Rubber sector slows

Photo by: Christopher Shay
Newly planted rubber trees in Mondulkiri province. Fewer trees are being planted as rubber prices fall.

The Phnom Penh Post
http://www.phnompenhpost.com/

Written by Chun Sophal
Monday, 20 April 2009

Falling international rubber prices are leading to a sharp drop in cultivation, putting govt production targets at risk

Expansion of Cambodia's rubber cultivation will lose momentum by an estimated 61 percent in 2009 year-on-year, according to new government figures.

Ly Phalla, director general of the Rubber Plantation Department, told the Post Sunday that an additional 10,000 hectares of rubber trees would be planted in 2009 compared with an increase of 25,901 hectares in 2008.

"Looking at seedlings, I believe that plantations this year will not increase as much as last year," said Ly Phalla.

In 2008, Cambodia had 107,901 hectares under cultivation, up 31 percent on a total 82,000 hectares in 2007.

The expected decline comes as international rubber prices hit US$1,400 per tonne, down from $3,500 per tonne in 2008, according a report by the Ministry of Agriculture, Forestry and Fisheries.

Lower automobile sales and rising stockpiles in China have contributed to sinking global rubber prices.

Ly Phalla said that lower international rubber prices and the global financial crisis are putting pressure on Cambodian farmers but that the decrease had not affected the national plan to cultivate 150,000 hectares by 2015.

"I think that the cultivation of rubber trees will increase again in 2010 as more trees are planted in western and northern provinces," Ly Phalla said.

Hak Vantha, a farmer from Chamkar Leu district of Kampong Cham province, who owns 20 hectares of rubber, said the slowdown was causing him to reconsider plans to plant more trees.

"I have 11 hectares of banana farm land, but I cannot cut down the banana trees to grow rubber trees because the rubber price is still not good," Vantha said. "I may cut down the banana [trees] to grow rubber next year if prices increase," said Hak Vantha.

Ly Phalla said that the slowdown has put some rubber planting projects in doubt.

"What we can see now is that some companies are attempting to cancel their rubber plantation development plans because they have difficulty raising money from banks," he said.

Nationwide, 8,205 hectares of rubber are grown under land concessions.

Another 45,469 hectares are grown on state land cultivated by private companies, and 4,041 hectares are grown under international development projects.

The remaining 50,186 hectares are grown by families.

Despite the slowdown, a $100 million plantation deal was signed this month, between the Khaou Chuly Group and the French company Socfina, to plant 20,000 hectares of rubber trees by 2010.