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.