Strategies to Revive the Philippine Rubber Industry
In our conversation with Mr. Igot, he suggested strategies on how to revive the Philippines rubber industry. He also provided this author some documents detailing the procedures as discussed below with some notations.
Why revive the industry?
There is a current and future demand for natural rubber in the advancing economies of China, India, Eastern Europe and others due to high demand of cars and vehicles requiring rubber. China has already overtaken the USA as the largest consumer of natural rubber. Take note that the current high demand is pushing the TSR20 price of rubber to above P130/kg. This makes rubber production one of the most if not the most profitable plantation crops in the country today.
Analyze the cause of decline of the industry and learn lessons from it.
The analysis of Igot is that, the Philippine rubber industry is characterized by decreasing productivity extended in maturity period - very low yield and low quality product sold at a low price. The decline was brought about by several factors which include: limited government extension service, non-enforcement of quality standards, unstable peace and order condition in Mindanao, land reform restrictions, and high interest development loans.
A report provided by the IRSG indicates that the Philippines is just producing 1 percent of the world natural rubber. This is inspite of the fact that there are still large areas of idle lands suitable for rubber production in the country, particularly in Mindanao.
Twin approaches in rubber expansion
At present, there are over one million hectares of public land suitable for rubber production in Mindanao. A large portion of these areas are deforested grassland which are in urgent need for reforestation to prevent soil erosion, insure the supply of water to the lowland, and prevent flash floods and others calamities.
Moreover, there are areas distributed to farmers which are generally idle and suitable for rubber production. Reforestation with timber species will create jobs only during planting and felling. There is no economic advantage in the interim. Conversely, if the land is planted to rubber, it will create jobs from the onset until the time it is harvested as timber, and then another cycle begins.
Establish rubber as a corporate crop in public land
In such a case, rubber shall be grown as a reforestation crop on a partnership basis between a corporate investors and local government unit or local inhabitants.
The corporation provides employment, income and generator of technologies in rubber which can be used in both the corporate and smallholder farms.
Use a cooperative approach to rubber expansion
This requires the adoption of a cooperative approach from development to market of rubber, pattern with modification to overcome the weakness and emphasizing the strength of the Malaysia’s FELDA schemes, Thailand’s Smallholder Development Plan and/or Indonesia’s NES Project for Oil Palm.
In this cooperative approach, it is important that there is a commitment by the government to assist and supervise the cooperative approach to development. The responsibility of the government should include the following:
a. providing or sourcing development fund at reasonable rate of interest
b. massive introduction of latest technology through training and extension
c. strict compliance of quality standard
d. strong monitoring with cooperative on development and repayment
e. ensure that the cooperative work by emphasizing or enforcing the basic role of the cooperatives and members.
Igot suggested that in the cooperative development scheme, the co-op should provide the role of the following:
a. component management, outsourcing (pay by results)
b. hire one labor unit from smallholder family for every 3 hectares developed
c. plant and maintain until turnover to smallholder at maturity
d. market and sell smallholders produce at price formula based on world market
e. manage development fund repayment
f. supervise smallholdings until full payment
Under the cooperative management scheme, he suggested that the cooperative members should carry out the following role:
a. turnover control of land to cooperative management for development
b. work for cooperative while his farm lot is under development
c. takeover and maintain farm lot under cooperative supervision upon maturity
d. sell produce through the cooperative
e. follow repayment scheme stipulated in the cooperative contract
Development cost and possible benefit
Igot estimated that the cost of developing a 1,000-hectare corporate or cooperative rubber farm at P160,000,000 or at -P 160,000/ha.
The estimated total production of dry rubber from 1,000 ha for 20 years is 43,292 MT. At the end of the productive lifespan of the plantation, the trees can provide timber of 50,000 CBMs. The sale of rubber and timber is valued at P4,272,255,000. This provide each member of the co-op an average income of P15,085/month per hectare. In addition, the 1,000-hectare plantation would provide 370 rural jobs to help decongest the urban center.
Production of natural rubber in selected ASEAN as reported by the International Rubber Study Group, 2004.
Countries Production Percent of
(MT) World Production
Thailand 2,873 36
Indonesia 1,792 22
Malaysia 986 12
Vietnam 384 5
Philippines 84 1
October 20th, 2008 at 4:58 pm
Nice article. Thanks.
Eugene
November 1st, 2008 at 1:56 am
This message is for Mr. Igot,
Buenas Dias Mr. Noni Igot. Bien interesado iyo aquel di uste libro, o hala si puede iyo conese compra si tiene ese aqui na Estados Unidos. Tiene came poco hectaria de tiera alla na Isabela que ya manda came siembra, tiene man que ta ayuda daw agriculturist pero era aquel quiere iyo tiene nuebo technologia para puede iyo man aplicar na diamon mga goma. Si puede uste le este dimio email por babor contesta. Muchas gracias.
Mahalo nui loa.