The country’s income from the export of rubber products increased substantially this year despite the crisis in rubber pricing in the world market. In the last fiscal year the country earned about US$96.7 million from rubber exports to China, Vietnam and Thailand, of which only US$37 million had come in the first six months according to the Agriculture Department of the Ministry of Agriculture and Forestry.The price of rubber in the country has currently dropped to just over 4,000 kip, while varying between 7,000 and 8,000 kip at beginning of the year. After the number of rubber trees that were mature enough to tap had increased substantially, rubber went to the top of the list of Lao agricultural exports as the highest revenue earner.
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Some Luang Namtha provincial rubber growers have decided to sell their plantations after the price of rubber has gone way down. Others have destroyed their plantations and switched to growing other commercial crops such as bananas and sugarcane, the provincial domestic trade section head, Mr Sawaeng Sivilay, told Vientiane Times yesterday. The huge drop in the rubber price this year has discouraged farmers in the province from growing the tree, he said. Some farmers have even chosen to sell the land on which they have planted the rubber trees, asking about 20 million kip a hectare when the trees are between two and four years old and around 30 million kip a hectare when the trees are nearly ready to tap, Mr Sawaeng reported.
Many growers are not expected to continue with this business despite the general understanding that the price will go up again in the next few years.
The raw rubber price in the province had risen as high as 15,000 kip/kg in 2010 but by the beginning of this year it had halved to 7,000-8,000 kip/kg and is now only just over 4,000 kip/kg. About 60 percent of rubber growers are keeping their plantations and stockpiling the rubber waiting for the price to go up again but 40 percent have had to sell because they can’t survive that long without income.
The drop in price here simply reflects the situation in the world market, according to Mr Sawaeng. The management of rubber production and pricing is limited as farmers can only sell to four buying companies in the province because they are legal investors approved by the government. Most of the rubber gets exported to China but the Chinese government has limited its import quota to 2,000 tonnes per year or 500 tonnes a company, Mr Sawaeng said. The quota has been imposed because the Chinese government wants to protect their own local rubber growers, he added.
Lao government representatives, in particular those from the provincial Department of Industry and Commerce, have approached the Chinese authorities with a proposal to raise the quota of the rubber goods but no answer has yet been forthcoming. To help solve the problem, the department last year encouraged rubber growers to set up a cooperative for price negotiation and to help each other get through the price crisis, Mr Sawaeng said. But some of the group’s members have had to sell their rubber at the very low price as they don’t have any other choice.
Luang Namtha, one of the northern provinces in Laos, contains the largest rubber plantations in the country with the majority of the investors being Chinese companies. The province has about 30,000 ha of rubber.
In recent years the product has helped improve the living conditions of local families working with the companies and selling their produce as well as contributing to provincial economic development and poverty reduction.