01/08/2015

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INDONESIA: Rubber exports to stay at 2.5 million tons in 2015

The 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 in 2014 from about 2.7 million tons in 2013. He estimated rubber exports in 2015 would be about the same as 2014's figure. Daud estimated exports in the first quarter of 2015 would decline due to bad weather conditions and low prices in the global market. He said that exports in the first quarter of 2015 could fall to between 450,000 and 500,000 tons, from 686,738 tons in the same period of 2014. 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 per year, and China with 260,000 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. "At $ 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 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. "But they won't suddenly quit planting rubber because this has become their bread and butter,” Lukman said. "Some 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.   Source: Daily "The Jakarta Post", Jakarta; 27 Dec 2014 (Syed Rashid Ali, Karachi, Pakistan)

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