Agribusiness

Dwindling Rubber Prices Jeopardize the Future of Rubber Industry

28 Nov 2018, by IBC Asia Insights

The Falling Rubber Prices

The natural rubber industry is currently being plagued by low rubber prices. The effects of low natural rubber prices are acutely felt by and unfairly apportioned to upstream smallholder farmers who are paradoxically the fulcrum of the natural rubber value chain. There are millions of smallholder farmers who are critical stakeholders in the natural rubber value chain. This is a serious issue and rubber prices need to increase to ensure a sustainable and equitable value chain.

Balancing Sustainability and Profitability of Rubber

Integrating sustainability into the natural rubber value chain and translating it to an economic value proposition is a significant challenge. The natural rubber industry has always been a traditional one, with age old practices deeply ingrained. Compared to products and commodities like paper, palm oil and cocoa, natural rubber is a commodity that has just jumped onto the sustainability bandwagon. The journey has just begun. How sustainability principles are cascaded down the natural rubber value chain from a tyre maker to the last smallholder farmer in the supply chain remains to be seen.

Continuous Research to Optimize Processes

There is continued R&D among tyre majors to ascertain if there are alternatives to natural rubber. There is also continuous R&D work done on the properties of natural rubber in relation to synthetic rubber and other compounds to optimize tyre performance. Investment has also been pumped into tyre recycling facilities.

Revolutionizing the Rubber Industry with Technology

Technology and digitization, two themes that are generally not associated with the natural rubber industry, have potential for growth opportunities. Over the last few years, we have witnessed how other industries have embraced and leveraged on technology and digitization to exploit value in their respective supply chains. Hence, I think it is never too late for the natural rubber industry to jump on to the bandwagon. For a start, technology can be used to trace and track natural rubber supply chains.

Author:

Kavickumar Muruganathan 
Vice President, Environment, Health & Safety
Halcyon Agri Corporation Limited
https://www.linkedin.com/in/kavickumar-muruganathan6399892/

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