Rubber, never a sunset industry

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Tapping Latex

Tapping Latex

Back in the 1980s, Malaysia was the world’s largest natural rubber producer and the crop was undoubtedly the star of the country’s agriculture sector. Although doubling production over the last ten years, those glory days are gone and the country has slipped to sixth place, behind India, China, Vietnam, Indonesia and current top producer, Thailand.

Although overtaken by oil palm which is the country’s current darling crop, Malaysia till this day continues to produce rubber. The question however, is rubber still relevant or a sunset industry?

The sun has never set on the rubber industry

At a recent palm oil conference in Kuala Lumpur, one delegate commented that “Malaysia should forget about planting rubber, kenaf or any other crops but oil palm”. He also commented that Malaysia will either sink or swim with the oil palm industry, and other crops such as rubber have become less relevant.

Malaysian Rubber Board Director General Datuk Dr Salmiah Ahmad is naturally defensive when somebody mentions rubber being a sunset industry. “I don’t understand on which part of the (rubber) industry the sunset took place. As far as I’m concerned, the sun has never set on the sector, although at one time or it would shine more or less bright.” she commented.

Malaysian Rubber Board Director General Datuk Dr Salmiah Ahmad

Malaysian Rubber Board Director General Datuk Dr Salmiah Ahmad Salmiah (pic) said ever since natural rubber was brought into Malaysia in 1876, the commodity has never seen a drop in export earnings. Except for a few slight downtrends following global demand, the industry’s export trend as a whole has always been on an up and rising.

Rubber export earnings

Demand for natural rubber will always rise in tandem with the growing global population and production industry. It’s also important to note that not only does Malaysia produce rubber, but is also a major producer of rubber products such as tyres, gloves, and prophylactics.

The rubber industry as a whole, including manufacturers of rubber-based products, earned the country RM33 billion in export receipts over 2013. This is expected to continually increase, contributing RM53 billion to the country’s gross national income by 2020.

Salmiah said rubber has been identified as one of the country’s National Key Economic Areas with four entry point projects (EPPs).

The four EPPs are aimed at boosting production and enhancing upstream activities, ensuring availability of domestic supplies to develop higher-valued rubber products, strengthening niche areas such as latex glove and commercialisation of Ekoprena and Pureprena.

She added that Malaysia, as member of the ITRC (International Tripartite Rubber Council), will always defend natural rubber prices.

Good income for rubber smallholders

Salmiah said that natural rubber is a good income earner for the country’s estimated 450,000 smallholders nationwide and their families. “The good prospects will always be there and what we need to do now is to constantly revitalise the technology to boost natural rubber productivity”.

Rubber stats

Rubber stats

Salmiah also begged to differ that oil palm earns higher income compared to rubber. “When you compare hectare to hectare, yes oil palm earns more than rubber. If you look at it differently, and compare per holding to holding, rubber earns more than oil palm.”

Natural rubber prices expected to rebound

Salmiah said although Malaysia has dropped down to sixth place, the country should continue to maintain and develop on niche areas it is good in. “Malaysia should continue to consolidate its position as the world’s largest producer of rubber gloves and other niche products such as catheters, rubber-based footwear, industrial rubber goods, inner tubes and condoms”.

Although natural rubber prices have been battered of late and sit at five-year lows, Salmiah said it is expected to strengthen by next year as the rate of increase in demand is expected to outmatch increase in supply. Natural rubber prices have sunk to RM4.55/kg the last few months but have now beefed up to RM4.77/kg.

“We can’t repeat the days when rubber prices hit RM17 a kilogram in 2011 but we expect it to strengthen and rubber tappers will return to their smallholdings.” said Salmiah. Industry experts say prices can firm up to RM7 a kilogramme, which is an ideal price for natural rubber.

Salmiah said that unlike oil palm, whose fruits will rot unless harvested, latex in the rubber trees can stay good for a long time. Under Budget 2015, the government via the Ministry of Plantation Industries and Commodities budgeted RM100 million to subsidise rubber smallholder and is considering using rubber to pave roads.

Rubber facts

Although Malaysia produced 826,000 tonnes of rubber in 2013, the country remains a net importer of rubber, purchasing one million tonnes annually to feed rubber-based industries such as those producing gloves and tyres.

Malaysia is the world’s number one producer of condoms, Foley catheters, and NR and Nitrile rubber gloves.

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