Sabah Rubber Industry accused of pushing costs to rubber smallholders

August 4, 2017

farmerThe Sabah Rubber Industry Board (LIGS) in Malaysia has been accused by political party Parti Warisan Sabah (Warisan) of pushings its costs to rubber smallholders.

The argument started when Warisan questioned how LIGS made a profit of RM100 million in 2016 when the agency was supposed to exist to help smallholders.

LIGS countered by saying the amount was not a profit but its revolving fund accumulated over six years.

In a statement on July 31, Warisan vice-president Junz Wong said LIGS or the Sabah government should explain why the procurement and maintenance of vehicles, road access, offices, other services and perhaps even the salary of the board’s staff were paid by the rubber tappers in Sabah.

“How can LIGS claim to have carried out its social obligation to provide door-to-door services despite poor access roads and marketing services regardless of distance and quantity when the rubber tappers are actually paying for all the costs? Isn’t the costs the responsibility of LIGS? Doesn’t the Sabah government allocate budgets as huge as RM400-RM500 million every year for the agriculture ministry?” he asked.

“Not only did the Sabah government not help make the Sabah rubber industry more competitive but it has become more difficult for smallholders to advance as they have to bear LIGS’ expenses.Doesn’t agriculture minister Datuk Yahya (Hussin) allocate enough funds for LIGS?”

Wong, who is also Likas assemblyman, also questioned why LIGS implemented such a policy that burdened rubber tappers and effectively reduced the competitiveness of the Sabah rubber industry.

He said it was no wonder LIGS was able to accumulate over RM100 million in its revolving fund over six years and that he would not be surprised if the fund ballooned to RM200 million in the near future.

“Warisan will make sure that LIGS will serve, assist, facilitate and protect rubber tappers’ interests and enhance the competitiveness of the industry,” he said.

Wong pointed out that LIGS had conveniently avoided the most important question of how it determined the dry rubber content (DRC) percentage and through it, the price of the raw materials to be paid.

In Sabah, smallholders sell their raw rubber in sheets and cup lumps, aged up to a week with DRC ranging from 65% to 80%.On the other hand, raw rubber in Peninsular Malaysia is sold after only 1-2 days old.

“So how could the price paid by LIGS with the DRC at 50% be fair to Sabah rubber tappers?Rubber tappers would really like to know the justification of how LIGS determines the DRC for their produce.Also, how does LIGS formulate the farm gate value for rubber raw materials such as unsmoked sheets and cup lumps, etc?”

“How does LIGS determine the DRC of these rubber raw materials and determine the pricing of each grade of rubber, such as Kepingan Gred (Rubber Sheet Grades) 1 and 2 as well as Kentalan Gred (Coagulated Rubber Grades) 1 and 2?”

Wong emphasised the importance of enlightening Sabahan rubber tappers on how the percentage of the DRC for the rubber raw materials is determined so they could, in turn, determine whether LIGS’ prices were fair.

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International Rubber Prices
(as of 16, October 2017)

Monthly The prices shown above do not include VAT @4% on purchase and expenses towards packing, transportation, warehousing  and other incidentals


Source: India Rubber Board

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