Vientiane Times, 22 May 2014
Lao authorities are helpless to assist rubber growers after the constant drop in rubber prices in recent years with the trend continuing. Thousands of hectares of rubber trees in the northern provinces are ready to be tapped, however prices are still decreasing.
A Luang Namtha provincial official Mr Sawaeng Sivilay, who is involved in rubber trading, told Vientiane Times yesterday that the major reasons for the decrease were due to the price of rubber on the world market remaining low and the limited quota of product imported by China.
Most of Laos’ rubber products were exported to China however, the Chinese government had limited the rubber import quota to only 2,000 tonnes per year, he said. Mr Sawaeng said last year the Lao government representatives, in particular the provincial authorities, had approached the Chinese authorities and proposed raising the quota of the rubber goods but no answer had been given yet. Rubber imports are limited due to the Chinese government wanting to protect their own local growers, he said. However, some Lao and Chinese entrepreneurs are illegally trading goods along the local border checkpoints.
Mr Sawaeng said rubber prices in Laos had increased to 15,000 kip per kilogramme in 2010 but in recent months it had dropped to around 7,000-8,000 kip per kilogramme. Currently rubber prices have fallen to around 5,000-6,000 kip per kilogramme, he said. Mr Sawaeng predicts that the price would continue to fall over the next few months due to oversupply in the market. The rubber market in China is large with rubber farms covering millions of hectares in the country – Laos is also not the only country which exports rubber to China.
Luang Namtha, a northern province in Laos, comprises the largest rubber plantations with a majority of the investors being Chinese companies. The product has helped improve the living conditions of local families who work with the companies and sell their goods. Rubber products have also contributed to provincial economic development and poverty reduction. Last year, the province earned more than US$13 million from rubber exported to China.
Mr Sawaeng said the low prices of rubber goods would affect the income of rubber growers around the country despite the increasing number of trees ready to be tapped. In recent years, the government has declared it would stop granting land concessions for the production of rubber, aiming to reduce the number rubber projects around the country. There are now around 300,000 hectares of rubber trees planted in Laos with thousands of hectares ready to be tapped.