THE rubber industry in Malaysia has passed through major crossroads, but challenges continue to plague it in the upstream, mid-stream and downstream sectors.
Mired in poverty, 450,000 rubber smallholders perennially plead for more government assistance to augment the low farm gate price of rubber. Yet our SMR (standard Malaysian rubber) factories are facing procurement challenges for raw materials because subsidies via the Rubber Production Incentive (Insentif Pengeluaran Getah) failed to arrest the annual decline in natural rubber production.
Vast areas of rubber plantations are now left unharvested, with the loss estimated to be RM3bil per year. Our dipped latex products factories now depend on imported latex concentrates as smallholders are not incentivised to collect latex anymore.
Meanwhile, dry rubber products manufacturers have to compete in the brutal global market. As a result, only about 60,000 tonnes of dry rubber are consumed locally per year.
Have our past rubber master plans failed to achieve their objectives? Apart from meagre production subsidies, there has been no sustainable plans to increase producers’ income, leaving smallholders vulnerable to the international commodity price.
At the same time, local SMR factories are facing procurement issues for raw materials. The Malaysian Rubber Board’s epricing system is laudable, but it does not benefit smallholders in Sabah as the state continues to adopt a monopsony system, which results in even lower farm gate prices.
It doesn’t take rocket science to understand that smallholders’ income can only be increased by higher productivity and/or higher prices for their produce. Developing new rubber raw materials that can generate higher sales value to our smallholders must therefore be a top priority for the nation’s rubber research activities. Before we plunge deeper into the abyss, our nation’s rubber experts and industry leaders should join hands now to map out a new strategy for the industry.
CHIK CHAN CHEE
Puchong, Selangor
Article originally published on April 13, 2023 in The Star (link here)