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Rubber Farmers Eye Market for New Yield: NIA Helps Add Value

Posted on: Tuesday, 21 March 2006, 12:00 CST

By Aranee Jaiimsin, Bangkok Post, Thailand

Mar. 21--PHUKET -- The National Innovation Agency (NIA) is helping pararubber farmers in Satun to use technology to add value to their products and develop non-contaminated rubber sheets that will fetch higher prices in the market.

Thailand is the world's largest natural rubber producer with a capacity of approximately 2.8 million tonnes per year, a third of global production.

About 1.23 million tonnes of natural rubber, accounting for 90 percent of the total volume actually produced, were exported in 2005. Of the total, 36 percent was classified as rubber sheet and generated 52.89 billion baht in revenue for the country.

Although Thailand is one of the world's leading natural rubber exporters, Thai products fetch low prices in the market due to product contamination and subjective quality, according to Sunan Nuanphromsakul, secretary of the Tungnui pararubber farmers' group in Satun.

To overcome these obstacles, the NIA started working with the farmers' group in 2003 to help develop premium and super-premium rubber sheets.

The total project was worth 40 million baht, 5.2 million of which has come from the NIA, according to NIA director Supachai Lorlowhakarn.

Unlike conventional products, premium and super-premium rubber sheets are free from contaminants such as sand and gravel. They offer tailor-made quality to customers, he said.

Super-premium rubber sheets also varied in viscosity to meet the requirements of each customer, Mr Supachai added.

"We hope that pararubber farmers will stop producing contaminated rubber sheets in the future, and both premium and super-premium rubber sheets will come to represent the image of local rubber products one day soon," he said.

The cost of producing premium rubber sheets is 2.97 baht per kilogramme higher than for common rubber sheets, while it costs an extra 7.56 baht per kg to produce super-premium sheets, he said.

"Unlike conventional rubber sheets, which vary in price according to the quality evaluation of each buyer, innovative rubber can be sold at certain prices as a result of their quality benchmark. However, margins don't seem to have increased significantly based on the current limited volume of production," said Mr Supachai.

Premium and super-premium sheets can be sold at 81.28 and 87.28 baht per kg respectively, while common rubber sheet fetches between 75 and 80 baht per kg, said Mr Supachai.

The Tungnui farmers' group has produced a total of three tonnes of premium and super-premium rubber sheets. However, they have had to stop production temporarily due to lack of demand.

Mr Sunan said that the group was waiting for responses from some leading tyre manufacturers -- including Bridgestone and Michelin -- as well as some footwear manufacturers, about the premium products.

He remained unsure how the group would pay for additional production costs if the premium lines failed to attract enough orders.

"The worst-case scenario is for the innovative products to be sold at the same price as common rubber. Until now NIA support has been covering the additional costs," Mr Supachai said.

"The pararubber farmers' group in Tungnui has nothing to lose as long as they don't produce any more [of these products] without order placements."

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Copyright (c) 2006, Bangkok Post, Thailand

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Source: Bangkok Post

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