Written on 03.04.2014 - Industry
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CAMBODIA: Rubber decline stokes worry

The government and industry insiders are worried about the steady decline of rubber prices over the last three years, during which the area it is cultivated in has grown. “Farmers and investors raised concern . . . over the trend of the market and the price of natural rubber, which has fallen from more than USD 4,500 per ton on average in 2011 to between USD 1,800 and USD 2,000 per ton in 2013,” Minister of Agriculture Ouk Rabun said during an annual meeting.

Rabun said that the rubber industry in almost all of Cambodia’s provinces is expanding, and the cultivation area has increased by 17 % last year when compared to 2012.

He said that total harvested land reached 78,000 hectares in 2013 – an area 32 % larger than in 2012 and capable of producing 90,000 tons of processed rubber for sale abraod.

Cambodia exports mostly natural rubber as well as smaller amounts of semi-processed rubber, and declining prices are making themselves felt.

Men Sopheak, vice director-general at the CHOB rubber plantation, said that all of Cambodia’s rubber exports rely heavily on the Chinese market, where there is a glut.

“From what I know, the rubber warehoused in Shanghai remains at 36,000 tons,” he said.

According to Sopheak, the price of natural rubber has fallen consistently in recent years. The current price is USD 1,980 per ton, which equates to very little revenue for farmers.

“The materials needed for rubber production have increased as well as the labour costs, meaning the production costs are getting more expensive,” Sopheak said.

“I expect rubber prices will improve next year, because for farmers to survive, the real price cannot get lower than this.”

Sopheak said his company has also tried to seek export markets outside of China, but that other countries don’t require as much as the world’s second largest economy, where 80 % of Cambodian rubber exports are sent.

For Cambodia, rubber, like rice, is a valued commodity. In 2013, the country exported a total of 74,198 tons with a total value of USD 170 million.

The Ministry of Agriculture said in a report earlier this year that the total projected cultivation area for rubber may reach 450,000 hectares by 2020.

Srey Chanthy, an independent economic analyst, said that the price of natural rubber, which is taken directly from the tree, will continue to fall in coming years if the value of processed rubber also declines.

He said that Cambodia needs to diversify its export markets and focus on quality and low-cost production.

“We need a foundation in processing, storage and better transportation infrastructure, and logistics to keep the costs low.”

Source: Daily “The Phom Penh Post”, Phom Penh; 1 Apr 2014
(Syed Rashid Ali, Karachi, Pakistan)