Data recently released by Cambodia’s Ministry of Agriculture, Forestry and Fisheries (MAFF) revealed thatthe first nine months of 2016 saw a continued increase in the country’s rubber exports despite the recent falls and current stagnation in prices as global demand continues to stall.
The MAFF data shows that exports until September were 82,825 tonnes, up almost 11% from the same period last year. MAFF’s data also shows that the number of hectares under cultivation has also continued to rise.
According to an unnamed official at the Association for Rubber Development in Cambodia, the increase in exports was not surprising, but the low prices continue to worry the industry.
The official added that the increase in exports is not a big deal as it is the result of the increase in plantation area where the farmers collect latex. He said they still continue to export to maintain operations even though they are currently selling at a loss.
Since reaching a high of US$4,500 per tonne in 2011, rubber prices have plummeted, and were below US$1,050 per tonne earlier this year.
Due to the low prices, Vietnam, Malaysia, Indonesia and Thailand – the latter three supplying some 70% of global rubber – cut their exports by 15% in March in an effort to reduce supply and hopefully increase prices.
The Cambodian government also issued a sub-decree in March concerning rubber export taxes. If global prices fall below US$1,000 a tonne, exporters are not required to pay tax, while US$50 per tonne will be levied if prices are between US$1,000 and US$2,000, and US$100 per tonne if they go above that.
Lim Heng, chairman of Hean Mean Investment Co. which owns 10,000 hectares of rubber plantations in Kampong Cham province, said that the supply cut by the three major rubber-producing countries had led to slightly improved prices, but the effect had so far been minimal.
He also said that current production costs were around US$1,400 per tonne and at current market prices of US$1,247 per tonne, rubber businesses were operating at a loss. According to Heng, local rubber farmers are looking to the Cambodian government for further help and subsidies for the industry.
According to MAFF, total rubber plantation areas reached 402,310 hectares in September, far ahead of the government’s target of 400,000 hectares by 2020. Of this, some 123,270 hectares are currently being farmed.
Despite the low prices and increasing production levels, Heng said that producers were hoping the market would rebound.