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Rubber on upward bounce

Rubber on upward bounce

Rubber is an industrial crop which can be exported and is currently a product with

a growing international demand. In Cambodia rubber is mainly grown in Kampong Cham,

Ratanakkiri, Mondolkiri, Kratie and Kampong Chhnang provinces.

Most of the rubber is grown by state-owned plantations, private-owned plantations

and small holder rubber plantations for natural rubber occupying more than 60,000

hectares. Broadly speaking, according to the study on the Evolution of the Cambodian

Rubber Sector Report, the rubber industry only accounts for 4 percent of the country's

agricultural sector and employs approximately 40,000 people throughout the country.

The price of Cambodian natural rubber has experienced ups and downs influenced by

demand and supply from the international market. Until recently, the price of natural

rubber increased sharply in the last few years.

In 2005, Cambodia exported a total of 28,289 metric tons of natural rubber. The exports

were mainly to regional countries such as Vietnam, China, Malaysia, etc. This sector

generated approximately US$37 million of foreign export earnings during the same

year.

However, Cambodia represents only 0.29 percent share of the world's natural rubber

production and ranks 16th among rubber producing countries. It is apparent Cambodia

has very little impact on global rubber production. The Cambodian rubber industry

faces many challenges ranging from lack of plant materials, security of land tenure,

lack of technical support, high and long term investment, and low productivity, processing

capacities, low level of production and rubber discount prices. In addition to these

constraints, the cost of rubber processing is between US$74 to US$120/ton, more expensive

than other regional countries. In Vietnam, the processing costs are US$70/ton and

nearer to US$60/ton for Indonesian factory operators/exporters.

Despite many challenges ahead, potential market opportunities for Cambodia's rubber

sector exist. One should consider how to remove the constraints, of which there are

three main issues. Firstly, immediate attention should be given to the promotion

of quality control of Cambodian rubber, particularly in setting up a system of export

specification and certification, improving the system that monitors the requirements

of foreign rubber markets, analyzing opportunities and threats, and recommending

responses.

Secondly, more emphasis should be given on rubber research and extension activities

to boost productivity and dissemination of appropriate technology to rubber planters

in relation to plant materials, land preparation, and technical advice. Furthermore,

the quality of inputs needs to be verified regularly by checking planting materials

used. Lastly, improving access to long term rural credit to minimize interest rates

and to encourage potential private sector investment in increasing cultivated areas,

rubber processing and trading also need serious attention.

By implementing these proposed action plans, Cambodian rubber planters could benefit

substantially from favorable market opportunities since the demand for natural rubber

is increasing from year to year, and its price has increased sharply in the last

five years rising from US$497/ton in 2001 to around US$1,900/ton in 2006, and it

is expected to continue on an upward trend. This situation provides an excellent

opportunity for diversification and income generation. This could also make a substantial

contribution towards attaining the objective of improving the standard of living

and reducing poverty in the areas naturally suitable for rubber crop plantation.

Chea Marong - Economic Researcher, Economic Institute of Cambodia, Phnom Penh

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