Rubber output to rise 5% in 2003: Gapkindo
Rubber output to rise 5% in 2003: Gapkindo
Adianto Simamora, The Jakarta Post, Jakarta
The country's rubber production is expected to increase by 5
percent next year from an estimated 1.6 million tons this year,
according to the Indonesian Rubber Association (Gapkindo).
Gapkindo's secretary-general Suharto Honggokusumo said that
the expected output increase was the result of harvests from
trees rehabilitated in the last 10 years in several producing
areas, mainly on Sumatra island.
"If the weather patterns in general are normal, we predict the
rubber output will increase by about 4 percent to 5 percent next
year," Suharto told The Jakarta Post on Monday.
The government has targeted rubber output at 1.6 million tons
this year.
The increase in rubber output in the world's top three rubber
producing countries -- Thailand, Indonesia and Malaysia --
normally causes a weakening in the commodity's price, as the
three account for about 80 percent of world rubber production.
However, Suharto said that despite the expected increase in
Indonesian rubber output, the rubber price would remain strong
next year.
"Thailand may suffer a drop in output next year as there will
be a wet season in the country, so I believe the price will stay
at about 90 U.S. cents per kilogram at least in the first three
months of next year," Suharto said.
He said that the rubber price, which had been on the rise
during the past several months, would continue its trend next
year and was expected to hit the price agreed upon by the three
rubber producing countries.
Ministers of the three countries have stepped up efforts to
prop up the price of the commodity after the price plunged to a
30-year low of less than 50 cents per kilogram late last year.
As of this month, rubber was about 84 cents per kilogram.
The three countries have set up the International Tripartite
Rubber Organization (ITRO) to help boost the depressed rubber
price.
Under the ITRO framework, the three countries have pledged to
cut rubber output by 4 percent and exports by 10 percent over a
three year period, starting this year.
The Indonesian government earlier said that it would lower its
exports to 1.23 million tons this year, while Thailand has set a
limit on exports at 1.93 million tons and Malaysia at 227,000
tons.
The three countries have also formed the International Rubber
Consortium Corp. (IRCo) to procure rubber from farmers and
withhold it to help stabilize the price.
However, the IRCo is not functioning yet as Indonesia and
Malaysia have not appointed their representatives to the
consortium's management board and Indonesia has not paid its
dues. The consortium needs at least $225 million in reserve funds
to be capable of influencing the price by stock purchases.
Suharto said that the price of the commodity would continue to
improve if the three countries implemented the above scheme
consistently.
He added that the country's exports would also increase next
year as China has opened its market for "technical specific
rubber" (TSR) products.
The TSR type accounts for almost 96 percent of output in
Indonesia, 50 percent in Thailand and 80 percent in Malaysia.