Rubber output likely to fall by seven percent
JAKARTA (JP): Indonesia will fail to take advantage of the currently surging prices of natural rubber on the world market because a lengthy drought will probably slash its production by seven percent this year, an industry executive says.
"It's a pity because our rubber production is decreasing while prices are increasing to their highest in four years," A.F.S. Budiman, executive director of the Indonesian Rubber Association (Gapkindo), told The Jakarta Post on Saturday.
He explained that this year's dry season, which started earlier than usual, has affected rubber plantations in the country.
The dry season has affected tens of thousands of hectares of rice fields and secondary crops in Java, prompting the government to support affected farmers by installing water pumps in fields depending on rainfalls and preparing cloud-seeding in areas close to irrigation dams.
Budiman said that rubber production in Thailand and Malaysia, two other major producers, have also been affected.
Natural rubber production in Indonesia, which covered about 3.2 million hectares of plantations, increased to 1.4 million tons last year from 1.32 million tons in 1992. More than 85 percent of the production was exported.
Demand
Rubber prices increased to their highest level in four years of 241.46 Malaysian cents per kilo on Friday due to soaring demands in China and falling production in Indonesia, Malaysia and Thailand.
According to Budiman, demand for rubber in China is estimated to double to 1.2 million tons this year from 600,000 tons in 1993, while its production of natural rubber is likely to reach only 320,000 tons, and synthetic fiber 380,000 tons this year.
The increasing prices prompted the International Natural Rubber Organization (INRO) to draw down its stocks in Indonesia, Malaysia, China, Britain and the United States because last week's prices were far higher than the must-sell level of 236 Malaysian cents.
Asril Sutan Amir, vice chairman of Gapkindo, said on Saturday that INRO's buffer stock manager has thus far sold about 120,000 tons from its stock of 220,000 tons.
"Unfortunately, farmers and plantation owners cannot enjoy the soaring prices due to the long dry season," said Asril, adding that the current price level is 20 percent higher than usual.
Asril said no one can predict how long this unusual situation will last or what is going to happen in the future.
Natural rubber producing countries proposed last week that INRO raise its reference to enhance its market facilitation.
INRO's buffer stock manager began unloading INRO stocks after prices went past the "may sell" level earlier this month and crossed the "must sell" level earlier last week.
The buffer stock manager sold rubber for the 11th trading day running last Friday but has had little success in curbing the spiraling prices. (yns)