Rubber trade runs dry as market prices spike

Photo by: Heng Chivoan
A rubber tapper's basin hangs from a tree on a plantation in Kampong Cham province.

via Khmer NZ News Media

Monday, 05 July 2010 15:01 May Kunmakara

Cambodian rubber exports dropped more than 34 percent in the first five months of this year compared with the same period in 2009, according to official figures from the Cambodia Import, Export, Inspection and Fraud Repression Department (CamControl).

Data released on Friday show a 34.19 percent drop in exported rubber, from 13,057 tonnes to 9,730 tonnes, and growers blame harsh weather for reducing production during the first five months of the year.

“The decrease was because of low rainfall and high temperatures. My production fell compared with last year,” said Mok Kim Hong, owner of the Chub Rubber Plantation in Kampong Cham province. He added that less than half of his 15,000 hectares of plantation had produced resin so far this year.

The Chub plantation had exported only about 2,000 tonnes this year through May, well off pace to match the 9,000 to 10,000 tonnes it exported last year, Mok Kim Hong said.

Meanwhile, rubber prices had spiked in foreign markets, pushed by increasing demand from China, said an official at CamControl who asked not to be named.

“We have seen a sharp rise in prices this year because of a growing demand in China for processed rubber used to produce car tyres,” the official said.

“China has one of the largest markets for tyres.”

The official added that Cambodia had missed out on benefits from high prices because it exported most of its rubber to Vietnam.

“We lose a great deal of value-added benefits because we export almost exclusively to Vietnam, which processes and exports rubber to the global market and gets higher prices than we do,” the official said.

The price of the highest-quality rubber, classified as grade 1 of 10, hit US$3,687.50 per tonne last week on the Malaysian Rubber Exchange. Grade 10 rubber reached $2,868.

In a bid to raise rubber production to 150,000 hectares by 2015, Cambodia inked a memorandum of understanding with Vietnam in September last year, offering 100,000 hectares in land concessions to 14 Vietnamese companies operating in Mondulkiri, Ratanakkiri, Kampong Thom Kratie and Preah Vihear provinces.

Vietnamese companies grew rubber on 10,000 hectares of land in Cambodia last year and planed to add 20,000 more by the end of 2010, some 30,000 hectares in 2011 and 40,000 hectares in 2012, according to the memorandum.

Last month, Cambodian businessman Mong Reththy revealed his firm, Mong Reththy Group, had invested $10 million to grow rubber on 5,000 hectares in Preah Sihanouk province, and planned to build a $5 million rubber-processing facility by 2013.

He said the coastal areas of Koh Konh, Preah Sihanouk, Kampot and Kep provinces had a total of 100,000 hectares that could potentially yield 2 tonnes of rubber per hectare.

“We will germinate rubber trees to sell to farmers who want to grow them so that they have jobs in Cambodia, in order to reduce emigration.”