KL finds way to push rubber yield, not price

KL finds way to push rubber yield, not price

KUALA LUMPUR (Reuters): Malaysia has found a way to boost its
rubber harvest by up to four times natural yield, but failed to
improve prices, Primary Industries Minister Lim Keng Yaik said
yesterday.

"A kilogram of rubber now won't even buy you a cup of coffee
in New York," Lim told a news conference in Kuala Lumpur.

"This is because there is no cooperation among Thailand,
Indonesia and us, despite the fact that we collectively produce
80 percent of the world's rubber," he said.

Lim announced for the first time yesterday that Malaysia four
years ago discovered a method to increase the latex flow in
rubber trees through injecting ethylene gas into the bark of the
tree, helping a tapper get four times the previous yield.

"With this method, a tapper can now look after 20 acres
compared to just five before," he said.

He added that the discovery of the "Low Intensity Tapping
System" was timely as Malaysian rubber plantations had shrunk
since 1993 because land was used for other developments.

While the tapping technique has helped maintain Malaysia's
annual rubber production at just over a million tonnes and
improved tappers' incomes, it has not improved the market price
of rubber, said Lim.

The minister has badgered Thailand and Indonesia in recent
years to demand higher prices for their rubber from European,
U.S. and Japanese customers so that Malaysia could follow suit.

But Lim said that the two countries had continued selling
rubber at discounted rates. He added that he has "lost almost all
hope of a collaboration".

On Friday, Malaysia's benchmark rubber grade, the Ribbed
Smoked Sheet One, was priced at 283 Malaysian cents a kg (61 U.S.
cents).

Lim said the price was "ridiculous". In July, before the start
of Asia's currency crisis dragged down the Malaysian ringgit, the
Thai baht and Indonesian rupiah, the price was over $1.

Lim said other export-focused commodities in Malaysia such as
palm oil, cocoa, and tin had all seen huge price increases since
the currency crisis. Palm oil futures and cocoa prices, for
instance, have doubled to an average of about 2,400 ringgit a
ton and 6,000 ringgit a ton respectively.

"At worst, the price of rubber now should be at par with one
U.S. dollar," said Lim. "The prices of tires and rubber products
have all gone up since the currency crisis, so why not the price
of natural rubber?" he asked.

He said Malaysian rubber traders were also to blame for the
industry's current predicament.

"They've always wanted the whispering trading system when the
government has been pleading that they use the open-cry system
like in palm oil," said Lim. "With whispering, there's no
transparency in the market and buyers can just say someone's
offering them a lower price than you are."