Five Rubber Trade Associations Consensually Agreed To Take Action
12 October 2014, 9:00 SEAST
The CEO of IRCo invited the Chairmen of five rubber trade associations, i.e. Thai Rubber Association (TRA), Rubber Association of Indonesia (GAPKINDO), Malaysian Rubber Board (MRB), Vietnam Rubber Association (VRA) and Association for Rubber Development of Cambodia (ARDC) on Friday, 10 October 2014 in Melaka, Malaysia to discuss the current weak rubber market situation, and to consider how to manage natural rubber (NR) prices at fair levels for both producers and consumers. The five Rubber Trade Associations deliberated the current weak natural rubber (NR) market situation and the prevailing NR price which is lower than its cost of production. The discussion focussed on concerted measures and ways in managing the current NR market situation to improve its price to a fair level for both producers and consumers.
The discussion consensually noted the fact that the growth rate of NR production for this year has been lower than what its consumers anticipated, while the growth rate of its consumption particularly from auto-industry remains intact. The five Rubber Trade Associations were of the strong opinion that current rubber market fundamentals were not as bad as what the market perceived, but current NR price was influenced by weak market sentiment and bearish commodities market which affected investors’ confidence.
The five Rubber Trade Associations raised the issue and difficulty faced by their members consisting of processors and exporters in purchasing/sourcing their raw NR materials as rubber farmers are reducing tapping activities, cutting down their old rubber trees and switching to other economic activities. In addition to that, no new expansion of rubber plantations was reported in all five countries as the Governments are encouraging to stop new rubber plantations.
Moreover, NR production in Southern Thailand and Northern Peninsular Malaysia have been reported to be decreasing in volume as both areas are experiencing erratic raining season, while the NR production in southern part of the rubber area in Indonesia has been declining due to wintering season. The discussion also raised the issue of labour shortage for tapping rubbers as rubber tappers prefer to do other economic activities as a result of lower NR price which had affected their income from tapping rubber. If NR price remains lower than its production cost, it is anticipated that NR supply in the global market would decrease in the coming years.
In order to reduce the burden of loss-suffered rubber smallholders, the Chairmen and representatives of the five Rubber Trade Associations strongly agreed to urge their members not to offer NR for sale at lower levels than current price. In the long term, the Associations would cooperate and work closely with their respective Governments and consumers in ensuring sustainable and adequate supply of NR for rubber related industry.