Rubber ‘cartel’ acts against price drops

A statement on the International Tripartite Rubber Council’s website shows that the organisation, set up in 2001 to represent the interests of the world’s three largest natural rubber producing countries – Thailand, Indonesia and Malaysia – doesn’t intend to sit back and accept the lower prices the commodity has received of late.

“We, the ministers under the International Tripartite Rubber Council (ITRC), express concern on the recent drop in natural rubber (NR) prices, which has a direct effect on the income of rubber smallholders in our three countries,” read the statement, which was released by the ITRC Secretariat in Bangkok on 16 August. “This is despite the fact that the demand for NR remains strong with low stock level. The drop in NR price was mainly contributed by negative market sentiment caused by various other factors including uncertainties in global economic growth.”

The ITRC Secretariat shares that the three countries’ governments have finalised the mechanism of what it calls the “Agreed Export Tonnage Scheme.” Under this scheme, Indonesia, Malaysia and Thailand will withdraw 300,000 tonnes of natural rubber exports and also accelerate a replanting programme that will remove mature trees from 100,000 hectares of land, a measure that will result in a further 150,000 tonne reduction in exports.

“With these two measures, a total of 450,000 tonnes of NR will be withdrawn from the market,” the Secretariat commented. “We are optimistic with joint implementation of these measures, the rubber price will recover and continue to be fair and remunerative to all smallholders and other stakeholders in the NR industry. This implementation will be closely monitored by the ITRC Monitoring and Surveillance Committee.”

Prior to the ITRC announcement the Association of Natural Rubber Producing Countries, which counts Thailand, Indonesia and Malaysia as members, reported that the three countries would respectively produce an estimated 3.61 million, 3.26 million and 1 million tonnes of natural rubber this year. The Agreed Export Tonnage Scheme reduces this combined output by some 5.7 per cent, and represents about 4.4 per cent of anticipated 2012 global production.