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Rubber exports to stay at 2.5 million tons next year

Indonesia’s natural rubber exports are expected to remain stagnant at this year’s level as production is set to stay low due to poor weather and weak prices in the international rubber market

Tama Salim (The Jakarta Post)
Jakarta
Sat, December 27, 2014

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Rubber exports to stay at 2.5 million tons next year

I

ndonesia'€™s natural rubber exports are expected to remain stagnant at this year'€™s level as production is set to stay low due to poor weather and weak prices in the international rubber market.

The association of Indonesian Rubber Producers Association (Gapkindo) expects Indonesia'€™s natural rubber exports to remain stagnant at about 2.5 million tons in 2015.

The association'€™s chairman, Daud Husni Bastari, said the country'€™s rubber exports were projected to decline by between 8 percent and 10 percent this year from about 2.7 million tons in 2013. He estimated rubber exports in 2015 would be about the same as this year'€™s figure.

Daud estimated exports in the first quarter of next year would decline due to bad weather conditions and low prices in the global market. He said that exports in the first quarter of next year could fall to between 450,000 and 500,000 tons, from 686,738 tons in the same period of this year.

Daud revealed that the US remained the country'€™s largest export destination with 400,000 tons per year, followed by Japan with 270,000 tons, China with 260,000 tons and India with 136,000
tons per year.

He said exports to Brazil (about 74,000 tons a year), Turkey and Argentina (21,000 tons a year each), showed upward trends, whereas those to Germany and France remained stagnant.

Daud said that the global price of rubber had dropped to US$1.48 a kilogram, or roughly half the price that was considered acceptable for rubber growers to be able to reap profits.

'€œAt $3 per kilogram, farmers were still willing to plant rubber on their land. But nowadays many of them have become discouraged by the current weak prices of rubber,'€ he explained.

According to the association'€™s data, the price of the commodity price has continued to fall each year since March 2011, when it posted a healthy $5.3 per kilogram.

Daud also revealed that the association, along with stakeholders in the coffee and cocoa industries, had previously met with Vice President Jusuf Kalla to demand that the removal of a 10 percent value-added tax be imposed on rubber to help cope with weak prices.

Meanwhile, Indonesian Rubber Farmers Association (Apkarindo) head Lukman Zakaria said that bad weather may have negatively impacted on the commodity'€™s production, but it would not stop it completely.

Lukman said that Indonesia'€™s annual rubber production remained stagnant over the past year at around 3.5 to 3.8 million tons.

He said that the low prices managed to force a number of farmers to convert to other crops, saying that many smallholder rubber growers from South Sumatra and Lampung provinces, which used to be rubber production centers, were now converting to other crops like oil palm and cassava due to the plunging prices.

'€œBut they won'€™t suddenly quit planting rubber because this has become their bread and butter,'€ Lukman said on Monday, over the phone.

'€œSome farmers reasoned that the prices simply didn'€™t match. Even with high profits, if the government doesn'€™t tend to the proper marketing of rubber, then they won'€™t be interested,'€ he explained.

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