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

Laos needs committee to manage rubber pricing

Vientiane Times, 06 Dec 2014

The price of rubber in Laos will continue to suffer as the country has not yet established a national committee for management of the commodity or an association for price negotiation. The major regional markets still depend on Thailand, Malaysia and Indonesia because these countries have large numbers of rubber plantations and so regional pricing is largely based on them, the National Agriculture and Forestry Research Institute Director, Dr. Bounthong Bouahom told Vientiane Times yesterday.

All the other Asean countries already have such an authority in place while Laos is just beginning to consider it, he said. Rubber is a relatively new industry for the Lao government but seen as making a very important socio-economic contribution, so consultation between the relevant sectors to appoint a committee to take responsibility is urgently needed. He said he believed that the agriculture and forestry sector is now making such a proposal to the government. The number of rubber plantations in the country where trees are nearly ready to tap has increased substantially so the time is ripe to set up a committee to be responsible for rubber issues, said Dr. Bounkhoung. The country comprises almost 300,000 hectares of rubber plantation and thousands of hectares are ready to tap, according to the Ministry of Agriculture and Forestry.

In the last fiscal year the country earned US$96.7 million from rubber exports to China, Vietnam and Thailand. This figure caused rubber to top the list of Lao agricultural exports as the highest revenue earner. The price of rubber has been dropping continuously and plummeted in October to a record low for the year, following drops in the world market price. The very low price of rubber in October bottomed out at 4,100 kip (3.2 Yuan) per kg. To help solve the problem the government, in particular authorities in LuangNamtha, the province home to the largest rubber plantations, consulted with trading companies to seek a better return for raw rubber in a bid to assist local growers who are suffering from the very low prices on offer. The companies agreed to buy rubber tapped in November this year at around 6,600 kip (5 Yuan) per kg, according to the provincial Industry and Commerce Department.

The International Tripartite Rubber Council (ITRC) Ministerial Committee Meeting 2014 last month, chaired by Malaysia, is expected to set up a regional rubber market within 18 months as one of the corrective measures to stabilize rubber pricing. The regional rubber market will merge the markets of the main natural rubber (NR) producing countries of Thailand, Indonesia and Malaysia (TIM), providing better price discovery and effective hedging functions to benefit producers, consumers and market players. The other ASEAN countries at the meeting, Cambodia, Laos, Myanmar and Vietnam have shown keen interest in cooperating with TIM to strengthen NR prices for mutual benefit.

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