Vietnam’s smallholder rubber farmers are not the only ones affected by the falling rubber prices, as a number of big agricultural businesses are also being forced out of business by the decline.
The steady downward trend in prices and production activities have pushed many farmers to stop tapping, abandon their plantations or switch to other crops.
A plantation owner who grows rubber trees in the southern province of BinhPhuoc and in Cambodia, in an interview with a local news agency, said that he has sharply scaled down rubber areas in his agricultural-land portfolio by more than 1,000 hectares.
Even though he is willing to sell his rubber estate at a significant loss, finding buyers is still proving to be a challenging task. According to the plantation owner, prospective buyers prefer strategically located rubber plantations which have access to major roads and are close to waterways.
Mature plantations with moderate yields are also the ones preferred by potential investors. They can either continue the farming business or acquire the estate as a long-term investment as rubber trees can be felled down for the hardwood timber, he added.
Rubber prices have hit the lowest level since 2009 as significant stockpiles and falling demand in China constantly dragged the rates down.
According to the state-owned giant Vietnam Rubber Group, rubber has become one of the most vulnerable commodities, saying that producers have not been able to control their output in recent years.
Prices have dropped to as low as VND26 million (US$1,164) per tonne while it costs VND25 million to collect and process the latex, Vietnam Rubber Group said.
Also investing in a wide range of sectors including electricity, livestock and hotels, the group has downsized rubber production by clearing rubber trees on a 3,000-hectare area.
Rubber production only accounted for 4% of the group’s total profit in the first six months, according to the group’s financial statement.
Experts forecast rubber prices could fall further in the final months of the year since stocks remain high.Meanwhile, as of July 31, the total production by a group of 11 countries that produces around 92% of the world’s natural rubber edged up.