Sustainable Natural Rubber Development

At the seminar, the experts say that the difference between the supply and demand in rubber industry is a problem that needs to be solved now. Demand for rubber has been slowed down due to the weak world economic recovery under the global crisis in 2008 and 2009. Either natural rubber or synthetic rubber is exceeding because China has built too many factories that produce synthetic rubber to catch up with demands of the world.

Since 2013, the rubber industry is facing challenges due to the dropping price. Currently, rubber export price in the range of VND36 million to VND41 million per tonne, down 56 percent compared to 2011, due to supply exceeding demand; this leads record rubber inventories. Export turnover, revenue and profitability of businesses are declining. In particular, profitability of most rubber businesses has declined and some businesses have the net profit declined by 99.5 percent compared to the same period of the last year.

 

Besides, according to Tran Ngoc Thuan, Chairman of the Vietnam Rubber Association, demand for rubber have dropped, driving the price to the bottom in early this October, so some growers have switched to other occupations and some businesses have stopped manufacturing or reduced quantities. In addition, the collaboration to set floor rates of top 5 natural rubber producers in the Southeast Asia has helped prevent decrease of the price below US$1,500 per tonne; however, the new rate does not create a satisfactory income level for rubber growers.

 

According to John Heath, Director of Wurfbain BV, Netherlands, said the EU forces large companies to report on impact on environment and society. First, the report requires companies that never do this will pay more attention to impact of businesses on the environment and society. Second, once the company found that the performance is relatively low; the principle of this new report will provide a strong motivation to improve the operational efficiency in order to avoid the disclosure of the negative information of the company. Third, the information that was provided from the new report will allow the investors and social group put the pressures on the companies that are operating less efficiently. Therefore, Vietnamese businesses should focus on exporting products that are more environment and society oriented to avoid violations.

 

According to Lekshmi Nair, Senior Economist of the International Rubber Study Group (IRSG), the world is developing towards sustainability and social responsibility. This is a sustainability and efficient principle in global supply chain and in the purchasing of raw rubber. Therefore, there are many opportunities that are open to encourage investment and increase consumption of natural rubber. Furthermore, the participation in sustainable programme will help rubber growers to reduce production costs and increase productivity and be socially recognised people that respect labour rights and human rights. This helps reform employer-employee relationship and give social impacts.

 

IRSG recommends that rubber manufacturing countries need to create a forum to discuss benefits of nations associated with development strategies of rubber industry. In addition, stakeholders need to work together on projects related to sustainability in order to build trust and transparency among stakeholders in value chain. In particular, it would be better if there is a partnership of the government of rubber producers and large suppliers to create an environment of mutual benefit to help farmers develop rubber in the long term.

 

Also at the seminar, IRSG introduced the "sustainable natural rubber industry" project to bring more benefits for stakeholders who join the entire value chain of rubber industry. This is a voluntary initiative and cooperation that IRSG is implementing to create a sustainable development of natural rubber industry worldwide to benefit entire value chain of rubber industry through such measures as promotion of sustainable development of global natural rubber, improvement of productivity of natural rubber, enhancement of natural rubber quality, support for protection and conservation zones, appropriate mechanisms of water management and absolute respect for rights of workers.

 

The project has criteria such as productivity improvement, enhancement of quality of natural rubber, supports of sustainable development of forests and water and protection of rights of workers.