Rubber growers pensive as price tanks
Lao rubber producers are concerned with what they see as the unsustainably low price of rubber as they experience the brunt of low prices on global markets.
Authorities in Laos cannot exert influence on the price of the commodity within the country as most production is for export via foreign traders, according to the industry and commerce sector.
The price paid to growers in northern provinces by Chinese traders has fluctuated between 6,000 and 8,000 kip a kg of raw rubber so far this year, down from 9,000-10,000 kip a kg at the end of last year, LuangNamtha provincial Industry and Commerce official, Mr SawaengSivilay told Vientiane Times yesterday.
This fluctuation comes as a result of the impact of demand and supply to the Chinese market, especially in Kunming, he said.
While the provincial authorities in particular the Industry and Commerce Department seek to negotiate improved terms with Chinese traders and firms, they could only agree to purchase rubber produced at the Chinese market price, he said.
“To protect all from accusations of cheating, we always follow adjustments of rubber price in China and announce buyers should report the purchase cost of rubber from farmers every week,” Mr Sawaeng said.
One important barrier for rubber producers in Laos is the limited export quota granted by the Chinese authorities, he commented.
Last year, Lao producers received a quota to export 5,000 tonnes of rubber to China but this year no figure has been reported as yet, he explained.
Unsustainably low prices of rubber have caused some growers to abandon the crop in favour of other commodities.
Hundreds of hectares of rubber trees have been cut down to make way for other crops.
The rubber price in Laos reached a peak of 15,000 kip per kilogramme in 2010, encouraging many people to take an interest in growing the trees for profit.
The price of rubber began to fall in 2011 and has stayed low ever since, bottoming out at 2,000-3,000 kip a kg, Mr Sawaeng reported.
The government has ceased granting further concessions for commercial rubber plantations on state-owned land but allows local people to grow rubber trees on their land if they wish to.
The majority of rubber plantation investments in northern provinces are from Chinese companies, while southern parts see a greater number of Vietnamese firms participating.