CHALLENGING BUT POSSIBLE TO FINALISE RUBBER PRICE MECHANISM THIS YEAR - EXPERT

The government's expectation to finalise the smallholders' Livelihood Rubber Price Mechanism (LRPM) by this year is rather challenging, but possible if every producing nation realises that there must be a sustainable income for smallholders and farmers.

Denis Low, the past president of the Malaysian Rubber Glove Manufacturers Association said reaching a consensus and working on the mechanism is never difficult if there is a common objective.

“The difficulties are in the implementation and the sincerity of participating nations. We must, therefore, work as transparently as possible. 

“Our rubber glove manufacturing industry would certainly support this initiative if it is a viable, conducive solution to the plight of the rubber producers,” he told Bernama.

He said the mechanism must not be a difficult structure to follow and has to be transparent.

In the past, even when Thailand, Indonesia and Malaysia were the top three producers, reaching a consensus was “difficult.” 

“What and how to agree on is rather challenging given that there are so many producing and non-producing countries involved,” he added.

In any case, rubber prices are so much higher in the first quarter of 2024 versus the same period a year ago.

“The SMR 20 in 2023 was averaging at RM5.9735 per kilogram (kg) while latex-in-bulk was at RM5.2375 per kg.

“This quarter, we are seeing the SMR 20 averaging at RM7.2715  per kg while latex-in-bulk is averaging at RM6.4636 per kg. It is a huge increase and good income for the smallholders,” he said.

However, Low said the government could continue giving subsidies if the farmers cannot get by on their income.

“A governmental subsidy is so much more convenient as it will not jeopardise the viability of users and the manufacturers,” he said.

On 11th March, Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said the government was aware of the issues affecting the livelihood and welfare of rubber smallholders in the country.

Aimed at safeguarding smallholders' livelihood, he said the LPRM will enable natural rubber prices to be within a fixed price range to reduce uncertainty over global rubber prices.

The introduction of LPRM was also among the key agendas in discussions between the government and rubber-producing countries under the Association of Natural Rubber Producing Countries (ANRPC) affected by rubber prices, the rise in production costs as well as cost of living.

“Similar to other export-oriented commodities, the price of rubber is influenced by global supply and demand factors.

“Furthermore, government intervention is not easy and only at a minimum level since the country's rubber production contributes only 3.3% of total global production,” Johari said.