Low Rubber Prices Could Drive Farmers Into Other Activities


24 September 2015, 09:40 SEAST


Rubber farmers could abandon growing the plant and move into other activities permanently if prices persist at their current low levels, potentially disrupting supply, the International Rubber Consortium in its latest weekly update.


“Currently, natural prices are mainly influenced by the global economic uncertainty, slower China economy and the strengthening of Japanese yen amidst the uncertainty on the timing of interest rates hike by U.S. Federal Reserve,” the Bangkok-based organization said in a statement.


IRCo representatives come from Indonesia, Thailand and Malaysia–the three countries that control nearly 70% of the world’s rubber output–and is an arm of the International Tripartite Rubber Council. The council, which has been likened to the Organization of the Petroleum Exporting Countries given its potential control over the market, works to make sure rubber farmers receive fair prices.


However, natural rubber–produced by tapping into rubber trees and collecting and processing the liquid that drips out–has emerged as one of the worst performers amid the slump in global commodities in recent weeks, thanks to a continuing glut of the material used in products from tires to condoms.


Data published by the Association of Natural Rubber Producing Countries–comprised of 11 countries that produce about 93% of the world’s natural rubber–already shows some small holders are moving away from production. Global production until the end of August was down 1.7% from a year earlier, the IRCo added.