Rubber producers state preference for INRO<\/p>\n
JAKARTA (JP): Local rubber producers said on Monday that they
\nwould prefer the government to maintain its membership of the
\nInternational Natural Rubber Organization (INRO) because the
\ngroup was still needed to keep global prices stable.<\/p>\n
The Chairman of the Rubber Association of Indonesia
\n(Gapkindo), Daud Husni Bastari, said that withdrawing from INRO,
\nan international cartel of producers and consumers, would cause
\nthe group to collapse and would in turn affect the global rubber
\nmarket.<\/p>\n
\"We consider INRO to be a good institution ... it is still
\nneeded to stabilize international prices,\" Daud told reporters.<\/p>\n
He said that without INRO, the country's position in the
\nglobal rubber market, which is currently oversupplied and facing
\nlow demand, would weaken.<\/p>\n
In a recent meeting with the Association of Natural Rubber
\nProducing Countries in Thailand, the Indonesian government said
\nit would remain in INRO, despite Malaysia's recent withdrawal
\nfrom the organization.<\/p>\n
The government said it considered the timing unfit to withdraw
\nfrom INRO, but added that it might consider doing so should
\nThailand also decide to leave.<\/p>\n
Daud said that if this happened, the organization would fall
\napart because the three countries -- Indonesia, Malaysia and
\nThailand -- are the world's major producers of rubber, accounting
\nfor 80 percent of global natural rubber production.<\/p>\n
\"Now that Malaysia has quit, without Thailand and Indonesia,
\nINRO would not exist,\" he said.<\/p>\n
INRO groups 16 importing countries, including the United
\nStates and the member states of the European Union, with six
\nproducers.<\/p>\n
The group, set up 16 years ago to ensure price stability and
\ncontain price fluctuations, has the mandate to buy rubber from
\nthe open market to boost prices and sell from its buffer stocks
\nwhen prices rise.<\/p>\n
Payments to INRO are based on the size of a country's output
\nand for consumers, on the quantity of imports.<\/p>\n
But the level at which it is authorized to intervene in the
\nrubber market has been too low to push prices up during Asia's
\nyear-long financial crisis, so that even after intervening in the
\nmarket in August, prices remained unaffected.<\/p>\n
Malaysia, Thailand and Indonesia were angered over INRO's
\ninability to raise prices and charged that it was more inclined
\nto protect consumers than the rubber producing nations.<\/p>\n
Malaysia decided to withdraw its membership of the
\norganization in August and Thailand is currently considering
\nfollowing suit.<\/p>\n
Price downfall<\/p>\n
Rubber prices have slid to a 30-year low and have been trading
\nat around 60 U.S. cents a kilogram since the Asian financial
\ncrisis began in the middle of last year.<\/p>\n
Daud attributed the price drop to a decline in demand
\nresulting from weak Korean, Japanese and Chinese economies and a
\nlabor strike in the U.S.-based General Motors assembly plant,
\nwhich ended in August.<\/p>\n
The summer season in several country's also lowered demand,
\nwhile several tire factories stocked up on tires between January
\nand March this year on fears of riots in Indonesia.<\/p>\n
At the same time as demand fell, supplies from Thailand and
\nIndonesia increased dramatically, spurred on by the sharp drops
\nin the two countries' currencies against the U.S. dollar, which
\nencouraged producers to export in large quantity.<\/p>\n
\"Areas such as South Sumatra and Kalimantan increased
\nproduction while prices crept ever downwards,\" Daud said.<\/p>\n
Farmers were tapping rubber trees between three to four times
\na day, compared to the normal rate of twice a day, so as to
\nbenefit from the surge in the U.S. dollar against the local
\ncurrency.<\/p>\n
Gapkindo expects the country's rubber output to reach 1.57
\nmillion tons this year, of which 1.5 million will be exported.
\nExports of the commodity reached about 800,000 tons in the period
\nfrom January to September, he said.<\/p>\n
Last year, Indonesia exported 1.4 million tons of the 1.5
\nmillion tons extracted from the country's 3.51 million hectares
\nof rubber plantation. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rubber-producers-state-preference-for-inro-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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