Working towards greater community control over land, forests and natural resources

Low rubber revenues in Luang Namtha hurting local farmers

Vientiane Times, Sept 7, 2012.

Luang Namtha provincial authorities are tackling the issue of falling rubber prices after growers have been hit by consistently low prices for several months this year. A decline in the rubber price on the world market and an oversupply of raw rubber in Luang Namtha has seen traders offering considerably lower prices than usual, according to the provincial Industry and Commerce Department.

Rubber prices in Luang Namtha province have declined in recent months, putting pressure on local farmers who are now committed to the crop. Raw rubber prices in the province began to drop in the middle of this year. Officials are concerned they will fall further if management measures are not put in place, the head of the domestic trade section Mr Sawaeng Sivilay told Vientiane Times yesterday.

Currently, raw rubber is fetching between 6-7 yuan (7,500 kip to 8,800 kip) per kilogramme, while normally prices are between 14-15 yuan (17,600 kip to18,900 kip), he said. Raw rubber prices have declined in the past but stabilised at 8-9 yuan (11,000 kip to 11,300 kip), Mr Sawaeng said. The current prices are the lowest in the history of rubber sales from Luang Namtha to China which began in 2008.

According to Mr Sawaeng, the provincial governor is working with his district counterparts and local authorities to set up farming cooperative groups to improve production and achieve economies of scale. The increased bargaining power is expected to allow the groups to command higher prices for their produce. Up until now, farmers have sold their rubber individually, putting them in a weak bargaining position and allowing unscrupulous traders to take advantage of them.

“We have also organised a technical unit to inspect rubber trading in the province and monitor rubber prices in the region and the world to help growers and stop traders taking advantage of them,” Mr Sawaeng said. Luang Namtha farmers who have mature rubber plantations which are being tapped have made money when prices have been good, but if prices remain consistently low the number of new farmers entering the business is likely to decline.

With rubber prices dictated by supply and demand, there are concerns about what will happen when more latex is tapped as more plantations start to mature. At present, only 10-20 percent of rubber trees in the province are being tapped, and Mr Saweng believes that as more and more trees mature over the next few years prices will decline. The provincial authorities banned the granting of any more land concessions for rubber a few years ago but local farmers are still permitted to expand plantations on their own land.

The province already has about 31,000 hectares of rubber trees, much of which is owned by overseas investors. Currently the sale of raw rubber to China brings around US$3 million in revenue to the province, according to an agriculture section report. So far this year, the province has exported about 1,700 tonnes of dry rubber and more than 500 tonnes of lump rubber to China. Those figures are expected to increase next year.

There are now more than 300,000 hectares of rubber plantations nationwide, the majority of which are large estates owned by foreign investment firms. The government believes these kinds of industrial tree plantations will help Laos to fulfil its socio-economic development plan but it is not yet clear what long term impacts they will have on local communities or the environment.

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