Tue, 18 Sep 2001

Indonesian rubber output to slide 15%

JAKARTA (JP): The country's rubber output is expected to fall by 15 percent to 1.3 million tons this year, from 1.5 million tons last year due to a combination of unfavorable weather conditions and the lower international price of the commodity, according to an executive of the Indonesian Rubber Producers Association (Gapkindo).

"The lower rubber output is a result of a prolonged drought, which has hit some regions across Indonesia," Gapkindo chairman Asril Sutan Amir told The Jakarta Post on Monday.

Indonesia is one of the three largest rubber-producing countries, together with Thailand and Malaysia. The three countries account for almost 80 percent of the world's natural rubber production.

Thailand is expected to produce around 2.3 million tons of rubber this year, while Malaysia's production should be around 600,000 tons.

Asril also attributed the fall in Indonesian rubber output to farmers' moves to convert rubber plantations into palm oil plantations due to falling rubber prices.

"Low rubber prices have discouraged them (the farmers) from cultivating rubber trees," he said.

Southeast Asian rubber prices are hovering around their lowest level in 30 years due to a market glut, and the global economic slowdown has encouraged tire makers to cut output due to weak demand for new cars and trucks.

Indonesia, Thailand, and Malaysia formed last year the so- named Tripartite Rubber Cooperation (TRC) in a bid to help prop up sagging prices.

TRC agreed earlier this month to reduce output by four percent in 2002 and 2003 and cut exports by 10 percent, starting Jan. 1 2002.

The TRC also agreed to implement an export quota scheme starting next year and might ask exporters to limit their forward shipments.

Asril said that, with declining trends in the country's rubber output, his association would find it easier to abide by the agreement.

"We will find no significant technical difficulty in implementing such production cutbacks and export reductions," he said.

Around 90 percent of Indonesia's rubber production is targeted for export, while the remaining 10 percent goes to local manufacturers.

The country's rubber exports stood at 1.38 million tons, valued at US$888.62 million last year, as against 1.49 million tons valued at $849.10 million in the previous year.

Indonesia exports its rubber to the United States, Japan, Singapore and European countries, with the U.S. absorbing more than 40 percent of total exports. (dmr)