Rubber output likely to fall by seven percent

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)