June 13, 2017

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Global economic instability drives the rubber price to decline

A worker hangs rubber sheets to dry.

Rubber prices in Myanmar have declined due to global economic instability, particularly in durable goods markets and petroleum which are closely linked to rubber said U Khaing Myint, the general secretary of Myanmar Rubber Planters and Producers Association.
Since May, a tonne of Myanmar rubber sold for about US$1,400 whereas the rubber price hit US$1,800-2,000 per tonne in April, according to interviews by the Global New Light of Myanmar.
Seventy per cent of global rubber production is used in the automobile industry and as auto production declines so does the demand for, and the price of, rubber. Rubber prices are also related to global petroleum prices and the dollar exchange rate.
In addition to these global factors, regional forces are pushing Myanmar rubber prices down. Currently, rubber production Thailand is increasing and the strong Japanese yen is driving the entire rubber market toward higher grade rubber rather the relatively poor quality product produced by Myanmar, said U Khaing Myint.
China usually buys about 70 per cent of all Myanmar rubber. The other 30 per cent is shipped to Singapore, Malaysia, Indonesia, Viet Nam, India, Korea and Japan. Myanmar’s rubber market suffers from a lack of technology, modern farming and processing practices and inefficiencies built into the rubber supply chain due to relying on networks of small holder farms. In Myanmar brokers and purchasers from the central rubber depot purchase rubber from rubber farms. And then, the brokers sell the rubber onward to export companies, which ship the rubber to other companies that apply processing techniques and other refinements to increase its value. Due to Myanmar’s lack of technical capacity and its low grade rubber production, Myanmar rubber sells for at least $500 less per tonne than standard international rubber prices said U Khaing Myint.
“We have to put all of our efforts into Myanmar’s rubber so as to keep up with international rubber quality,” he said. “The rubber farm owners and the labourers engaged in this rubber industry have to join hands so that Myanmar’s rubber can meet international criteria. Both the government subsidies and technical assistance are also required in a bid to fulfill the needs of small-scale farm owners.”
The rubber association has organised regional workshops to enhance rubber quality in cooperation with Japan for the past four years. The workshops focus on start of the industry production processes in line with protocols established by the International Organisation for Standardisation. They also promote sustainable enterprise and human rights principles including prohibitions on child labour and environmental stewardship, U Khaing Myint said.
Most of the rubber businessmen in Gyogaung village, Hlaingbwe Township in Kayin State are using traditional methods handed down one generation after another. They are far removed from international norms or any technical assistance, said Lin Lin Tun, a rubber farm owner from Hlaingbwe Township in Kayin State.
“We have a strong desire to get access to advanced techniques,” he said. “Technical assistance is harder to reach for small-scale businessmen working on the outskirts of the town. We have to receive the techniques from rubber experts with the help of social network, Facebook. We are willing to attend the course to enhance rubber quality if possible.”
Myanmar’s rubber is mainly produced from Mon State, Taninthayi Region, Kayin State and Bago Region. There are more than 1.6 million acres of rubber land across the country while rubber latex is produced by over 700,000 acres of rubber land.

 

By May Thet Hnin

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