Rubber industry losses continue

The rubber price has been decreasing, hurting farmers and causing concern among exporters. 

Though the export tariff has been cut to zero percent, they are still facing difficulties because of the increase in domestic supply and the lowering of demand in the world market.

Total export value down by half, prices fall by 1/3
Vietnamese businesses for the first time increased export volume to over 1,000 tons in 2012 and then maintained a slow growth rate of 5-6 percent the following years. By 2015, Vietnam had exported 1,137.4 tons of rubber.

Meanwhile, the export value has been decreasing from $3.2 billion in 2011 to $1.5 billion in 2015. In 2014, the decrease was especially sharp – 28.4 percent.

This is because the rubber export price has been plunging in the last five years. After climbing to a peak in 2011, the price has been decreasing. In 2015, the price of one ton of rubber was just equal to 1/3 of the highest price. 

ASEAN Rubber Business Council (ARBC) in September 2015 issued a warning about a price decrease and said that Vietnamese households whose income is mostly from rubber trees were in big difficulties.

Consequences of hot development 
The rubber industry once witnessed a hot development period in 2006-2011, when the export price escalated rapidly. At that time, Vietnamese farmers rushed to chop down cashew and coffee trees as well as natural forests to shift to rubber. 

Big money was then poured into rubber projects, not only by individuals, but also by businesses, from agricultural, real estate, transport and finance companies. 

Some of them made heavy investments in hundreds of projects growing rubber in the Central Highlands, the southeastern region, northern Vietnam, and in Laos and Cambodia.

Just within 10 years, the rubber cultivation area in Vietnam increased by twofold to 1,000 hectares.

In Vietnam, the rubber latex price began decreasing in 2011 after reaching the highest peak of $5,000 per ton. Reports showed that though the cultivation areas are increasing, the increases have been slowing down.

Vietnam’s rubber export relies on China
Vietnam’s rubber industry has gone downhill, according to experts, also because of lower demand from major export markets – Malaysia, India and China.

A report showed that 50 tons of out of every 100 tons of rubber exported in 2015 went to China, while 15 tons went to Malaysia and 8 tons to India. When the Chinese economy declines and demand decreases, Vietnam suffers.