RUBBER experts have welcomed the move by CP Group to enter the industry extensively, saying the presence of the agribusiness heavyweight would create more competition and benefit the industry as a whole
The bright outlook in the next few years for the commodity has attracted more players but the government also wants to promote related businesses such as rubber nurseries and rubber manufacturing to support the growth.
CP Group chairman Dhanin Chearavanont announced recently that the group would place more emphasis on rubber and aimed to lead the business within the next few years.
He said the group had developed crossbred rubber tree saplings that could yield for up to 36 years, compared with 25 years for other strains. Investments to make rubber products such concentrated latex will also be made at plantation sites.
Thai Hua Rubber Co chief executive officer Luckchai Kittipol said the entry of CP reflected the promising future of Thai rubber thanks to strong exports and fuel prices that have significantly pushed up prices of competing synthetic rubber.
Raw rubber sheets in Thailand were trading last Friday at 130 baht, down from an average of 140 baht last month and a peak of 174 baht in February. However, prices are much stronger than the averages of 58 baht in 2009 and 105 baht last year.
Strong demand from China, mainly to feed its growing automobile industry, would push Thailand’s rubber exports to 2.9 million tonnes this year, up from 2.74 million in each of the previous two years, he said.
Thai investors have been expanding rubber plantations both locally and abroad and rubber tree expansion is a key policy of many political parties.
“There’s nothing wrong with promotion but they should promote the nursery industry to support such large expansion,” said Mr Luckchai.
While the Bhumjaithai Party pledges add 800,000 rai of para rubber plantations over the next three years, the Pheu Thai Party says it aims to double the growth of new plantations to 1 million rai per year over the next five years.
Though the first phase of 200,000 rai of the 800,000 rai-plantation expansion project started this year, a shortage of saplings is still a major obstacle.
Sapling prices have also risen to about 40-50 baht apiece while the scheme set the cost at 18 baht.
Mr Luckchai said that Thai Hua, which has a joint venture in Laos, has purchased saplings from lower-priced sources, Vietnam and China at only 10 baht each.
Wit Pratuckchai, director-general of the Office of the Rubber Replanting Aid Fund (ORRAF) said the office had to cancel its auction plan to purchase 18 million saplings at 18 baht, since no sellers showed up.
To fix the problem and ensure cultivation is completed by August, the office will allow planters to purchase saplings themselves at certified nurseries but they have to pay the price differences. The second option is for planters to acquire or develop saplings that meet the standards of the office.
“Next year the situation is expected to ease as about 27 million para rubber saplings will be ready for the second phase that covers 300,000 rai,” said Mr Wit.
For expansion to continue, he said, the government needs to map out better guidelines to ensure no negative impact on the environment and open opportunities for some benefits from selling costly para saplings.
Investment in rubber processing plants should also be considered.
CP aims to sell 600,000 of its JVP 80 saplings this year, and it also plans to set up rubber production plants in provinces in the Northeast, where its varieties grow.
The group has also developed tapping devices to replace the conventional system, in which manpower and time are big factors.
CP has taken two years to develop a puncture device to penetrate tree bark. Plastic tubes and containers give higher purity latex, and proper puncture force protects the skin of the tree.
Sixteen rubber projects worth 2.18 billion baht received investment privileges from the Board of Investment in the first five months of this year.
The large projects include a 328- million baht plant to make rubber sheet and block rubber, being developed by Inter Rubber Latex Co in Surat Thani, and Tokai Rubber’s plant to make rubber cushions for vehicles in Rayong, worth 272 million baht.
Source: Bangkok Post