ANRPC urges members to increase demand

ANRPC urges members to increase demand

COLOMBO (Reuters): An international eight-nation grouping of rubber producing countries yesterday expressed concern over the decline of prices over the last two years and urged its member countries to take corrective measures.

The Association of Natural Rubber Producing Countries (ANRPC) however said that it was not in favor of imposing rubber production quotas on member countries since it could send the wrong signals.

"We are not thinking of any quota system, only looking at positive directions to increase consumption of natural rubber," J. Lalithambika, secretary-general of ANRPC told Reuters in an interview.

"Quotas will send the wrong signal. Our intentions are to increase the production of natural rubber. We are careful not to send wrong signals," she said.

"(At the same time) we may have to coordinate supply and demand. It is difficult to stop supply, it is not practical. On the long run it is not good for the producing countries to curtail supply," she said.

Lalithambika was speaking at the conclusion of a meeting of ANRPC member nations in the Sri Lankan capital Colombo, where the association resolved that member countries should implement measures to encourage domestic consupmtion.

A statement from the association said that the recent apparent upturn in natural rubber prices was primarily due to the depreciation of currencies of major rubber producing countries.

But the cost of production of rubber has been rising and in the light of the decline in real price, the production sector is facing severe constraints, the statement added.

"The livelihood of the smallholders had been adversely affected in the producing nations and that this will affect the future production capacity of these countries," it said.

Lalithambika said that the global natural rubber production is estimated to rise to 6.72 million tons next year against 6.49 million tons in 1997.

"Natural rubber consumption will also increase to 6.61 million tons in 1998 against 6.4 million tons this year," she said. Rubber production in 1996 was 6.34 million tons while consumption was 6.13 million tons.

"The year end stock of natural rubber in 1998 will again go up to 2.05 million tons from 1.95 million tons at the end of this year," she said. Stocks at the end of 1996 were 1.86 million tons.

She said that production growth had outpaced rise in consumption and had led to a decline in rubber prices.

"Basically, supply had outweighed demand and this had a negative effect on natural rubber prices," she said.

"Though this presents a gloomy scenario, rubber prices may still improve in 1998 since the economy of the major developed countries is expected to register an upward growth. Moreover in the case of rubber price, market sentiments play a significant role," she added.

However the association has acknowledged that there could be a short supply of natural rubber in the next century based on forecasts of several institutions.

"In order to sustain the present growth in the supply of natural rubber, measures have to be adopted to alleviate the current situation," it added.

The ANRPC comprises of eight rubber producing countries including Sri Lanka, Thailand, India, Indonesia, Malaysia, Singapore, Papua New Guinea and Vietnman.