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Govt pledges investigation for fair rubber price

Vientiane Times, 28 July 2014

The government has pledged to undertake an investigation to ensure a fair rubber price following claims from rubber growers that the price is lower than the market rate. Deputy Minister of Industry and Commerce Mr Bounmy Manivong made the pledge on Friday in a press conference held at the National Assembly (NA) responding to the issue raised by a rubber grower through the hotline of the NA’s ordinary session that ended on the day.

The rubber grower from northern Luang Namtha province, one of the Laos’ major rubber–growing provinces, called for relevant sectors to address what he claimed was the low rubber price. “We will ask provincial authorities to investigate to ensure a fair price,” Mr Bounmy promised.

At present, the average price of rubber sold in the province stands at between 6,700 – 7,000 kip per kilogram. Chinese firms have been set up to purchase rubber from farmers. But the deputy minister noted that the low price could have been caused by market trends and other reasons. Low rubber prices might have been caused by oversupply on the world market, while some rubber growing countries like India and Malaysia have increased rubber production. “We can’t claim the price that we want. The price must be based on world market rates,” he said. In addition, he said the quality of rubber produced by Lao farmers might not meet standards and that caused the low price.

With the fact that some rubber growers have not joined rubber planting groups (groups of rubber growers) they have no negotiation power with Chinese purchasers and this might be another reason they have been offered unreasonably low prices, Mr Bounmy observed. “Those who are offered low prices might be the growers who haven’t joined the groups. We will inspect this,” he said.

He went on explaining the possible reasons for low rubber prices, saying that the quantity of rubber produced in Laos is still small as only some rubber plantations have been harvested currently; therefore Laos cannot fulfill huge orders required by foreign purchasers meaning that Laos cannot sell directly to the purchaser. In this context, rubber produced in Laos is sold through middleman or firms who solely define the price.

However, he promised that officials in charge would investigate and work out the issue to ensure a fair price, saying that fair treatment is important to guarantee sustainable cultivation and production of the rubber. According to information from the Ministry of Agriculture and Forestry, there are about 300,000 hectares of rubber plantations in Laos. But Mr Bounmy said information regarding how many hectares of the rubber trees are being harvested and how much latex is tapped a year is unavailable, saying officials are still collecting that information.

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