Cobweb phenomenon in rubber market of Kerala

More than 90 percent of rubber produced in India is from Kerala. The state holds a dominant position both in area and production. But now a day farmers are looking at alternative crops or not tapping their rubber as prices have crashed due to lack of demand, imports and labour cost. The study revealed that during high priced season farmers in Kerala shifted from other plantation crops like cashew, coconut, etc. to rubber or they focus only in rubber production but in higher prices, seeks to benefit from higher prices. These results in surplus production, more than the demand, resulting in a price crash, often referred to as the ‘problem of plenty’. Seeing the low prices, farmers switch to different crops or produce less of the same crop, leading to lower than usual production for that particular crop. This increases the prices of crops, completing the cyclical variations in price and production reflects Cobweb phenomenon.