4* 7 47 TtMtls SCI 5ixi.(x> 1 *0I> 13 15 ** 1.5" Tm;i1 3tlh 2SW 3.744 nm mi 33.32** If HI IHI 1 Calculated on the basis as given in Annex 01 Assumptions * Average Yield 835.83 kg/ha 2 @ Rs 5/kg for the average yield for years from 7 to 12 * No. of trees 450 3 Including manufacturing cost 4 Input prices are given in Annex 02 Table 2. Cusv of mature upkeep : year 13 - IS f while tapped on B-panel] (Rs/ha/yr at J 995 prices) LABOUR USAGE MATERIAL USAGE LABOUR + MATERIAL COST* M psmsm Cosi R« Nimf o»>< LABOUR + MATERIAL COST* M psmsm Cosi R« Nimf o»>< l-ertih/ei 1112:1-4:14 4 1 37 H 5.7(1 34(1 53 55 h.3«i l-Vriili/cr Kieserile ks 10.11(1 42.5 \ to II 74 \,i , 1.41 I'esi «V: Disease Citiurul I3.X2 m 1 41 Census & Numbering of Trees i (1.68 gal 75 (Kl 0.5 3S. 1.05 -'i ^ - - m -" (157 Mar kin); of Tapping Panels 3 1549 1 (13 i (1 7(1 Tapping UK IV7<4 XI.SI - f*,«sT ** 55.59 Tupping UiensiK SCI 1501X1 1 IS) 4 14 (1 42 Anli-Coagulani (Nil. S<>4> kg 3h.(l(l 1 1 1 XX fix (1 IV Maim faetu ring'* 1 21 41 Desiliing of Drains II 3 77 • ' - # 2 57 Terracing 4 1 37 ' -5 0.9J Weeding 30 I0.2X ff.*"y\.v>.\ i /, ' W 7 (II Tools •. "y... SCI 5(K).(K) 1 ss - I3.X2 ..,:s 1 41 292 l(KI.(KI •><•(<» IIXUKI KKI.IXI 1 Calculated on the basis as given in Annex 01 Assumptions * Average Yield 1521.67 kg/ha 2 @ Rs 5/kg for the average yield for years from 13 to 18 * No. of trees 425 3 Including manufacturing cost 4 Input prices are given in Annex 02 Table 3. Cosi of mature upkeep: year 19-24 {while tapped on C-panel)(Rs/ha/yr at 1995 prices) LABOUR USAGE MATERIAL USAGE LABOUR + MATERIAL COST3 ACTIVITY N- Cchmis A: Numbering i»l 1 tves i I) 74 (Ml 75 (HI 11.5 3» 1 41 -. aw II h4 Marking nl 1 appmu I'ancK 1 11 " j » II 7,1 1 appnip X.' IN 5X lappiiiL' (i|t.*iisi|> SCI 15(1 IKI 1 )Sl 5 5'( - tatf II 47 And t'oauulatu (Nu. S<),| 1* tli 111 1 7 61 : :7 ' « II IU MamiditMuniu! : i 7 IK'siliui}! i>l Dnittis n 4 OS •. 1 X5 4 i« 1 4X .3» 1 IU X 1)1 5 i> )"lK)|.S :">::̂ :;S::": f̂e::$:?: SCI .SIXMO 1 *» IX 4« m 1 5h I'.xal KKI.IKl urn mi im> mi 1 Calculated on the basis as given in Annex 01 Assumptions * Average Yield 1388.33 kg/ha 2 @ Rs 5/kg for the average yield for years from 19 to 24 * No. of trees 400 3 Including manufacturing cost 4 Input prices are given in Annex 02 Table 4. Cost of mature upkeep: year 25-28 (the 1st 4 years of D-panel) (Rs/ha/yr at 1995 prices) ACTIVITY LABOUR USAGE ^ MA'JERlAji USAGE' ; ^ , •" <• ^ . < • • • £ . <•: f <•. A"-̂ r- r'MATERIAL '/,- COST3/ ' ACTIVITY J** of i c« * <*.* limit %W:::>:::::?:¥:: 9̂vS: Cos* B •" <• ^ . < • • • £ . <•: f <•. A"-̂ r- r'MATERIAL '/,- COST3/ ' ACTIVITY J** of i c« * <*.* limit %W:::>:::::?:¥:: 9̂vS: Cos* B I'erlili/er 1112 14:14 4 1.57 S.70 21 Ih 45 12 5 IM I'lTlill/LT • Kieseriie 10.00 IM 7..10 \ - ®o * (1 65 I'est & Disease On it ml IV 22 1 72 Census & Numbering ol I'rees m 0.79 p i i i 75.(11) 0 5 l.4h aw 0.70 Marking ol" Tappini! Panels > (>.7<» 0.52 lapping Jill 17AW X2.4X ^^^^^^^^ MMI7 I'appui.u Ihensils v VI 150.111) 1 5 7h : j WO 0 52 Ann Coaeulam (Na. MM 1>J! }b 00 1 4 1 ''2 • , » » (1 17 Maiuilacuiiinir IS 20 Desillinj: ol' Drains II 4.32 l l l p i i l l l l i l l / •• ' 1 15 Terraciiu* 4 1.57 1 14 Weed ini! 21 << i m S.4S i ; i'?4 (> IS Tools MM 500.00 1 0 . 2 2 iOO ' 1.72 Total 254 (. 100.00 100.00 100.(10 1 Calculated on the basis as given in Annex 01 Assumptions * Average yield 1056 kg/ha 2 @ Rs 5/kg for the average yield for years from 25 to 30 * No. of trees 375 3 Including manufacturing cost 4 Input prices are given in Annex 02 Table 5 . Cost of mature upkeep: year 29-30 /the last 2 years of D-panelj (Rs/lm/yr at 1995 prices) ACTIVITY LABOUR USAGE MATERIAL USAGE LABOUR + MATERIAL COST* ACTIVITY NotX Cast Un* [tort ftfct Ks Ct*C* Us foreign LABOUR + MATERIAL COST* ACTIVITY NotX Cast Un* [tort ftfct Ks Ct*C* Us foreign 1 eriili/.er 1112:14 14 l-ertili/er Kictmic I'esi Si Disease Ciiiiirnl S » 4(1 <>2 w 1 1 r i f l l l l Ks Uribt «*, PertcM. iLABOURH- v mMmmmwm^ ACTIVITY ' s > 1 r i f l l l l Ks Uribt «*, PertcM. * 'ft* - , Icnili/cr UI2 14:14 Icnili/cr Kicscrtic % v •> ' tttllllillf IVsl & Disease Control 411 s>S 2 .33 Census & Numbering of Trees i * f t * 1 75.(111 (1.5 .1 12 \* -a® . 0.15 Marking nf Capping Panels W "* rapping IM 13 044 X4 (v4.«5 Tapping Ihetrsils SCI 150.11(1 1 12.3(1 0 70 Auli Coagulant (Na. SO,) Mi 3(v(K> (l>» 2 h2 is 0 15 Manufacturing-' 17 00 Desitiing of Drains II S.J 4.25 Terracing 4 1.55 Weeding 15 1,34* 7.5 5 XII fouls / * •• SCI 5(KIIK) 1 4(1 ')S % j-.. * 2.3.3 lolal :(»> 100(10 MKI (HI t ^ " < 4" i - KKMKI 1 Calculated on the basis as given in Annex 01 Assumptions * Average yield 730 kg/ha 2 @ Rs 5/kg for the average yield for years from 31 to 33 * No. of trees 300 3 Including manufacturing cost 4 Input Prices are given in Annex 02 The results therefore reveal that upkeep of mature rubber is a labour intensive farming system. Such a farming system may be ideal for smallholders with sufficient family labour especially in situations where the opportunity cost for labour is relatively low. This could have been one of the major reasons for the increase in the share of smallholder extent in all the major natural rubber producing countries. For instance, the share of smallholder rubber extent in the world has increased from 39% in 1960 to 85% in 1994. The figure 2 shows the cost of mature upkeep by different activity and by age groups. Tapping accounts for nearly 56% to 60% of the total cost at all age levels in the mature phase. The cost of manufacturing is the second most expensive activity accounting for 13% to 21% of the total cost. This is followed by fertilizer application and weeding. The cost of fertilizer application consists of 5 - 9 percent of the total cost up to the 28"' year of planting. This clearly suggests the importance of using cheaper substitutes such as rice straw, bush legumes, etc. to minimize the cost of inorganic fertilizers. Average cost per tree The average cost per tree (maintenance, exploitation and processing) during the mature phase are given for different age groups in Table 7. The cost per tree in the mature period has ranged between Rs.71.50 - Rs.83.60 per year with an overall average of Rs.78 per year. Hence, each rubber tree would require inputs worth of approximately Rs.2,l00/= (78/= x 27 years) during the entire mature phase. Table 7. Average cost per tree during mature phase by age groups Age group (years) Average cost" (Rs/tree/year) 7-12 72.05 13-18 83.62 19-24 80.05 25-28 77.37 29-30 74.71 31-33 71.57 which includes maintenance, exploitation and processing costs 46 Activity 0 6 10 15 10 M Coil (II tOO) ACUTUT cam 0 S 10 1ft 10 16 Colt (Hi D00) Activity o 6 10 16 ao 16 Cent (Si -000) Fig. 2. Cost of mature up keep by activity according to age group (up to year 24) 47 A c l l T l l l 0 6 10 I t 10 Coil (fc -000) (Aonioadi) AcUlUT 0 « 10 18 10 Coat(Bl"000) AetlTllr 0 1 4 6 • 10 11 U 14 C a t (Si -COO) Fig. 3. Cost of mature upkeep by activity according to age group (from year 25 up to year 33) 48 Annex 01 Guidelines for Calculation of Cost of Mature Upkeep Type Of operation/input Remarks 1. Fertilizer Application: A) Material While tapped on virgin hark:(year 7-18) While lapped on renewed hark, upto 5 years before uprooting: (year 19-28) In the last 5 years before uprooting B) Labour @ 800g of U12:14:14 mixture/plani/year in one application and lOOg of Kieserite/plant/year in one application x No. of plants @ 550g of UI2 : I4 : I4 mixture/plani/year in one application and 50g of Kieserite/plant/year in one application x No. of plants Fertilizers are not being applied @ 4 labourers per ha per year 2. Pest and Disease Control: A mixture of Brunolium and Red Powder is applied along with tapping; @ Rs 500/ha/year for chemicals 3. Marking of Tapping Panels: @ 3 lahourers/ha/year from year 7 to 24 and 2 lab/ha/yr from year 25 to 30 4. Tapping: S/2 d/2 system with 280 tapping days/ha/year assuming a stand of 500 trees/ha and a tapping task of 250 trees/labourer/day 5. Tapping Utensils: coconut shells (600), spouts (500). tapping knives (2), GI buckets-2.5 gal (2) and small collecting buckets (2) 6. Anti-coagulant (Na,S0 4 ): @ I25g per 100kg of latex 7. Manufacturing: @ Rs 5 per kg of latex crepe (labour cost + material cost); where an average annual yield for each period (tapping panel) is calculated 8. Weeding: While tapped on virgin bark: While lapped on renewed bark: While slaughter tapping: @ 2.5 iahourers/ha/momh @ 1.8 lahnurers/ha/momh @ 1.25 labourers/ha/month 9. Tools: a set of basic tools used in upkeep of rubber" 10. Wage Rate : Rs 83 /= per Manday Annex 02 Type of input Unit tost (Its) Fertilizers - Imported Rock Phosphate (IRP) 4.50/kg - U 12 : 14 : 14 5.70/kg - Kieserite 10.00/kg - Dolomite 00.80/kg Chemicals for pest and disease control - Sulphur 100.00/ha/year - Mixture of Brunolium and Red powder 500.00/ha/year Tar 75.00/gallon Anti - Coagulant (Na_,S04) 36.00/kg Tapping utensils 150.00/ha/year Tools (for mature period) 500.00/ha/year 50 A Summery of Input Prices