IRCo moves to stabilize price
IRCo moves to stabilize price
Zakki P. Hakim, The Jakarta Post, Jakarta
A grouping of three of the top natural-rubber producing nations
-- Indonesia, Malaysia and Thailand -- has invited Vietnam to
join the International Rubber Consortium Limited (IRCo), in a bid
to control the price of the commodity.
Minister of Trade Mari E. Pangestu said the three countries
decided that they would invite Vietnam during IRCo's board
meeting in Chiang Mai, Thailand, on April 29.
Output from the three makes up about 75 percent of global
natural rubber production. "If we have Vietnam as a member, IRCo
would account for at least 80 percent of world's natural rubber
production," she explained.
The board meeting took place on the sidelines of a meeting of
the Association for Natural Rubber Producers (ANRP), the trade
minister said earlier this week.
Aside from the three IRCo members, the ANRP also consists of
Papua New Guinea, India, Vietnam, Singapore and Sri Lanka.
Mari participated in the meetings during her week-long trade
trip to Vietnam and Thailand late last month.
She said the grouping would be able to establish a fair global
price, and added that smallholder growers and tappers would
benefit.
"If we work together with strong cooperation instead of (free
market) competition, the grouping will be able to stabilize the
price," she explained.
The three countries formed IRCo in 2003 in a bid to push
rubber prices higher.
Establishing the cartel was part of the effort to avoid a
recurrence of the traumatic events of 2001, when the rubber price
crashed to a 30-year low of 45 U.S. cents per kilogram.
The price bounced back in late 2002 to reach US$1.30 per
kilogram, but has been volatile since then, going down to $1.10
per kilogram, recently closed at $1.20 per kilogram.
The highest price in the last 10 years was in 1995, when it
stood at $1.55 per kilogram.
IRCo also set up last year a Committee on Strategic Market
Operations (CSMO), which will intervene in the market to ensure
that rubber prices do not fall below $1.10 per kilogram.
Indonesia is the second largest natural rubber producer in the
world after Thailand. Producing 1.79 million tons in 2003,
Indonesia exported 91 percent of that which it produced.