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."