Rubber requirements

SRI LANKA’S rubber industry is wary over the possibility of increased prices as the world’s top producers gather to stabilise global prices this week, raising age old questions over productivity, replanting, value addition, technology infusion and a host of other issues.   

The Three-Nation Rubber Products International Conference in Bandung, Indonesia, this week will see Malaysia, Thailand and Indonesia attempt to stabilise the market price for rubber. Economic giants India and China are also expected to be present at the conference as observers.

Sri Lanka, once the world’s fourth largest producer of rubber but now the tenth, is concerned that increased prices will result in local industries having to pay a higher price and reduce buyers in the global market.  

Around 70 per cent of Sri Lanka’s rubber is consumed locally and while a price increase would boost small plantations, it is questionable whether the overall economy can absorb the higher price, according to Colombo Rubber Traders Association, which has also pointed out that the world’s largest buyers India and China may not be willing to shell out the extra expense if the top producers are to cut their exports by 300,000 tons as expected.

The situation is made even bleaker by the economic crisis in the West and dropping oil prices, which will make synthetic rubber more affordable. As manufacturing drops even in emerging power houses such as China, the blow will be felt by rubber producing countries around Asia.  

In the first half of this year, Sri Lanka’s rubber exports grew 5.3 per cent to US$ 433.5 million. But earnings in June dropped 15 per cent to US$ 64 million, according to Central Bank data. The Rubber Traders Association has acknowledged that prices dropped in July and August as well with many hoping for a final quarter upsurge in prices to meet the 2012 target.

At the conference Malaysia is expected propose 10 Malaysian Ringgit per kilogramme of rubber instead of 7.47 Malaysian Ringgit. If agreed upon, 230,000 smallholders in the peninsula will experience a 30 per cent increase in income, according to reports.

Thailand is the world’s largest rubber producer with about three million tons annually, Indonesia produces over two million tons and Malaysia about one million tons. A decision by these veritable “giants” in the rubber industry will leave Sri Lanka with no option but to follow suit.

In April the Association of Natural Rubber Producing Countries (ANRPC) revised down its total production estimate in 2012 for member countries to 10.297 million tons from 10.42 million tons estimated earlier due to lower prices.

Industry experts have long called for research that would set a crop productivity target, breed clones for moisture stress tolerance and develop transgenic clones to improve or alter the technological properties of processed rubber among others.

They have also encouraged techniques for development and rapid multiplication of identical plants to release the full yield potential of clonal material and eliminate root stock effects.  An effort to expand rubber into the low-country dry zone and find more efficient fertiliser techniques to save millions are also aspects that need to be looked into.

These are just some basic ideas that have been repeatedly suggested but just as routinely ignored and as global challenges mount, it is essential that Sri Lanka supports its crucial industries before it is too late.