Over a period of four months that started on Monday, Indonesia is to slash rubber exports by 98,160 tons. Malaysia started on the same date and plans to cut 15,600 tons, whereas Thailand, the world’s largest rubber producer, will cut 126,240 tons of rubber exports starting May 20.

Trade Ministry trade assessment and development agency head Kasan Muhri said the move was part of the ITRC’s sixth Agreed Export Tonnage Scheme (AETS), which in total would cut rubber exports by 240,000 tons this year.

“We will keep on monitoring rubber prices to ensure a remunerative profit for rubber farmers,” Kasan told journalists recently. “Meanwhile, exporters from the Indonesian Rubber Association [Gapkindo] will help oversee the export cuts.”

ITRC member countries represent 66 percent of the world’s rubber production, which amounted to 13.96 million tons in 2018, up 4.6 percent from the year before, according to the Association of Natural Rubber Producing Countries (ANRPC).

Thailand, the world’s largest producer, was estimated to have produced 4.82 million tons of rubber, followed by Indonesia, the world’s second-largest producer, at 3.77 million tons and Malaysia at 600,000 tons last year.

The global rubber price is currently holding steady at around US$1.4 per kilogram after it fell to below $1.2 in late 2018.

With the latest AETS, the rubber price is expected to exceed $1.5 per kilogram and reach as high as $2, Kasan said.

“We believe this export cut will not translate into lower export value as the lower export volume will likely be compensated by a higher rubber price. [...] Exporters at Gapkindo have calculated the cut into their export proportion [so they would not lose profit],” Kasan added.

The Coordinating Economic Ministry’s deputy for international economic cooperation Rizal Affandi Lukman said the rubber from the export cut would be used for domestic consumption, such as for constructing rubberized roads and making retread tires.

“We believe domestic demand will be high enough to absorb the rubber from the export cut,” Rizal said.

He added Malaysia and Thailand also had their own means to boost domestic rubber consumption to support the AETS.

Malaysia, for example, has allocated 100 million ringgit for a similar rubberized road program, while Thailand’s One Village One Kilometer rubberized road scheme would allow its road construction projects to absorb 270,000 tons of rubber per year.

The export cut and its diversion toward domestic use, he said, would serve as short and medium term efforts to revitalize Indonesia’s aging rubber industry.

As for the long-term effort, the government had committed to starting a nationwide rubber replanting program, which will cover some 3.6 million hectares of rubber cultivation area.

This year, the government aims to replant 5,000 to 6,000 ha of rubber plantations. The figure, said Rizal, would gradually go up to 50,000 ha annually.

“We plan to replant 60 percent of the existing cultivation area and allocate the other 40 percent for other crops,” he said. “This has to be a massive effort since our rubber trees are getting low and their productivity is decreasing.”

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